Category: Economics

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Economics

[1168] Of what is up with Suria Capital Holdings?

In between writing papers, I scourged the internet today to look for good companies which I could reasonably park my idle cash in. It did not include deep research but rather, just casual reading. After awhile, I stumbled upon Suria Capital Holdings Berhad and it looks reasonably okay. The company operates ports in Sabah and, according to various reports, is cash rich. Further, future outlook for ports in Sabah is rather rosy especially with increased production of palm oil as well as discovery of new crude oil fields in Sabahan waters. The ports of Sabah is expected to be beaming with activities. I was all excited, looking for the final push to buy Suria Capital’s share until I saw Parti Bersatu Sabah alleges that Suria Capital might be sold to private sector group:

KOTA KINABALU: Parti Bersatu Sabah (PBS) today urged the State government to confirm reports that it was in the process of selling its controlling shares in Suria Capital Bhd. to private sector groups. [PBS : BN government planning to sell Suria Capital. Parti Bersatu Sabah. Januart 29 1999]

At the moment, Suria Capital Holdings is controlled by the state government of Sabah.

Upon seeing that, I immediately realize that some of the risk associated with buying the a piece of the Company. It is politics of protectionism and it could be problematic. Yet, it was way back in 1999.

While I have not heard a real controversy involving the company yet, in my mind, the probability of such thing happening increased tremendously after I read a report written as late as January 2007 that a possible buyer of Suria Capital might be Temasek Holdings, the investment arm of the Singaporean government:

PETALING JAYA: Suria Capital Holdings Bhd, which operates all of Sabah’s seven ports, has caught the eye of Singapore government-linked companies (GLCs).

The GLCs are keen to acquire a substantial stake in Suria, sources told StarBiz yesterday. If a deal were struck, the Singapore GLCs would have equity exposure to the ports in Sabah, which is believed to be the world’s biggest exporter of palm oil. [Singapore GLCs eyeing Sabah ports. The Star. January 18 2007]

Whoa!

There is no other interesting news regarding Suria Capital except for this:

Suria Capital Holdings Bhd has proposed a two-into-one share capital reduction and the reduction of its share premium account to eliminate its accumulated losses, which stood at RM352.04 million as at Dec 31, 2006. [Suria proposes 2-into-1capital reduction. The Edge Daily. April 2 2007]

That led to this:

Suria Capital Holdings Bhd share price fell as much as 18.8% or 13.5 sen to a month’s low of 58 sen in early trade on April 3 after it proposed a two-into-one share capital reduction. [Suria down 18.8% to 1-month low on share capital reduction. The Edge Daily. April 3 2007]

In return:

Suria Capital Holdings Bhd’s capital restructuring plan will not have a negative impact on the value of its shares, its group managing director Datuk Abu Bakar Abas said.

He said on April 5 that the technical adjustment on the share price would reflect the same value immediately before and after the exercise. [Revamp no impact on Suria Capital share value, says MD. The Edge Daily. April 4 2007]

I will not pretend to understand why the price fell but it has since recovered some ground. For today in fact, the price has risen to approximately 75 sen from 68 sen.

So, should I buy or pass?

After making a killing at Dialog, I am feeling a little bit gung-ho. Hmm…

Nevertheless, with limited time for research and subsequently, information, the fundamentals seem to be there.

Categories
Economics

[1167] Of a fall of 0.2% or 7.2%?

An article by Bernama highlights that the Malaysian industrial production index falls 0.2%:

KUALA LUMPUR, April 9 (Bernama) — The Industrial Production Index (IPI) for February 2007 fell 0.2 per cent to 123.0 compared with 123.2 in February last year. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

While true, the magnitude of drop from the previous month is actually 7.2%:

Compared with the index of 132.5 in January 2007, the IPI for February 2007 dropped 7.2 per cent. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

Is this bad news?

Without more information, I cannot really say. From the look of it, through limited data, it seems like seasonal fluctuation and nothing more though. I however am tempted to link the decrease to the fall in demand for electronics in the US.

Regardless, this is how the index looks like at the Department of Statistics of Malaysia:

By the Department of Statistics of Malaysia. Public domain?

What do you think?

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — okay. I forgot about seasonal adjustment. Now, I am embarrassed.

Categories
Economics Society

[1166] Of wanna work in the US?

Well, bad news:

On the day after it began receiving applications for H-1B work visas, the US Citizenship and Immigration Service reported yesterday it had already received more than double the number of applications it is permitted by law to grant for 2008. The same limit took two months to reach last year.

While H-1B grants are officially capped at 65,000, USCIS reported receiving over 150,000 applications as of Monday afternoon. [H-1B Visa Limits Hit After Only 1 Day. Scott M. Fulton, III, BetaNews. April 4 2007]

Hat tip to Jiinjoo.

Categories
Economics

[1163] Of blog war between DeLong, The Street Light and Free Debate

Economists are taking sides. It starts at The Economist:

Despite a dispiriting start that saw the imposition of steel tariffs, the Bush administration has made great efforts on trade, pushing forward with both multilateral and bilateral deals. Its biggest goal, a substantive deal from the Doha round of World Trade Organisation negotiations, is currently on life support. But the administration has managed to secure a variety of smaller deals, while letting steel tariffs die a death at the hands of the WTO. Now even progress of that sort may end. [Trouble with trade. April 2 2007. The Economist]

The Street Light fires the first shot:

The Economist takes a massive dive today, as they continue to bizarrely and irresponsibly assume the best (or maybe “the least bad” would be more accurate) of the Bush administration. [The Economist on Bush on Trade. April 2 2007. The Street Light.]

The DeLong as reinforcement:

Kash Mansouri writes… [Kash Mansouri Is Very Unhappy with the Economist on Bush on Trade. April 3 2007. Grasping Reality with Both Hands]

Free Debate, the blog of the Economist, counterattacks:

BRAD DE LONG approvingly links Kash Mansouri, as he goes after us for claiming that the Bush administration has been relatively strong on free trade issues…

[…]

Despite the good professor’s endorsement, this take on the Bush administration’s trade policy is an implausibly uncharitable reading. I confess I am stonkered at the willingness to blame the Bush administration for being insufficiently active on Doha, since without the trade team’s efforts, Doha would not be on life support; it would be dead. The Bush administration did everything but a fan dance to lure all parties back to the table after the catastrophe at Cancun, and while it has not gone as far on farm subsidies as anyone would like, this is widely regarded as driven by (Democratic and Republican) farm interests in Congress, not some failure on the administration’s part. It does the administration no good to negotiate a treaty that can’t be signed.

[…]

The Bush administration is far from perfect on trade; I think particularly of its ridiculous stance on sugar ethanol. But the Bush administration is constrained by political realities. It has failed to take many damaging steps despite intense political pressure, such as declaring China a currency manipulator, and where it does impose anti-trade measures, they are pleasingly often something like the steel tariffs, which were guaranteed to be overruled by the WTO. And as Mr DeLong’s commenters point out, whatever Mr Bush’s trade sins, they are at this point thoroughly overshadowed by the Democratic protectionists currently flexing their muscles in the House. That’s less an endorsement of the Bush administration than a sad comment on the state of trade policy in the world today: the Bush administration is the best we’ve got. [Tu quoque. April 3 2007. Free Debate]

Would Mankiw and Krugman (or heh, by proxy, Mark Thoma) get a keg and make a merrier party?

Categories
Economics

[1161] Of why Malaysia is the center of Islamic banking

From the Wall Street Journal, via the Free Debate at the Economist:

Six years ago, a Malaysian bank asked 80 financial institutions in the Persian Gulf for help in selling a corporate bond that complied with Islamic prohibitions on interest.

All but one declined to participate, branding the novel security “haram,” or banned by Islam. Just a few months after the $150 million offering proved a success, however, many of these doubters shelved their theological qualms and came up with similar Islamic bonds of their own.

The global Islamic bond market that has developed since then is now worth an estimated $50 billion in securities outstanding, part of a burgeoning Islamic financial industry that’s fast approaching $1 trillion in assets. The torrents of cash that fuel this boom mostly come from the Persian Gulf’s oil bonanza. But it is distant Malaysia, thousands of miles to the east, that has emerged as the industry’s unlikely trailblazer.

“Malaysia is the catalyst for change,” says Faiz Azmi, Kuala Lumpur-based global head of Islamic finance at PricewaterhouseCoopers, the accounting and consulting firm. Much of what is now considered conventional in the industry, he explains, was test-driven here first — often against the objections of conservative clerics in places like Saudi Arabia. Now such innovations are not just commonplace in the Gulf, but also have become an important revenue source for Western financial giants with Islamic-banking divisions, such as Citigroup Inc. and HSBC Holdings PLC. [Malaysia Transforms Rules For Finance Under Islam. Wall Street Journal. April 4 2007]

I remember religious conservatives claiming that the stock market is haram as well.