Happy Chinese New Year To All

The exodus has begun .... have a healthy and prosperous New Year ... may all your dreams and good wishes come true!!! Drive safe & slow ...

Hing Ket Grill House

This is one of my preferred eating places. The reason why I have not featured it earlier is that this thing is too damn popular already, they do not need more publicity. As it is, if you go on Fridays or weekends, you better arrive before 7pm or you will walk away disappointed. Its comfort food. Its our very own kind of barbecue.

I am there at least once a month. Its in Klang but funnily many people from Klang have not been there. No, its not another bak-kut teh stall!!! Its an unpretentious grill house. Go with somebody who have been there, I beg you, its very difficult to locate.

I always sit outside the bungalow restaurant to enjoy the early evening alfresco dining. Nothing better than to go in shorts and T-shirt and sandals. Have a cool beer (plus dunk it in ice for that Malaysian-hawker-way of enjoying cold beer) and wait for the food. Plus, be prepared to eat with your fingers a lot, its a lot more fun.

Their number one dish is Grilled lamb chops. Its not a pricey place, and the lamb chops are not the best cut. A tip, ask them to cut it into bite size pieces, save you wrangling with fork and knife over the bones and tendons. Its the smokiness that makes it extremely tasty, and their remarkably fresh home made mint sauce. Aaahhh ...

Their next best thing to have is grilled fish, just ask for the best fish they have for the day. Again, its nicely grilled and the key is their wonderfully spicy chilli sauce that comes with a zing. The chilli is used to coat and grill the fish with - notes of belacan, killer chilli and a good dose of garlic and lime.

The other must have item is grilled crabs. My complaint here is they do not have terribly big ones, just small crabs, but its still wonderful if you like crabs.

Its not just grilled stuff they do well. They do a mean Marmite chicken wings and you should leave room for their mee dish using thoong-fun.

All in all, you will leave the place spending not more than RM50pp but what a wonderful way to have dinner. Now if the beach was right in front of the restaurant, then its paradise.

HING KET GRILL HOUSE
Lot 3569, Batu 3 1/4
Kampung Jawa, Klang
Tel: 33713913, 33710861
11.30am-2.30pm, 5.30pm-10.30pm

India's Economic Strength Compared To China

Why is China the “workshop of the world” when Indian labour is even cheaper and her entrepreneurs admired worldwide? There are many reasons, including (until recently) the anti-foreign-trade policies and small-scale industry reservation policies as well as poor infrastructure in power, roads, water and ports. Perhaps even more important are the restrictive labour laws and certain other regulations, which encourage Indian manufacturing units to “stay small”, thereby forgoing the classic industrial economies of scale and scope.

Both China and India have sizable population, both are seeing a growing middle class by improving the economic livelihood of those in the rural areas. Yet as an economic engine or superpower, India seems to be bogged down by certain factors. The biggest division is that one is state planned centralised economy while the other is probably to most democratised country in Asia with many "almost independently managed states". However, thats the big picture, the reality would show that India's economy is more powerful and resilient in many ways when compared to China.

As a percentage of GDP, China's domestic consumption is the lowest of all major economies, hovering at just 1/3 of GDP. Most of China's growth in 2009 had come from infrastructure spending or speculation in domestic assets. In India, the domestic consumption accounts for 2/3 of GDP - now that is food for thought. China's artificial suppression of the yuan restricts domestic spending. As great as the surpluses are, more than 3/4 of China's capital goes to the 120,000 state controlled entities. That being the case, most of the profits in China end up in state coffers.

The OECD’s Investment Policy Review of India says India has designed policies to encourage investment as part of market-oriented reforms since 1991 that have paved the way for improved prosperity.

“Restrictions on large-scale investment have been greatly relaxed. Many sectors formerly reserved to the public sector have been opened up to private enterprise. Import substitution and protectionism have been replaced by an open trade regime,” the OECD report notes.

But further reforms are needed. India’s policy framework for FDI still remains restrictive compared with most OECD countries. Meanwhile, its investment needs remain massive, with poor infrastructure holding back improvements in both living conditions and productivity.

India’s growth is led by domestic demand and growing incomes in the coming years will continue to boost domestic demand and industrial activity. Reforms, the growth of home-grown corporations and rising scale of foreign direct investment are also pluses. Large domestic savings (37% of GDP in 2007), both by households and corporations, have played a pivotal role in India's economic growth. High domestic savings and the development of homegrown corporations have boosted investment (39% of GDP in 2007), helped by cheap foreign capital. Combined with a large private consumption (55% of GDP in 2007) base and a low trade dependence (imports and exports account for around 20% of GDP), the Indian economy is perceived by foreign investors as a "domestic demand-led story".

Due to the economic slowdown in 2008, household savings in financial assets fell to 10.9% of GDP in 2008 from 11.5% in the previous two years led by the large decline in holdings of shares and debentures. Households also shifted their savings from mutual funds to bank deposits due to an increase in risk aversion in 2008. With the decline in risk aversion in 2009, households will slowly shift back to equities. India's gross domestic saving rate might have declined from 37.7% in 2007 to 31% in 2008-09.

Indis' middle class stands at a formidable 300m while China's figure is around 150m. Half of China's population is in rural areas while India still have 2/3 of them in rural areas. According to a recent study by MIT School of Management, China's absolute levels of poverty and illiteracy have doubled since 2000, while India's have been halved! In India, economic growth in rural areas have outpaced growth in urban areas by 40%. Rural India now accounts for half of India's GDP, it was 42% in 1982, and it contibutes about 2/3 of India's growth . Rural China accounts for only 1/3 of China's GDP, and contributed to just 15% of the country's growth.

Increasing the growth potential and attaining the Chinese type of economic growth is constrained by India's democratic set-up, which requires political consensus to implement economic reforms. Coalition governments in the recent years have slowed the approval of reform and liberalization-oriented legislations. However, policymakers argue that slow and sequenced reforms and liberalization over the years have in fact helped India achieve strong and sustainable economic growth and limited the impact of global cues on the Indian economy.

India's medium term challenges include reducing dependence on foreign oil, increase efficiency in oil consumption to reduce its impact on fiscal and trade deficits. Cutting down oil and agriculture subsidies to reduce unproductive fiscal spending and large budget gap. Structural reforms include improving agriculture yields, development of infrastructure, health care and education access to increase absorptive capacity of economy. Other challenges include: The stance on Foreign Institutional Investors (FIIs) and capital inflows, and managing their role in generating credit and asset bubbles. Balancing private sector and foreign investors' role with concerns about social stability. Reducing corruption, and income and wealth inequality, especially between states and between rural and urban areas. Boosting human capital development and job creation can raise consumer spending, especially for the lower and middle income groups and in rural areas. Liberalizing foreign investment caps, broadening and deepening the domestic capital markets, easing capital controls on companies to borrow from abroad, and improving financial intermediation of domestic savings can buoy investment.

We should reconsider India in relation to China in their path to dominating the global economic scene over the next 20 years. Both will be taking very different path and will have major consequences to the global competitive paradigm. China's still lags in a several areas and the rural dislocation and to a certain extent the "forgotten group" being left behind will have grave social and economic costs in the coming years, if not properly managed and improved on.

p/s photos: Asin

Country Stock Markets Performance - Markets Diverging?

The markets have been wrought with worries about a few EU countries and the Euro currency which have rattled global equity markets. Sovereign debt credit default swaps have been rising sharply for countries such as Greece and Portugal in recent days. Equity markets in Spain, Portugal, and Hungary are down more than 5% today alone.

Below Bespoke highlighted the year to date performance and performance since the 19 January 2010 peak for the major equity markets of 81 countries around the world.

Spain is down the most year to date with a decline of 13.45%. Greece is second worse with a decline of 11.13%, followed by Puerto Rico, Jamaica, Slovakia, and China. Italy, Germany, and France are down more than 5% year to date, while the UK is down 4.87%. The US is down 3.58%, but it has been the second best performing G-7 country year to date behind Japan. Thirty-eight of the 81 countries are still up year to date, so things haven't gotten that bad everywhere. Latvia, Lithuania, and Estonia are all up more than 20%.

What's interesting is to see where Malaysia is, we are right at the median. One can safely say that our correlation to major equity markets have been very mild - in other words we are still not a preferred destination for foreign funds. Can be good or bad, you do not see much whiplash action when these funds withdraw. Even though our KLCI index has tumbled, its mainly due to weakness in the big caps, if you had been in mid or small caps, your losses would have been muted.

Indonesia and Vietnam have held up even better as I did see some foreign funds preferring to have an exposure there. Usually in this type of correction, where macro factors and sovereign debt are involved, foreign funds in smaller emerging markets are quite OK to stay put. If they feared funds withdrawals, it is easier to get money out of HK, Taiwan and Brazil.

Some funds have certainly taken chips off the table, however I do not see this as a prolonged bear market at all. Where else will they put money to work? Treasuries?

p/s photos: Sowelu

iPhone Winning Corporate Users

Those who have the iPhone will know what I am talking about. Once you have it, you'd never want to use any other phone. I survived the Blackberry sentence for 2 years, its no fun. The iPhone is the best ever, its a lot of fun, and its like having an iPod as well. Buy the docker/player and you have a good sound system while charging your phone as well. The iPhone's strength is also its main weakness. As app downloads are managed exclusively through the iTunes Store, IT managers can't centralise installation and security updates as with other software. Unlike Blackberry or Windows Mobile devices, each phone must be updated by its end user, even if update prompts are pushed to the device. But, the pull factors of iPhone are so great that more and more senior execs are pushing their IT department to cave in.

Gartner: The uber cool iPhone is making inroads into the business market with new enterprise applications making it hard for IT managers to swim against the phone's popularity tide.

It is now deployed or being piloted by more than 70 per cent of Fortune 100 companies, according to Peter Oppenheimer, Apple's chief financial officer.

“We're continuing to see a rapidly growing number of enterprise CIOs who have now added the iPhone to their approved device list. This penetration has doubled since the iPhone 3GS first shipped this past (US) summer,” he said at the company's first quarter results presentation on Jan 25.

Yellowfin's iPhone app for business.

According to Gartner, the iPhone operating system is now the third most popular in the world commanding 17 per cent of the smartphone market, behind Nokia's Symbian with 44.6 per cent and Research in Motion (RIM) with 20 per cent.

Glen Rabie, chief executive of business intelligence software maker Yellowfin, says corporations are surrendering to the iPhone's appeal.

Apple's OS share rose 4.2 per cent in the year to October 2009, behind RIM's 4.9 per cent, at the expense of Symbian and Microsoft's Windows Mobile which lost 5.1 and 3.2 per cent respectively. Google's newcomer Android managed to capture 3.5 per cent market share in its first year.

Much of the rise of Apple's share stems from consumer uptake; nevertheless its use in enterprise environments is rising.

“We've certainly seen a massive uptake of the iPhone by the enterprise. Executives just want it and are telling the IT people to just make it work. There are cases where all executives have iPhones and the rest of the staff have Blackberries. Slowly it filters down,” Rabie says.

Yellowfin counts Telstra, Levi's and government agencies as clients. It recently joined the likes of Salesforce.com in launching an iPhone app to allow access to it server-based business intelligence packages.

“The iPhone has built a mindset to make everything simpler. Each app only does one thing, which is good because people just do what they need to do,” Rabie says.

Apps v Security

The iPhone's strength is also its main weakness. As app downloads are managed exclusively through the iTunes Store, IT managers can't centralise installation and security updates as with other software. Unlike Blackberry or Windows Mobile devices, each phone must be updated by its end user, even if update prompts are pushed to the device.

“In my view that's the only thing that is holding it back,” Rabie says.

At the same time, RIM which has a strong enterprise foothold precisely because of its security and all-in-one infrastructure is not letting the app fever pass it by. It recently launched its own app store App World, allowing Blackberry users to search for and download apps directly from a central website, rather than having to search through software vendors' sites or wait for their IT managers to do it.

Small business no brainer

David Campbell, owner for David Campbell Building in Sydney, has a fleet of seven iPhones which staff use on construction sites. They are trialling a “Tradies App” developed by the company to aid onsite supervisors to compile a daily site diary, document variations and issue sub-contractor agreements and purchase orders on the spot. He hopes the app will be available through iTunes soon, maybe even bringing in some extra revenue.

“We had Blackberries and Treos before, but they don't stack up in the ease of use for the guys,” Campbell says.

Enterprise Requirements

While end users and small businesses value user experience more, enterprise IT managers have a different wish list. Anthony Petts, sales and marketing manager, HTC which manufacturers Windows Mobile and Android phones, says they want:

- email exchange functionality

- centralised security

- calendar and contact synchronisation

- keyboard input

- a range of hardware models to suit different staff levels/requirements

“When I ask people why they want an iPhone they say because it's the latest. There's hype, buzz and a notion of status affecting the buying decision, but in the enterprise when they look at security and functionality (other phones) become a real consideration for them,” Petts says.

Predictions

Gartner predicts it's Android, not iPhone, that will overtake RIM as second biggest smartphone OS in the world by 2012. Windows Mobile will manage to maintain its market share although suffering greater pressure from open source despite the Marketplace app store launch.

However, Petts believes Microsoft will strengthen its grip on the Australian smartphone enterprise market with Windows Mobile 6.5 and HTC's own HD2.

He says the phone combines the finger-sensitive (capacitive) screen that iPhone and Android users prefer with the accuracy of stylus-driven (resistive) screen the enterprise demands.

“We've had very strong enterprise coverage with Windows Mobile predominantly from a security and infrastructure point of view. If companies have Microsoft Exchange set up, there's nothing else they need to do and they'll have all the security that comes with that. No additional investment, no need for another server and they can add Microsoft Sharepoint and Office to it to keep it in the family,” Petts says.

Top smartphone hardware vendors, Asia Pacific (unit sales)

Nokia - 75.3 per cent market share (down from 79.9 per cent in Q1 2009)

Apple - 8.1 per cent (from 3.8 per cent)

HTC - 6 per cent (from 4.6 per cent)

RIM - 3.6 per cent (from 2.9 per cent)

Samsung - 2.9 per cent (from 2.4 per cent)

Source: Gartner, Q3 2009.

p/s photos: Christina Chan Hau Mun

Michaelangelo's David Tour de USA

Michaelangelo's David was sent to the USA on a loan tour ....

After two years, David was returned to Italy ....

His Proud Sponsors were:

The Real Picture Behind 'China Crisis'

There are basically two groups of investors in their opinion of China's economy. In one camp are those who are optimistic on the economy’s strength and its ability to thrive in an otherwise bleak global environment.

The most recent economic data release showed a sharp rebound in the Chinese export sector has further enhanced the positive sentiment

In the other camp are an increasing number who believe that China’s economic
miracle is nothing but a mirage and that 2010 will be a year of painful reckoning. Some analysts are claiming that China’s growth model is fundamentally flawed and the massive stimulus measures adopted since late 2008 have only intensified the economy’s structural imbalances, which will make the inevitable downside adjustment even bigger. The usual worrying features of the economy such as asset bubbles, “mis-investment”, an inefficient banking system, growing social unrest and corrupt governance - some are predicting an imminent economic crash and even social chaos. Some prominent hedge fund managers have reportedly even begun shorting the “China story” in recent months. Well, for every buyer, there has to be a seller... so the story goes.

Is the economy headed toward a sudden collapse, as expected by the “house of cards” camp? The answers to these questions obviously weigh heavy in investors’ decision making. There has never been a lack of skepticism toward the Chinese economy. Even 5, 10, 15 years back, there were the usual China-bashers and permanent-bears who have been proven wrong over and over again by the country’s enormous economic success and social progress over the past three decades. However, the question marks about the country’s fundamental growth model deserve careful assessment. The core argument of this bearish camp is that the Chinese economy is mainly driven by capital spending and exports, both of which have exhausted their potential. The economy is bound to slow sharply due to a lack of new sources of growth. Or is that the full picture?



While there is always a chance of a major collapse in any economy, I think China is going to chug along just fine. I do not think that China’s capital spending is excessive. China’s capital spending boom has mainly been driven by profit incentives rather than government direction. Those who think that China’s capital spending is terribly inefficient and will face an imminent crash will be proven wrong. If you take the data and extrapolate on internal capital returns on the country's projects - China's figure is very much in line with other developing countries.

Second, one may argue that the U.S. consumer sector has entered into a prolonged period of deleveraging, and that its demand for Chinese products will never recover to pre-crisis levels. However, an important fact is that China’s export market has become increasingly diversified. If you refer to the chart, even though the U.S. remains the largest market for Chinese overseas sales, its market share has shrunk from a peak of 22% in the late 1990s to 17% today. In fact, Chinese sales in some of the nontraditional export markets such as Australia, Latin America, Africa and the Middle East have experienced much faster growth in recent years than sales to other developed markets.

Meanwhile, China continues to reduce trade barriers with emerging Asian countries. At the beginning of this year, China and the 10-country Association of South-East Asian Nations (ASEAN) formally established one of the largest regional free-trade zones in the world.

Over the years, the Chinese authorities have worked to boost domestic consumption in an attempt to reduce the economy’s dependence on exports and capital spending. In this sense, slowing capex and exports should be taken as a positive sign, as it means that policy makers’ consumption-boosting initiatives have finally begun to bear fruit.



The Chinese authorities still have a lot of room to boost growth. Infrastructure in the country’s rural regions is still grossly insufficient and needs tremendous government input. Massive domestic savings and the very low public sector debt burden means there is a lot of financial resources the government can utilize to buy a lot of growth, similar to what they have done over the past year. This kind of growth-boosting campaign is of course unsustainable over a prolonged period of time, but China is among the few countries in the world that are most capable of dealing with a crisis scenario with extraordinary policies – and have a significant war chest to do it with.

Hence we should not see a crash or a major crisis of any sorts in 2010. Yes, the markets will have to experience some bumps here and there, in particular when Beijing tries to tighten the screws on lending and rein in liquidity a bit every now and then - but its for the betterment of the economy, not a noose around the economy's neck.

Currently, the authorities are beginning to tighten policies again. The risk factor is the country’s bubble-prone asset markets and potential damage to its banking system. Specifically, as a result of China’s massive household sector savings and highly pro-cyclical global capital inflows, Chinese asset prices are prone to boom-bust cycles. So far the extreme volatility in asset prices, such as the 70% crash in the domestic A-share market and housing price declines in some major metropolitan areas between 2007 and 2008, has inflicted little damage on banks’ overall asset quality, as the above chart would indicate clearly. This is because policymakers have maintained a significant buffer between asset markets and the banking system - banks’ mortgage lending practices have been very conservative, with a mandatory down payment ratio of 20-40% for real estate purchases. Banks’ direct exposure to the stock market is also negligible, as leveraged investments are not allowed.

Recently, the authorities announced that index futures, margin trading and short-selling in the A-share market have been officially approved. Even though it may take months for these instruments to be developed and deployed, and they are undoubtedly positive in terms of improving the efficiency of the domestic capital market.

Structurally, China’s economic performance will most likely continue to outpace that of the rest of the world. This warrants a more positive stance on Chinese assets over global benchmarks, especially as current valuations of Chinese assets are comparable to global and emerging market averages. Have a look at the chart above on China's valuations - its very reasonable still. From a cyclical point of view, it’s important to recognize that there is a disconnect between a country’s economic performance and its stock market. One does not need to be super-bullish on an economy’s immediate growth outlook to be positive on its financial asset prices.

Stock markets are highly sensitive to policy shifts, which is a lagging response to economic performance. Weak growth leads to policy easing, which is stimulative for the stock market. Similarly, strong growth normally leads to tightening policy, which bodes ill for equity prices. In some cases, good economic news turns out to be a headwind for stocks. Currently, China’s strong growth recovery is pushing policymakers to tighten, a critical juncture that is typically associated with heightened volatility in equity prices. While the Chinese A-share market will continue to struggle in the coming months, investors should not take this as a sign of pending economic troubles. These tightening measures are good problems to have.


p/s photos: Gu Chen