For those who want to know more on AMMB :-

KUALA LUMPUR: Kenanga Investment Bank research believes the central bank's decision to raise the overnight policy rates by 25 bps to 2.25% (from 2.0%) could be a prelude to "further increases in the coming 12 months".

It said on Friday, March 5 the impact of the rate hike on the banks depends on the inter-bank rates; base lending Rates + variable-rate loans, fixed-rate loans and sector risk.

It said Malaysian banks have more assets sensitive balance sheet, going forward earning is skewing toward the upside. Net interest margins (NIMs) are likely to expand as asset yields re-price faster than cost of fund.

The immediate impact of OPR hike is inter-bank rate. The research house said it sees possibility of interbank rates increase by 25bps from March onward. We believe Hong Leong Bank with the lowest loan to deposit ratio of 53% is the biggest beneficiary on this front.

"Besides inter-bank rates, we believe BLRs should increase in tandem with OPR by 25 bps to re-price the current BLR-based loans. Rate hike would increase average lending rates. Banks with higher portions of variable-rate loans should fare comparatively better. Among the banks, Hong Leong Bank (81% of total), Public Bank (73%) and Maybank (73%) have the highest portion of variable-rate loans," it said.

Kenanga research said fixed-rate loans such as hire purchase may not re-price for five to seven years. AMMB (57% of total) and EON (43%) are biggest losers with the highest portion of fixed-rate loan. Government-linked banks, namely Maybank and CIMB, fare comparatively better than consumer banks, owing to larger low-cost deposit bases and variable-rate loan portfolios.

It noted that the duration of investment and dealing securities, namely bonds, is difficult to determine from the limited disclosures. Banks under its coverage suggests that their respective managements have been anticipating a rate hike and would position themselves accordingly. However, it expects investment banks, that is CIMB and AMMB would face substantial mark-to-market losss pressure.

On the overall, Kenanga Research believed the rate hike would have positive impacts to the banks’ earning.

It suggested investors should have BUY traditional banks (Public Bank and Hong Leong Bank) for net interest margin recovery. We believe their asset should re-price faster than liability in an environment of rate hike, hence, NIM should recover faster than peers.

"While we looking for market correction, investment banks with high Beta which are trading close to 2007 high level, offer limited upside from here. We maintain our SELL on CIMB and AMMB after a strong rally in 2009," it said.

There is always a good buaya among the bad ones.

I suggest both of you meet on top of Mount Kinabalu.

Some of us meet at Genting hill.

This post has been edited by SKY 1809: Mar 5 2010, 05:31 PM

You should not take the valuations at face values.

On the surface, some stocks may appear to be undervalued bcos of many hidden costs to be written off over a long period of time. I suspect Maybank might adopt this approach. AirAsia could be another ( Analysts expressed some doubts )

Some companies may appear to be overvalued bcos they prefer to write off pre operating expenses even before the commencement of a business. Though under the accounting rule, these expenses could be written off during the year it starts to operate. amended.

So some adjustments or discounting factors may have to be applied.

Not easy to spot them, but just keep in mind of the discrepancies that may arise.

It is an art or skill . Care has to taken if you go for super long term.

For the purpose of sharing only aka do not mean to lecture anyone.

This post has been edited by SKY 1809: Mar 6 2010, 11:21 AM

Yes, I agree. Under the matching concept, written off during the year seems to be more appropriate, no doubt about it. Better if written off as soon as possible.

Accounting policies needed to be fair to the current economic environment . Also not static , always changing to the needs of the business community.

The change of accounting rule in US of marking to market to some " Fair Valuation " is one such , that most Accountants disagree, but it is saving the whole world from falling apart anyway.

Which stock market in the world could withstand on its own if Dow falls apart ?

Costs or Expenses incurred whether can be " capitalised" or written off themselves are subjective in nature to some own interpretation . How you support your arguments is important.

One very unique Accounting Practice in Malaysia is, assets registered under the name of a third party ( so called Bumiputra ) could be capitalised as Assets of the non Bumiputra company per se , and hence claiming for Capital Allowances ( written off by way of depreciation ) by Non Bumiputra. Perhaps, not acceptable in other parts of the world.

( sorry , to mention the subject of race here )

The bottom line is the Fairness per se, and one should not strictly or blindly follow so called "Accounting Practices"

Things happened or practised in Malaysia during the Asia Financial Crisis were deemed to be totally unacceptable , now deemed to be normal acceptable practices in US.

Bail outs of banking system, lowering of interest rate , creating more employments and more spending to stimulate the economy in Malaysia , were totally unacceptable by IMF or US during the Asia Financial Crisis, right ?

Who pays the External Auditors anyway, so the subject of Independent "ness" is seriously in doubt.

You think the external Auditors of LCL are totally doing a good job ? Cannot be sued by Investors ?

The whole world is inter dependent.

I seriously urge accountants to come out and share their own opinions and not merely " auditing " people ideas.

Thanks, anyway for sharing yours.

This post has been edited by SKY 1809: Mar 6 2010, 09:11 AM

Interesting Article :-

Should Maxis’ current shareholders bear IPO costs?

http://biz.thestar.com.my/news/story.asp?f...02&sec=business

I am still trying to figure out under which " Accounting Practice" , costs incurred are relevant to Maxis.

Or Accounting Practices give leeway, perhaps the reason given is , the listing was requested by a VVIP ? So it is justifiable in nature ?

Anyone cares to share more.

This post has been edited by SKY 1809: Mar 6 2010, 11:00 AM

That is not my point.

I am more concern with Accounting Practices give way to " TOO BIG TO FAIL " corporations.

The universal concept of Fairness to all ( big or small alike ) is seriously in doubt.

This post has been edited by SKY 1809: Mar 6 2010, 09:34 AM

Yes, I agree with you.

The concept of having IPOs changes a lot today.

It is more of spreading the risks ( transferring risks to small fish ) as the business worldwide is at great uncertainty and facing fierce competition . Of course , it is hidden under " Fund Raising " Objective. It is more like someone is buying an insurance policy, with no " intention " to claim but likely in future.

On the other hand, listed companies with good cash piles , more and more are taken into private ( relevant to dividend investors like you )

" TOO BIG TO FAIL " is likely to fail in next crisis.

Breaking up of very large Corprations into smaller units would also lower the risks in time to come. The old school of thought of " Specialisation" i.e doing what you are really good at is making a come back.

The recent changes ( more to come ) to banking rules that make Banks more difficult to own Banking, Insurance and Broking Business under one entity , unless you have very huge Paid up Capital to support. So breaking up could be another good option.

Could be more IPOs coming the way.

Just my personal opinion

This post has been edited by SKY 1809: Mar 6 2010, 12:26 PM

I am glad you do that.

My intention is create some awareness among the small fish like us.

Never my intention to cause any sell downs of Maxis , if any.

With due respect to Maxis shareholders.

This post has been edited by SKY 1809: Mar 6 2010, 11:15 AM

Just to enlighten you that in many developed markets.

Big fish could hold 20% and control, the rest 80% belongs to smaller fish ( through unit trusts and so on ).

Again , that 20% could belongs to a family as a whole.

Another way of spreading the risks, if you want to call it.



This post has been edited by SKY 1809: Mar 6 2010, 08:27 PM