Monday, 14 February 2011

What's The Fuss About Mubarak?

Not all of us are widely read about international affairs. We see something erupting, a crisis, a massive chaos of people protesting, but why?

AFP: US President Barack Obama said Friday the people of Egypt had spoken after history moved at a "blinding pace," and called on the now-ruling military to ensure a transition towards "genuine democracy". Obama gave a statement soon after it emerged from a euphoric Cairo that President Hosni Mubarak, a 30-year US ally who America subtly helped push towards the exit, had resigned after days of raging street protests.

"The people of Egypt have spoken - their voices have been heard and Egypt will never be the same," Obama said.

"Egyptians have made it clear that nothing less than genuine democracy will carry the day," Obama said, praising the military for safeguarding the state, but also calling on them to secure a credible political transition.

The US administration had struggled for days to find ways of impacting the 18-day crisis, as Mubarak had defied pressure to end his long authoritarian rule. Obama had ratcheted up calls for a peaceful, swift transition to democracy, and on Friday he pledged that the United States would stand with the people of Egypt - one of America's staunchest allies and a recipient of some two billion dollars in annual aid.

"By stepping down, President Mubarak responded to the Egyptian peoples' hunger for change," Obama said in his brief statement.

On taking power Friday, the military moved quickly to reassure the citizens whose street revolt toppled Mubarak that it would respect the popular will.

And the White House called on the new authorities in Egypt to honour existing peace agreements with Israel.

"It is important the next government of Egypt recognise the accords that have been signed with the government of Israel," White House spokesman Robert Gibbs said.

Mubarak's hurried departure Friday - after saying late Thursday he would stay until September's elections - will have brought relief in Washington, facing a dearth of options to force an end to the crisis. But Mubarak's exit also posed searching questions about future US Middle East policy, with a possible power vacuum in Egypt.

Still, Obama hailed the toppling of the Arab strongman, brought down by two-weeks of mass protests in Cairo's Tahrir Square, as a defining moment in world history.

"The word Tahrir means liberation. It's a word that speaks to that something in our souls that cries out for freedom," Obama said.

"Forever more it will remind us of the Egyptian people, of what they did, of the things that they stood for, and how they changed their country and in doing so changed the world."

The president also drew parallels to other tumultuous world events, highlighting the end of the Berlin Wall, Indonesians rising up against president Suharto, and Indian independence icon Mahatma Gandhi.

"We can't help, but hear the echoes of history, echoes from Germans tearing down a wall, Indonesian students taking to the streets, Gandhi leading his people down a path of justice," Obama said.

He called on the armed forces to now ensure a political transition that is "credible in the eyes of the Egyptian people," Obama said, warning that there could be "difficult days ahead."

"Over the last few weeks, the wheel of history turned at a blinding pace, as the Egyptian people demanded their universal rights," he said.

Besides praising Egyptians, Obama also sought to make a wider point, apparently seeking to connect with Muslims elsewhere who felt marginalised and may be easy prey for extremists.

"Egyptians have inspired us and they've done so by putting the lie to the idea that justice is best gained through violence," Obama said.

"For Egypt, it was the moral force of non-violence, not terrorism, not mindless killing, but non-violence, moral force, that bent the arc of history towards justice one more."

US lawmakers on Friday were also weighing tighter controls on exports that can help repressive regimes cling to power.

The US Congress, which cheered anti-government protests in Iran last year, also applauded the turmoil that toppled Mubarak, amid worries that US aid and know-how hurt both movements.

"We continue to watch and have concerns about the misuse of any equipment that the United States provides or sells to another nation," said a spokesman for the House of Representatives Armed Services Committee, Josh Holly.

© 2011 AFP

---------------------------------

Former Egyptian President Hosni Mubarak moved assets into untraceable accounts abroad during the 18 days of protests before his resignation, the Sunday Telegraph reported, citing unidentified intelligence sources.

Mubarak may have accumulated more than 3 billion pounds ($4.8 billion / RM6.2 billion) over his 30-year reign, according to the newspaper. Financial advisers to the Mubarak family tried to move some of these assets beyond the reach of investigators to Gulf states, the newspaper said.

To contact the reporter on this story: Michelle E. Frazer in London at mfrazer@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net

---------------------------

Jason Koutsoukis in Cairo.

SMH: Spurred by a kitchen cabinet that included his wife, Suzanne, his son, Gamal, and his Vice President, Omar Suleiman, the former Egyptian president Hosni Mubarak's last hours in office were marked by a desperate attempt to cling to power.

In a detailed account published by al-Ahram, Egypt's largest-selling newspaper, military leaders threatened to publish their own statement announcing that Mubarak had been sacked.

The newspaper said a statement announcing Mubarak's resignation was pre-recorded by the army's chief-of-staff, Sami Enan, and delivered to the offices of the state television broadcaster Nile TV.

In the end the statement was not broadcast after Suleiman agreed at the last minute to read his own statement that Mubarak had resigned in the interests of the country.

In the days since the resignation, senior government and party officials have confirmed that Mubarak originally made a commitment to resign on Thursday, only to change his mind at the last minute.

Al-Ahram and Associated Press reported that Mubarak's top aides and family concealed the full extent of what was happening on the streets, instead telling the 82-year-old that he could ride out the turmoil which had brought the country to a virtual standstill.

The insider account portrayed Mubarak as ''unable, or unwilling, to grasp that nothing less than his immediate departure would save the country from the chaos generated by the protests'', that he lacked strong advisers who could tell him what was really happening.

''He did not look beyond what Gamal was telling him, so he was isolated politically,'' one official was quoted as saying. ''Every incremental move [by Mubarak] was too little, too late.''

Mubarak, said another official, ''tried to manage the crisis within the existing structures and norms'' but the incremental reforms he offered would never suffice to placate the protesters.

As the unrest mounted on Thursday, with more people on the streets and labour unions calling for a general strike, the military grew impatient and Mubarak's cabinet also divided.

Quoting senior Egyptian officials, editors and journalists from other state newspapers close to the regime, retired army generals in contact with top active duty officers and senior members of Mubarak's National Democratic Party, the report said it was military leaders who had persuaded Mubarak to appoint Suleiman, the intelligence chief, as Vice President to try to quell the protests.

But when chaos continued for 18 days, insiders believed Mubarak had reached the end.

That was Thursday. Hossam Badrawi, secretary general of the then ruling National Democratic Party, met Mubarak that afternoon and told reporters he expected the president to ''meet people's demands''.

The Supreme Council of the Armed Forces issued a statement recognising the ''legitimate'' rights of the protesters, even calling the statement ''Communique No. 1'' in language that reflected their belief that they had already taken power.

The Prime Minister, Ahmed Shafik, gave an interview to the BBC's Arabic channel in which he also strongly hinted that Mubarak would be stepping down. But as Mubarak prepared what many believed would be his resignation speech, he changed his mind.

One insider quoted by al-Ahram said Gamal, 47, who had been touted as the president's successor, rewrote his father's speech several times before it went to air shortly before 11pm.

The then information minister, Anas al-Fiqqi, who, a few hours before the speech went to air, made a public statement saying that Mubarak would not resign, was also present when the recording was made.

On Friday, as Mubarak flew to more secure surrounds in the Red Sea resort of Sharm el-Sheikh, the military allowed protesters to gather outside his Cairo residence, as well as clog the streets surrounding the state television and radio offices, the areas around parliament and the offices of the Prime Minister.

That proved to be the final straw. The military acted. Shortly after 6pm on Friday, with millions on the streets in Cairo and a string of other cities, Suleiman performed the last official act of his 10-day period in office.

His statement announcing the end of Mubarak's 30-year rule of Egypt lasted 49 seconds.

Saturday, 12 February 2011

UBS Sees A Trickle Not A Torrent

A trickle, not a torrent

Year-to-date equity flows modestly negative; no ‘capital flight’
. Data from various sources suggests that inflows to Asia have slowed, but we are by no means seeing ‘capital flight’ from the region. Outflows over the past 4 weeks look to be small and nothing out of the ordinary versus history in Asia ex Japan.

Denise Keller


Outflow from Asia/EM funding the DM outperformance?

A more important question is whether the outflow could accelerate if developed

markets (DM) continue to outperform. Looking at the data since 1990, it is rare
that Asia would see outflow whilst DM see inflows except during financial crises
and global bear markets. We are not expecting a reversal of last year’s flows.

India flow not as extreme as it appears; Indonesia back to Sep 2010
. Adjusted for market performance, inflow into Indian equities in 2010 was the highest amongst Asian markets at ~10% of market cap, which would imply the greatest vulnerability to a reversal. That said, the inflow was in line with history and reversals tend to be modest and short-lived in India ex-the financial crisis. Foreigner stockholdings in Indonesia are now almost back to the pre-Q4 2010: from a flow perspective the market appears to have adjusted the most.

Strong inflow into Korea/Taiwan unlikely to continue

Whilst flows into India and Indonesia have been weak over the past 3 months, they have been strong in Korea and picked up significantly in Taiwan, which have been reflected in the relative performance. Flows to neither market (KR/TW) look
extreme; however, it would be unusual for them to continue in the current pace.

The recent underperformance of Asia ex Japan equities versus developed markets, on the back of strong G7 economic data and ongoing inflation concerns in Asia, are leading to many questions (and fears) about a sustained reversal of fund flows into this region, and in turn, further underperformance from Asian equities.

Denise Keller


While flows are starting to reverse on some measures, we are not seeing
calamitous selling. More importantly, we also find historically that when the US
outperforms Asia in a rising market, there is little evidence of investors selling
Asian funds to ‘get overweight’ developed markets. More often, flows to Asia just slow down. In other words, fears that the recent outperformance of the US versus Asia will lead to a substantial reversal of flows in our view seem overplayed.

At the country level, India’s flows, at 10% of market cap during 2010, were the
highest. If there is a foreign capital flight, this market looks most vulnerable. The good news is that, historically, equity portfolio outflows have tended to be moderate and shortlived affairs in India, with the exception of the global financial crisis. In other words, strong inflows do not usually reverse. Taiwan’s flows, very strong in the last quarter of the year, look unlikely in our opinion to repeat themselves. We see no positive or negative in Korea’s flow data, which has been steady and unspectacular for most of the last year, i.e. not vulnerable in our opinion. Finally, the froth in inflows in September/October last year into Indonesia has entirely reversed. From a flow perspective the Indonesian data
looks most interesting.

Regional flows – modest outflows

In recent weeks, flows have turned negative from Asia ex Japan. We look at this
in two ways. In Chart 1 we show data from Emerging Portfolio Fund Research (EPFR) – an aggregator of mainly retail flows. This shows data into Asia ex Japan funds (and ETFs) over the last few years, and we deflate it by market cap.

Because the individual week to week data can be quite jumpy, we take a four
week moving average of the data. As the chart shows, in recent weeks, the flows
have started to turn negative. But very modestly so. Clearly there has been a
moderation in the momentum but by no means is capital ‘fleeing’ Asian equities.

We see the same pattern from the individual stock market data of net purchases
of Asia equities by foreigners. This data is only available for India, Indonesia,
the Philippines, Korea, Taiwan and Thailand. The general trend is similar. As
we show in Chart 2, foreigner net purchases tapered off towards the end of 2010,
but we are not seeing significant outflows from the region.

The first point is that flows are very modestly negative, but there is not, as yet,

panic selling or calamitous outflows. One of the questions we have encountered
in recent weeks surrounds the fear that we are on the brink of major outflows –
that investors could turn major sellers of Asian equities to fund inflows to
developed markets, given their recent outperformance, better G7 economic data
and inflations fears here in Asia.

Looking back at US mutual fund data back to 1990, we see no evidence that this

actually happens when Asia underperforms the US, with the notable exceptions
of bear markets. In other words, if Asia keeps underperforming US equities, in a
rising market environment (or at least one that is not a global bear market), it is not unreasonable to see US flows being positive, but Asian flows also positive.

In Chart 3, we show the 3 episodes since 1990 when EM flows are negative

whilst DM flows are positive – two of them are during global bear markets
whilst the other one relates to the Asian financial crisis. For sure, there is an asset allocation shift at the margin away from Asia to developed markets that has mirrored the recent outperformance of developed markets. But flows don’t tend to fully reverse and turn negative unless we are in a major bear market. More likely, what seems to be driving the US and other developed markets up, is
an asset allocation shift away from fixed income to developed equities – as the
data suggests.

Denise Keller


Strategy summary

While flows are starting to reverse on some measures, we are not seeing
calamitous selling. More importantly, we also find historically that when the US
outperforms Asia in a rising market, there is little evidence of investors selling
Asian funds to ‘get overweight’ developed markets. More often, flows to Asia
just slow down. In other words fears that the recent outperformance of the US
versus Asia will lead to a substantial reversal of flows seem over played.

At the country level, India’s flows, at 10% of market cap in 2010, were the highest. If there is foreign capital flight, this market looks the most vulnerable.
The good news is that historically, equity portfolio outflows have tended to be
moderate and short-lived affairs in India, with the exception of the global
financial crisis. In other words, strong inflows do not usually reverse. Taiwan’s
flows, very strong in the last quarter of the year, look unlikely in our opinion to repeat themselves. We see no positive or negative in Korea’s flow data, which
has been steady and unspectacular for most of the last year, i.e. not vulnerable in our opinion. Finally, the froth in inflows in September/October last year into
Indonesia has entirely reversed. From a flow perspective the Indonesian data
looks most interesting (on the positive side).

Denise Lorraine Keller

Friday, 11 February 2011

Credit Suisse Sees Buy Signal Soon

● MXASJ down almost 7% from high, time to buy? With MXASJ (MSCI Asia ex. Japan) down 7% from its high of 580 to 540 currently, a key question is whether it is time to buy. Our Asian 6 factor valuation indicator has moved from 1% overvalued in December 2010 to around 6% undervalued. So, we are not yet at our “Buy” signal. The next factor we look at is whether there has been foreign investor capitulation. Significantly, yesterday alone was associated with US$1.68 bn of net foreign selling, and so far in February we have seen net foreign selling of US$2.88 bn in Emerging Asia ex. China, ex. Malaysia.

● Average net foreign selling in prior non-recession corrections was US$6.5bn. Figure 1 highlights that net foreign selling in the current episode of US$2.88 bn is still below the average net foreign selling of US$6.5 bn during the last seven non-recession corrections.

● But foreign investor capitulation is most evident in Thailand. While Thailand was associated with net foreign buying of US$1.9 bn in 2010, so far more than half of this inflow has been reversed with net foreign selling of US$1.16bn year-to-date. In contrast, net foreign selling in India at US$1.34 bn appears small in the context of net foreign buying of US$29.4 bn in 2010. Figure 2 also highlights that on a rolling 12-month basis, Korea has received 28% of all flows versus its MSCI weighting of 36%, and Taiwan has received 23% of all flows versus its MSCI weighting of 30%. India continues to be the most crowded trade with 43% of all flows versus an MSCI weighting of just 17%.

Thursday, 10 February 2011

Finally A Decent CD Shop

I don't know about you, but I hate shopping for CDs in most places in town. We only get those highly commercialised releases, where's the "real music" section? Now, selling CDs is a dying business unless you can carve a niche for genuine music lovers, who will pay for the real thing and not just download a copy and then make ten copies for friends.

If you assess the artistes that Loud n Clear are bringing in, you would appreciate their effort and music knowledge and wide range in tastes.

The shop is open now, so go and browse, talk to the owners, tell them some artistes you like, they will be able to introduce similar ones that you have not heard of. For genuine music lovers only. See you there ...

There will be an official opening with Zyan and Winnie Ho doing a mini showcase performance as well on 22 Feb. Need to book ahead of time for that.

(click to enlarge images)













Reasons & Rhymes


So what caused yesterday's slump in most markets? I love it when everyone is asking the same question, and nobody seems to have answer. Its like debating how we know if there is a God for sure. The usual market weakness reasons would not be sufficient to explain the shareper than usual daily losses.

Bloomberg has this to say: "Asian stocks fell, dragging a benchmark regional index lower for a third day this week, on concern U.S. unemployment and efforts by emerging countries to tame inflation will hamper a global economic recovery."

Hmmm, ok Bloomberg, you need to do better than that.The FBM KLCI fell 2.09% or 32.08 points to 1,503.99, the steepest fall since it lost 2.11% on Nov 6, 2008. YTD, the FBM KLCI lost 0.98%. Losers thumped gainers by 750 to 160, while 223 counters traded unchanged. Volume was 2.23 billion shares valued at RM3.13 billion.

Hong Kong’s Hang Seng Index fell 1.97% to 22,708.62, Taiwan’s Taiex lost 1.89% to 8,836.56, South Korea’s Kospi fell 1.81% to 2,008.50 and Singapore’s Straits Times Index lost 1.5% to 3,103.39. However, the Shanghai Composite Index rose 1.59% to 2,818.16 and Australia’s S&P/ASX 200 Index added 0.20% to 4,914.40

Then we go searching for reasons to attach to the picture, some said its the Javanese burning of 3 churches. Hmmm, read closer, no one died, it was an orchestrated thing by a small minority extremist group. Not sufficient reason.

Then there are those who cited China's recent rate raises. Old story man, even Chiuna was the sore thumb yesterday gaining substantially. Fears of other Asian central bankers doing likewise, well, its a maybe but WE ARE COMING from such a low base rate, surely any rate hikes are not sufficient to turn people off - sounds logical but underwhelming.

http://vfourvictory.net/wp-content/uploads/2010/08/olivia-ong-guitar.jpg

Then there are the experts who say foreign funds are moving out in droves. Pleeassee la people, institutions do not act as one. Its not like they collude at a monthly meeting and say lets get the hell out on these 3 days. We tend to blame foreign funds when markets are down, in reality, there are always buyers and sellers both local and foreign. There are good and bad fund managers, good and bad investors, local or foreign - its too simplistic to attribute the day's weakness or strength to just one group of people. Its bigger than all of us.

We try to make it "small" by being able to explain things away, but we are belittling the market's predictability and in many ways, the market has a mind of its own which is difficult to fathom if you look at it on a day to day basis.

The OZ markets closed higher albeit slightly, hence the markets really started to turn late. China was not affected and that tells a tale. Its program selling, especially weakness seen in indexed stocks as they were sufficient liquidity, index related.

Why trigger the program selling, well if you receive some bad news during Asian time zone but the bad news is for US companies, which you think is sufficiently bad to turn sentiment southwards, the easiest is to sell futures of any markets stock indices. That in turn triggers sell programs further in selling down stocks as the disparity in futures would cause these programs to buy futures and sell stocks to cover.



So, what's the bad news? Cisco’s shares declined 10%-12% in premarket trading after the network-equipment maker late Wednesday warned of declining public spending and posted weaker quarterly margins. Cisco is a big enough barometer to pull down other big techies for sure. So, it was a bet, which I think is pretty shallow. It may not just be Cisco but an aggregation of factors, but once program sells hit the markets, they tend to exaggerate the downside as "no one seems to know the real reasons, so they sell first ask questions later".

Believe you me, I think the US markets will be able to hold onto its sensibilities and we should see a steadier market tomorrow.

One can easily concoct a bad scenario for the same event or paint a good one, its just shifting the reasoning to suit where the markets are headed. For example, US jobs figure is still bad which is bad if you are looking from a recovery angle, but good as it will maintain low rates there much longer, thus making stocks more attractive.

When Hu Visits The US



definition of irony ...

the fund manager ...


the funniest one of all, a brilliant retake of Abbott & Costello's Who's On First ....

Friday, 4 February 2011

Making The Perfect Cuppa


Nothing like making a perfect cuppa in the morning. I think I will call it the tiramicinno ; )


Recipe: 1/4 cup Farm House milk, one teaspoon brown sugar, froth till twice the size, pull two espresso shots with a time lag of ten seconds in between ... walla ...