Money vs Currency

Currency performance is but a true reflection of the underlying dynamics of economic growth, inflation, a country's competitiveness and revenue streams ... among others. The table below reveals all that in one go. 

HKD is on a false sense of security. It is tied to the USD and will bring about havoc in its economy as it does not deserve the "low interest rate environment couple of good economic recovery", all the while the HK side has to contend with a slowing China economic engine  plus a deflated shipping industry,and a flattening housing/real estate market in China". The strong USD basically causes a highly uncompetitive kick to its travel/conference industry. Its a false sense of security which translates into a housing market that is primed to go off a cliff anytime soon - what with the usually strong currency, a crackdown on corruption in China (which ay lead to cash withdrawals).

IDR - Still on a high from the recent elections with a promise to reduce corruption on all levels. Even though oil dependency has lessened, it is still a substantial portion. Hence methinks IDR has a long way to fall if oil prices stay below $70 for a few more months.

Yuan & Rupee - Both have had tough restructuring to do in their economies with India having it harder over the past two years. Unlikely to see further erosion of their currencies as they are already happily competitive with a technically undervalued currency.

Singdollar - The lack of dependency on oil will see an actual boost to Singapore via lower oil prices. However, their dependence on regional trade will hit their outlook. Currency may ease slightly going forward.

Ringgit - If you look at the ringgit vis a vis the rest, we are doing very well thank you. Oil prices is a substantial contributor to the economy, esp our budget, but thankfully our budget and the way we handle our allocations also means there are a lot of "excesses and capacity" to be cut without hurting the real economy. Too many ongoing projects to dislocate the economy. A slowdown in awarding of oil and gas packages will not be as impactful as it does not really trickle down. Still, the ringgit may weaken a bit more oil prices stay below $70 for too long.

Look at the last 4 countries on the list, its oil oil oil ... plus Russia has embargo and Ukraine issues to boot. Venezuela already devalued its currency and should need to do it again very soon. Argentina will need more money or risk defaulting again. Brazil is not out of the woods too. 

p/s money is personal, currency is government ...

KopiSusu ... The Musical

Its about Nanyang music ... the era of 50s-60s ... Nanyang basically referring to Southeast Asia. The influence of the music from Shanghai's decadent years and HK's frolicking years meshed with the local musicality of Chinese emigrants to Southeast Asia.

Hotline: 016 238 6513
http://www.dpac.com.my/page/ticket/bookTicket/view/315.html

The Road Is Long .. and Many A Winding Path

Let's be clear here, I am not criticising the planned road name changes. Just offering suggestions on why and how things could be better. It does not matter if the changes were to recognise the past rulers of our beloved country.

a)  We can and we should and we have recognised many historical figures including rulers of our nation. Let's re-examine if naming roads after them is such a good alternative. Roads are meant to describe and place a location. If its too long, it adds enormous difficulty in remembering, mentioning to friends and other practical uses. It becomes impractical which defeats the purpose of naming roads. Jalan Tun Perak is great, so too Jalan Sultan Ismail or Swettenham Road or even Birch Road. But when a name gets too long, it becomes self defeating - the very intention to honour becomes an opportunity to ridicule.

b) By all means, recognise our past historical figures in other ways, such as buildings, statues, gardens, fountains, mosques, bridges ... its not so cumbersome.

c) Now when we use Waze of Google maps, before the wonderful lady can finish the instruction... "in 50 meters turn left into Jalan xxx xxx xxx..." we would have passed the exit before she can finish her instructions.

d) We seem to have a huge chip on our shoulders. We should never attempt to re-write history, it happened. A road's name need not be "all good and dandy", so what if its Jalan James Birch, whether the guy was good or bad, he was part of our history Thats where our confidence, self sufficiency in our nation's history stands on ts own ... be him/her a 'bad person historically' is besides the point. We learn and acknowledge the history, the good and bad, we cannot and should repaint history or worse, only SHOW the new generation and the future "the nice side of things about Malaysia".

e) WE ARE NOT SHORT OF NEW ROADS, heck we are never short of new roads ... there are dozens new ones every month, all over... we are not closing down roads. Why touch Jalan Duta??? Why do we try to complicate things? Why don't we prioritise other more important stuff? What if we change the names of the top 20 major buildings every 5 years, can you see the value in that???

Rain Drops Keep Falling on My Convertible

In a forthcoming paper in the Quarterly Journal of Economics, Meghan Busse and her co-authors ask if weather conditions affect car purchasing decisions. They find that the choice to purchase a 4x4 or convertible is highly dependent on weather conditions at the time of purchase, which is inconsistent with classical utility theory. Psychological biases such as projection bias and salience seem to explain their findings. The paper is available here.

A History of Irish Economic Thought

The book which I co-edited with Tom Boylan and Renee Prendergast entitled A History of Irish Economic Thought is now out in paperback, making it affordable for the interested reader (the hardback version retails at a staggering £100). The book looks at the contributions of Irish economists to the development of economics as a discipline. It also looks at how particular political and economic debates centred on Ireland (e.g., land reform and the Bullionist controversy) affected wider economic discourse.

The Wayang Kulit Behind Oil Price Gyrations

Is there a puppet master, I mean nothing much has changed for much of 2014, so why the sudden drop in oil prices over the past two months? One can cite US production of shale oil but thats not like something happened overnight. All knew the numbers coming on from shale oil. So what gives?

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Opec divided on oil output

BY BEN PERRY
LONDON: The Organization of Pe- troleum Exporting Countries (Opec) oil producers cartel will hold one of its toughest and most significant meetings in recent years as, faced with sliding prices, its members must contemplate whether to cut output.
Ahead of Thursday’s Opec meet- ing in Vienna, its dozen member countries are split on what direction to take after a 30% drop in crude prices since June has slashed rev- enues.Opec’s poorer members, led by Venezuela and Ecuador, have

called publicly for a cut in output, while Iran has hinted at a need to reduce production.
But the cartel’s Gulf members, led by kingpin Saudi Arabia, are rejecting calls to pump out less oil unless they are guaranteed market share in the highly competitive are- na, according to analysts.
“The minimum consensus that appears likely to be reached at Opec’s meeting is a commitment to better comply with the official production target of 30 million bar- rels per day,” Commerzbank ana- lysts said in a note to clients. — AFP 
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As you can see OPEC is almost toothless... not really toothless but rather that Saudi Arabia is not brandishing their big stick. So whats their motivation?

Apa Lagi Saudi Mahu?

Some cynics might say that its Saudis' way of trying to curb or trash the US shale oil's viability. That does not hold much water though nice conspiracy theory for a Hurt Locker movie script. 

Much of US shale oil can cost between $50-100 per barrel just to get the oil out. That is official figures fro International Energy Agency. The IEA confirms that ONLY 4% needs oil prices to be above $80 for it to be viable, though some analyst reports put that at as high as 20%.

It is very hard to displace shale oil as their wells are much shallower, which is to say they will move to more viable wells and will only tap harder to get at shale oil till prices move back above $90. 

Plus politically, it does not make sense to screw with USA while they are an important ally in the current 'war' against Islamic State.

It also does not make sense to screw with shale oil as their production costs will never be competitive against their own oil extraction cost. Saudis (and North Africa) cost per barrel is closer to $10 per barrel, though some areas may reach as high as $25 per barrel. Hence in actual fact it would make more sense for shale oil to continue as a base for oil prices, plus adding sufficiently to a resource that is limited. Its pointless to push oil to $200 per barrel, even if they can. The fallout to the global economy, and making themselves more a 'future target' for war for oil.

This Is Why Saudis Are Letting Oil Price Slip

Saudis can easily move oil prices back above $90 if they reduce their output and they can do so as they have the reserves to do so. Saudi Arabia has about 260n barrels in reserves and about 9-13m barrels a day. So what did the Saudis do in recent weeks... they actually increase their daily output by 0.5% to 9.6m a day. Strange isn't it? Not only that, the Saudis in recent weeks even offered discounts to big Asian consumers thus depressing oil price further.

Financially Saudi Arabia has over $700bn in cash/bonds reserves , so they do not need the money and can stay at this status quo for a couple of years if need be. The worst country to be affected is their 'enemy' Iran, which actually needs oil to be above $120-140 for it to break even. Russia needs $100 per barrel or else its budget loses $2bn for every dollar below $100... hence for now Russia will need nearly $40bn to watch the hole in their budget this year alone. 

It is also an important way to make life very tough for rogue nations in the Middle East supporting the IS as the funds are necessary to fund the war and terrorist acts.

The unfortunate nations who get steamrolled from all this include Venezuela and to a lesser extent Malaysia. 

The Truth Hurts ...

The Bankers' New Clothes

I'm a big fan of The Bankers' New Clothes: What's Wrong With Banking and What To Do About It by Anat Admati and Martin Hellwig. Anyone interested in the future of banking and how banking should be regulated needs to read this highly accessible book. Recently, Admati and Hellwig have written a response to their many critics, which attempts to debunk 28 flawed claims - it is available here. In the video below, Admati gives an interview to INET about The Bankers' New Clothes.

RON95 Petrol: What does it mean by NO MORE SUBSIDIES ?

Today, the hottest topic in town was "No more subsidies on RON95 and Diesel starting Dec 1". While the starting date is just a mere 10 days from now, it catches every Malaysian by surprise. No wonder netizens share this news all over in social medias discussing about this matter and alert other petrol users.

How to determine the prices?

Based on news report, the Domestic Trade, Cooperatives and Consumerism minister, said the retail prices of RON95 and Diesel will be fixed according to managed float, similar to the mechanism dictating the RON97 petrol price. He added that there will be an announcement at the end of each month to set the following's month fuel prices, to be determined based on a monthly's average price.

What's the rationale behind?

Many observers see this as the beginning step for Government to start implementing the much debated "income-based fuel subsidies" which is based on salary of an individual. Anyway, how was it going to be implemented was still unclear at this juncture.

How about RON97?

• First, we saw RON95 price increase by 20c to RM2.30 on Oct 2.
• Second, we saw RON97 price decrease by 20c to RM2.55 on Nov 19. 
• Then, starting Dec 1, RON95 and diesel price will be no more subsidized.

Wait... Something was wrong over here... Why the more premium RON97 will remained subsidized after Dec 1? Shouldn't it be another way round instead?

What does it mean?

If world oil prices shot up in the next few months, we may experiencing a more premium RON95 (in terms of pricing), if RON97 prices remain unchanged. Of course, we as a consumer will make a comparison and pump accordingly. In fact, many people started to pump RON97 due to the mere 25c price difference currently. Happy pumping !!!

Investing - A Liberal Art?

Following on from my previous post, in the video below Robert Hagstrom talks about his book Investing: The Last Liberal Art.

Share Trading: Nominee vs Direct CDS account

Did you ever notice that when you open a share trading account with a broker, they will usually ask you whether you prefers nominee or direct CDS account? For an ordinary investor, we might not really understand what are the differences and benefits that you can enjoy for both types of CDS (Central Depository System) account.

Well, this is the very basic step every share trading investors should find out first, before approaching a share broker. Equipping yourself with the relevant basic knowledge in order to avoid starting at the wrong footstep. Agree?

This article may help you to understand the differences between these two type of account. Please refer to below comparison tables:

Account Opening Stage

How about the Trading Fees?Generally, the charges are the same for both accounts. Whereby, the normal brokerage fee is 0.42% per transaction with minimum RM12 for online transaction or minimum RM40 for offline transaction. Meanwhile, the clearing fee is 0.03% per transaction and stamp duty of RM1 per RM1,000 contract value.

How about Collateral Limit?

For those account which gave you some trading limit based on how much collateral you pledged into your trading account. Collateral such as cash and shares would give you a limit of 2-3 times of the total value pledged. This is good for those traders who want some flexibility, so that he/she still can buy shares although he/she don't has so much cash inside their trading account yet. Of course, investors need to settle the outstanding amount within T+3 trading days.

After Trading Stage

By comparing both account, share investor who owns a Direct Account can enjoy better savings on the "after trading" charges. However ,the main advantage that a Nominees Account holder can enjoy is the service of a share broker. The paperwork of corporate actions sometimes is very hard for investors to understand and make decision. And, many investors might missed out in replying those corporate actions if they were a direct account holder. If you're a nominee account holder, please make full use of your nominee charges. In summary, there is advantages and disadvantages to both accounts.

PS: All Margin/Pledge /Foreign Trading accounts are treated as Nominees CDS account.

This is a guest post contributed by Martin Heng Sin Soon, an Equity Dealer with RHB Investment Bank. You can open both nominee and direct account with him. He can be reached via email heng.sin.soon@rhbgroup.com.my

Investing: The Last Liberal Art

I have recently read Investing: The Last Liberal Art. In it, Robert Hagstrom argues that students, investors and investment professionals need a range or latticework of mental models to help them understand the complex world of investment. The mental models come from a wide range of disciplines - mathematics, psychology, philosophy, sociology, biology, decision making, literature and physics. Hagstrom clearly demonstrates how each of these disciplines can help investors think about investing.

I found this book very helpful in thinking about the education of students in my school. The world is a very complex place and we need to have a diversified portfolio of ways of thinking about the world, which only a broad-based education gives us. The university curriculum can become too specialised and narrow, resulting in graduates with an undiversified portfolio of mental models.

Canto-Mando Movie Reviews

Time to bring up some movie recommendations cause there are a couple recently that piqued my interest. The first is Kung Fu Jungle, its a badly titled movie in English, sounds so much cooler in Chinese. Its a great kung fu movie but its significant for a lot more than just entertainment. 

If you remember the comedy classic Kung Fu by Stephen Chow Sing Chi, where he tried (successfully) to incorporate the many popular kung fu techniques and "fantasy kung fu stuff" into a well woven comedy. In many ways its a great tribute and acknowledgement to the discipline in movie making.

Well, KFJ is like Kung Fu except that it took the more serious route, and the kung fu is a lot more realistic and authentic. Besides entertaining audiences, KFJ roped in as many as possible the HK kung fu movie stars from the late 60s, 70 and 80s and gave them roles in it. In many ways, its an excellent tribute, as the story goes about a guy wanting to be the ultimate kung fu master and he goes about it by seeking out the top masters in each genre of kung fu, but he has gone a bit cuckoo so he not only wants to beat them but kill them as well for no apparent reason.

Donnie Yen was amazing and so were his co stars. 

The second recommendation is a romantic comedy. Its part 2 of Don't Go Breaking My Heart, you need not have watch the first to watch this, but it would help a lot in enjoyment. When masters such as Johnnie To and Wai Kar Fai decide to ditch their usual gangster-police-shootout hats and go into rom-com, it usually leads to pretty watchable stuff.

The interlinking relationships between the main stars were fantastic. The energy and believability, the characters all fleshed out properly and you would feel for each of them. Gao Yuan Yuan was adorable and sublime. Koo Tin Lok, Miriam Yeung and Daniel Wu were great. Storyline was solid and layered. No kiddie mushy stuff here. Great movie, watch both parts.

There is a running theme and its more for those jaded but yet still looking for love in the modern world - love is not so much determined or predestined... its in your own hands, you have to take it, grab it, or let it go. I think I can use the word "satisfying" here for a really good romantic comedy.