newspaper articles December 17, 2011

A few interesting articles today:

The pride of Padini

http://biz.thestar.com.my/news/story.asp?file=/2011/12/17/business/10113907&sec=business

An issue which has caught the attention of Padini's fund managers, analysts, shareholders, and bankers is its buildup of inventory. Chan reasons that they bought a lot on purpose to secure the supplies.
“We are not stuck with the stocks. Most are finished basic items, not the trendy stuff, so they will be saleable. In view of China's current situation, where the factories are shutting down and lowering their capacity, you will find it harder to buy the quantities you want.”

The next two quarters will be interesting to see if they can indeed reduce the inventory significantly.

 

Corruption and inflation – how they affect the economy

http://biz.thestar.com.my/news/story.asp?file=/2011/12/17/business/10108355&sec=business

It is obvious from the above that the economic impacts of grand corruption, systemic corruption, and syndicated corruption can be significant because of their scale. One would expect them to have a larger economic impact, e.g. inflationary pressures, when compared to petty corruption, individual corruption or non-syndicated corruption.

I always felt that inflation has been understated in Malaysia, hard to believe it is only a few percent per year while so many items have doubled in price over the last say ten years.

Bursa IPO pipeline to remain healthy

http://www.btimes.com.my/Current_News/BTIMES/articles/20111216233106/Article/index_html

Bursa chief executive officer (CEO) Datuk Tajuddin Atan said it was difficult to say if the exchange would be able to top this year’s number, even though the local market has been relatively resilient, in the face of stormy markets globally with the European debt crisis deepening.

“Hopefully (we can), but next year is challenging ... very, very challenging. You know for a fact that markets are soft. But I think, what we’ve seen here is that our market is resilient.

So, consistently above 20 is still good. Above 20 is a good number for an exchange of our size,” he told Business Times.

At the time of the interview, Bursa was in the midst of crunching out its listing target number for 2012.

Still, Tajuddin claimed he is not overly concerned about numbers, per se, and insists there continues to be “strong pipeline” of companies that could list when the time is right.

“I’m more interested in a consistent pipeline and in the quality of companies that come in,” he remarked.

To me the only thing that counts is quality. If there are ten not so great IPO candidates, then zero should be listed.

I get the impression that SC & BM are filtering IPO candidates (somewhat) better than before, but I am still very worried about letting Chinese companies in. I think Bursa Malaysia will get their fingers burned on them. Time will tell.