Turn The Page

Finally, this time is different as the Taiwan’s ruling party, KMT, was heavily bruised at the recent election held on Nov. 29. The main opposition party, DPP, could even crush the KMT to the core, if it can win another two seats of county magistrates, out of the total positions of 22. DPP knocked out KMT at 13 to 6 at the end.

Local political and economic landscapes have been too rotten to justify a series of so-called decent reforms laid out by Taiwan President, Ma ying-jeou, who in past six years failed to cheer Taiwanese. Though it may be acceptable to say the KMT has done itself well to handle its ties with China, Taiwanese have increasingly turned out to be the victims of the M-type income distribution. Corruption have been more rampant in recent years than when Taiwan was led by the DPP party, during 2000 to 2008, with the despicable showing coming as the major reason for the KMT’s defeat.

At a time when the KMT is struggling with its reshuffling of the Cabinet’s members and its policy toward the island, Taiwanese have embraced the democratic traits by choosing the opposition party candidates as most of new leaders in local counties and municipalities. It may be too early to say the DPP can thwart the pro-China KMT at the Presidential election in 2016, but chances for DPP’s win appear strong as KMT obviously will remain as a lame duck due to the party's currently-raging internal conflict.

The election results sent a loud message - there does exist swing voters in an election, and a country can’t be controlled by big conglomerates as well as political profiteers in managing Taiwan-China relations. The cross-strait tie is always hotly-debated in local elections. A further improved link with China is of course widely wished, but needed to be achieved via the upgrade of public well-being.

People do vote for a change .....

Good luck !!

Turn The Page https://www.youtube.com/watch?v=sMqNFAU0tOw

Taiwan students protest (Sunflower Movement) remains over the Service Trade Pact singing with China

Now it comes to the 18th day for those students occupying Taiwan’s lawmaking building, the Legislature Yuan, in protest over Taiwan-China Service Trade Pact which was passed hastily at the Yuan’s internal affair committee in early March 2014, and required by Taiwan’s President Ma to be effective before June 2014. Ma, doubling as the head of the ruling KMT party, has forcibly ordered its KMT lawmakers to unanimously support the pact with no room for any revision before June. As the KMT owns a majority in the Yuan, a pass is widely-viewed inevitable.

Besides the sharply rising inflation, annoying jobless rate, and dirt-cheap wage level similar to that 15 years ago, those “Black-shirt” students are angry over the inappropriate measures adopted by the KMT, including its back-room negotiation with China even without any prior notice to its own KMT lawmakers. Meanwhile, the opposition party, DPP, is turning weak and gearing itself up for the massive elections at 2014 end. In face of the uncertain future, students decided to voice displeasure toward President Ma who enjoys approval rating as low as 9%..

The pact, as part of the sub-pacts under the Taiwan-China ECFA inked in 2010, raised doubt about its efficiency to lift Taiwanese welfare, particularly amid the fact that the island in past few years, or since Ma’s ruling in 2008, has deteriorated financially and economically, albeit the cross-Taiwan Straits political ties did improve. Ma has vowed to stimulate economy, yet with results benefitting those 1% wealthy conglomerates as shown by the poor monthly wage well capped at the minimum NT$22,000. His efforts, being driven by Taiwan makers’ increased investment in China, have however prompted youngsters to look for jobs in neighboring nations by handling poker-shuffling and cows-killing.

Partly motivated by riot police’s fierce moves to strain students' attempt to storm into Taiwan’s Cabinet building on March 23, as many as 500,000 people on March 30 wearing black shirts took to the street in Taipei city to call for the KMT-led government to first pass the cross-Straits oversight draft before getting the Service Trade Pact passed. They protested not just over the potentially rising jobless rate after the pact is effective, but also the so-called reunification between Taiwan and China - a nerve-racking threat among some Taiwanese who reject the communism. Speculation has swirled that Ma and China’s leader, Xi Jinping will meet at Ma’s current tenure due 2016. The pact will further pave the way for that.   

China has stepped up its economic and political clouts in Taiwan, via nonstop Taiwan investment there. What has haunted the island is China’s own claims to retake it after KMT lost civil war and fled to Taiwan in 1949. Ma has claimed the pact will bring more boon than bane to the island, adding that people could find higher paid jobs in Chinese cities, such as Shanghai. As thus, Taiwanese must be brave enough to face future competition on the openings of domestic consumption industries, including hair-cutting, tourism, hotel and financial, etc. Recent media headlines said that Taiwan has lost its foreign-trade competitiveness against Korea which had won more FTAs.

Global economies might have been on path to recover, and Taiwan corporates in 2013 earned a 37% yoy jump of total profit. However, few of them announced a wage hike, not to mention significant job openings. Taiwan has been too reliant on the manufacturing sector operating on the ODM/OEM modes. Innovation and the move into higher-end tech sectors should play a more pivotal role  in Taiwan economy than the pact.

To certain extent, some people opposed the pact not out of the fears of KMT’s China-leaning policy, as long as the pact will boost Taiwan economy as they expect. China now is too big to be ignored by Taiwan, but doubts remain about whom at the end will be benefitted from the pact. The KMT was viewed to have betrayed the democratic system in the review of Service Trade Pact, a folly that it must be responsible for to remedy. More critically, it must try to calm the worry by asserting no future Taiwan-China deal to be made with ulterior motives and at expense of Taiwanese interest.  China at the same time must stop its long-exisiting threat against other nations for them to first sign FTAs with Taiwan, as well as leave Taiwan alone in global political arena. 

God bless Taiwan !!!

Link to the protest on March 30, 2014. 
The rally is the largest ever in number of protesters.

 https://www.youtube.com/watch?v=0ASAfRw99Gg&feature=em-share_video_user

The Boys of Summer

                             Nobody on the road, nobody on the beach. 

                             I feel it in the air, the summers out of reach

                             Empty lake, empty streets, the sun goes down alone.

                             I'm driving by your house, though i know that you not home

                                   

Quoted from song lyrics - The Boys of Summer      

                                            Performed by Don Henley

We are about to say goodbye to September. The summer is officially nearing an end as a cold front is expected to hit the island soon, likely bringing rain and sending temperature dropping. Marking the start of a wet and chilly season, October has been traditionally associated with irregularities and zig-zags in global stock markets.  

My initial experience about facing a crashing stock market gyration dated back to Monday, 19 Oct. 1987. The Black Monday freefall saw the DJIA dive by 508 points to 1,738 (down 22.61%). As a member of Taiwan pioneering group mainly comprising securities analysts to receive training abroad, I went to NYC for the first time in Oct 1987 to attend a 6-week financial seminar held by NYIF located on Pine Street. Everything was new to me - not just the financial knowledge but also the high-rising skyscrapers on that bustling city.

Teachers of NYIF were panic on that date,  in and out of the classroom throughout the day. I couldn’t catch the shivers they showed as I was young (25 years old) with very little sense of market ups-and-downs. The NYSE was crowded with TV reporters, and someone shouted on Wall Street: “Look out, Superman is falling!” I didn’t laugh, neither did I say anything. My Taiwanese classmate said he should have bought a camera to take some pictures for the event. I did what he intended to do in the ensuing days. I still remember the grim looking on teachers faces, and feel sorry not able to address the problems for them, or help them find the “X Factor”.

Couple days later, I went to a big bookstore on Broadway in a shiny afternoon when I skipped the class. After picking up a pocket-size, paperback book named as “How to make money on Wall Street”, I lined up for the payment. A guy standing behind me asked, “is this a new version?” I was mum again, just smiling. That question is still hanging over my mind until now. I scooped up a lot of books during the stay in NYC, lurking at bookstores as often as standing at the top floor of World Trade Center. When the autumn is approaching, I am always in a “New York State of Mind”.

Global stock markets have demonstrated their surprising strength to climb a wall of worry these past 3 years, shrugging off tons of disturbing news that included sovereign debt in Europe, murky economic outlook in US and overwhelming threat of inflation. Fears might persist about a bear market, which will very likely take its roots in next 6 months and descend a slope of hope. History just repeats itself - what goes up must go down and the law of gravity can apply to any financial market. In coming months, investors might well be smothered by reports concerning how low the market will go. But if there is headwind or no wind, just stay ashore with higher cash position.  
A bottom is confirmed to set off a new bullish run in a scenario that prices survive the retest to previous lows on declined volume. As they say, “market bottoms are a process, not an event.” One can be brave enough to catch falling knives for now, a sure thing one can do if on solid balance sheet.  Others might hope October won't live up to its bad reputation as a freaky and ruthless month. 


PS. Trees are difficulty to paint as it always requires deeper patience.  

Good Luck !  
Link to The Boys of Summer -

http://www.dailymotion.com/video/x2ijq9_don-henley-the-end-of-summer-live-i_music

Learning to fly

                                             I'm learning to fly, but I ain't got wings

                                             Coming down is the hardest thing

                                             Well the good ol' days may not return

                                             And the rocks might melt and the sea may burn ---

                                             I'm learning to fly, around the clouds 

                                             But what goes up must come down ---

                                                         
                                                         Quoted from song lyrics – Learning to fly

                                                         Performed by Tom Petty

Bears held the sentiment edge at a time filled with EU financial troubles, slower pace of US economic growth and pent-up selling pressure from commodity bugs. Even while these phrases turned into cliché in ordinary media use, global stock investors gave them increasing attention.

Bulls still get swatted

The US GNP was pruned for 2nd time last week by FED, citing reasons from those long-running issues including persistence of US inflation, sluggishness in housing market and stifling consumer spending. These headwinds faced by the US will be still monitored closely, and in a worse case will likely drag on into 2012. However, depending on who you ask, the Fed message is either important or a non-event as it's likely the Fed will keep the fed funds rate at close to zero since Dec. 2008. One upshot is that bulls will be on the hot seats, albeit not going to be hit as hard as in 2008, when things are coming down. Adding to the layer of uncertainty lately came from worsening financial health in EU as reflected by downgraded Italian banks, and retreating oil price which is helpful to contain inflation, but inevitably will put a damper of global high-yield funds exposed heavily to oil-rich developing nations. Redemption frenzy has emerged, hinting of heightened odds for a chain reaction that exerts extended downward vortex for global stock markets.

Taiwan stock market - Window-dressing effect on tap; Industrials should hit their strides this week

It might sound like a long shot for the index, sagging to 8,532 last week, to snap back over 9,000 soon, but a short-lived retest over the previous 2-month-long support line of 8,700 is in store this week. A case of significantly shrinking volume should serve as signs of simmering spring-back. Anticipation was swirling for TSE to regain its footings by shovel-ready buying spree spurred by local funds and listed conglomerates to spruce up their books for 1H11. Investors this week are also slated to receive NTD140 bn cash dividend, though the ex-dividend trades will strip about 45 points of TSE index. That sizable dividend is widely seemed as source to stave off negative showing of M1b money supply growth which skidded to 8% in May, a low since Apr. 2009 and 3rd straight month of slump.              

For the rest of June sessions, most speculated industrials will shine and the pits sieged by foreign bulls will likely slip. In June so far, local big institutionals have been keen in scooping up stocks in traditional industrials such as cement, auto, rubber and retailing. The most salient exception is the 4 main shares in petrochemical FPG group (led by FPC, 1301) which had spoken of 20-30% slippage in 2H11 sale. Taiwan Cement (1101) and Asia Cement (1102) last week both showcased ambitious schemes to double annual output capacity within 5 years in China turf, with the first up from current 50 mn tons, and the latter, 25 mn tons. Asia Cement spread its footholds into China in 1996, while Taiwan Cement lagged behind in 2004 but saw its shoots sprouting sturdier there. As reported, Taiwan Cement was at No. 6 spot in China top-notch cement makers in 1Q11.

Financials also speculated to call the shots for TSE

Taiwan and China have stricken more bank cooperation deals under the ECFA pact. Salivating at hugeness of China market, Taiwan banks respectively stepped up efforts to sign MOU with China counterparts in droves. Meanwhile, Fubon Financial Holding (2881) made a splash after sprinting higher than Cathay Financial (2882) to spearhead the sector. At its shareholder meeting Friday, Fubon stressed importance of strengthening its capital base and got a stamp of investor approval for its study about whether to raise fund of NTD40 bn by DR or right issue. Shrugging off the fact that it is now the financial highest flyer, the bank spelled out plan to snap up its own stocks in a bid to share with its workers. That self-assured stance signals its necessarily bullish sense in order to soak up larger cash inflow in future share offering fixed at splendid price. Strong cash spigots might serve them in good stead while flying by the seats of their pants in China.

In spite of being regarded as sister companies, both have squared off each other in domestic bank, insurance and securities stages. Fubon spread out its bet on online sales and telecom (Taiwan Mobile 3045); Cathay has been spectacular in operations of hospital and construction. A spurt of growth sent Fubon squeezing out other listed financial peers as it squeaked out NTD1.59 EPS in first 5 months of 2011, while Cathay sputtered due to FX suffering in offshore investment. Cathay shot to NTD94 in July 2007, the highest score among financial holding corporations which were sanctioned to be set up in 2002 amid Taiwan 1st round of financial system reshuffling. (related report - Wild Wild West in Apr.)

Comparison between Fubon & Cathay (Unit for close, NAV, EPS: NTD)

TSE Code	Name	Close (24 June)	Common Shares (1bn)	Assets (NTD1 bn)	Employee No. (1k)	Client Base (1mn)	Mkt Share,  Insurance Policy (%)	NAV Per Share	EPS (Jan-May ’01)	EPS (2000)
2881	Fubon	42.85	8.57	3.410	20.67	9.0	21.50	25.61	1.59	2.33
2882	Cathay	42.65	10.15	4.780	38.00	11.7	28.40	20.96	0.35	0.42

No silver lining yet for cloud surrounding techies

Tech stocks, though not of all stripes, got squashed of late, with their own slimmer profit predictions for 2H11 spawning shivers among foreign houses which shaved the sector rating amid suspicion about its strength to stack up against traditionally peak season in 3Q. Looking ahead, the sector may continue spooked by familiar news spotlights, such as stubbornly firm local currency and subdued demand from EU and China, with chances for a successive downward spiral not ruled out in short term. TSMC (2330), TSE biggest cap, was smashed to NTD72.90 last Friday, following its target price was slammed by a long-term solidly-supportive foreign house to NTD65 on assumption the global-caliber IC foundry runner will stumble to secure orders from Apple Inc. for A5/A6 chip processor. The slash of price, first one after TSMC shareholder meeting in early June, will surely set the stage of selling storm for TSMC, steepening the slide of tech sub-index.

Delta Electronic (2308), TSE highest play that 74.31%-owned by foreigners, also failed to strut its stuff. Settling at NTD100 Friday, the firm tried to soothe foreigners, stating that its sale is still set to steam ahead, with 2011 sale portion between the spells of 1H and 2H scaled back to 45%:55% versus earlier 40%:60%. However, the relation among Delta and foreign houses seemingly is straddled in an increasingly-strangled stalemate as Delta scolded them about scathing views for Delta smarting over slowdown of growth stamina and nearly 24% target price cut to NTD102. Meanwhile, Yageo Corp. (2327), Taiwan standout in the sphere of passive component, last week shed NTD3.10 WoW to NTD11.90 on surprising news that its schedule to say goodbye to TSE by delisting hit a snag by the government strict yet scrumptious scrutiny. (related report – The final countdown in Apr.). In short, after recent swoons, this summer is shaping up to be even trickier to techies, and it is partly because of their skittish future suggestion.

It’s a well-perceived wisdom that what goes up must go down, - the hardest rule for anyone to learn and struggle with. Those trite, déjà vu and recurring headlines are simply excuses squaring with anything that is coming down. It may be not so smart at present to up stake for a swift and sustainable rebound. Slicing and dicing of when stock markets will fly again is not specifically imperative.  
  
Good Luck !                           
Link to Learning to fly – http://www.youtube.com/watch?v=s5BJXwNeKsQ&feature=related

I really like the sketch drawn as I was a junior in college. It was in the midnight that I finished it and I still keep it.... It's a flashback to my youth, whenever I take a look at it ....

Shelter Me

                         Everybody needs a little place they can hide
                         Somewhere to call their own, Don't let nobody inside
                         Every now and then we all need to let go ---
                         We all need a little shelter, Just a little helper to get us by 
                         We all need a little shelter  Just a little helper, and it'll be alright ---

                                Quoted from song lyrics – Shelter me

                                Performed by Cinderella

Bears have come out of hibernation worldwide, baring their claws and making inroads into territory once occupied by bulls which revisited Babylon for a long while, probably searching for a hedonistic lifestyle.

Bears plunge global stock markets

A recent spate of disappointing economic news played havoc on US stock market which has chronic bad luck, consistently hitting weekly losses since late Apr. But it struggled to plod through the volatile path, putting in signs of a bottoming-out last week. The DJIA closed higher barely over 12,000, while the SP500 lurched toward an end of 6-week losing streak. Though with weekly gains, bumpy roads still lie ahead before bulls can change a vicious cycle to a virtuous cycle. The US economic pictures look bleak, as employment sector faces tortuous uphill climb, worry swirls about downgrade of US debt/credit rating, and doubt surfaces about Fed remaining ammo to recover the economy. (Maybe, time is ticking closer for the Pentagon to unleash more high tech panacea fostering a new leaf in global tech industry.)  

The list of concern was lengthened lately after a reemergence of tumultuous Greece financial crisis. The disturbing drama in Europe, replayed over again since more than a year ago, is essentially a bête noire of global stock investors, The conundrum is seemingly morphing into a painfully rhetorical war across the Atlantic pond, about who is to blame. The culprits may include hedge funds, and those European banks which made hay involved in CDS derivatives, and at the same time have been lax in bank capital adequacy ratios. It’s said that the resurgent crisis is likened to a “hostage” one, in that the EU will be forced to draw Excalibur to rescue itself, sawing the core part of those banking internal problems. A perfect temporary elixir may well come from printing more money, as lauded by some to shun a risky bank run, or collapse of financial system. If Greece is not to drop out, austerity measures should get underway in earnest, otherwise a trickle may turn into a big tsunami that no one really wishes for. A few has feared that there will be a repetition of 2008 financial crisis.

As one ever-lasting Chinese saying goes, - an overextended unity among warlords is doomed for a break-up, and vice versa. EU members of course are far from war bugs, but to go bust for a country is needed when going-bust is right, if it is still reveling at its past-tense golden age and overlooking a reshuffling aimed for a scenario of "phoenix rising out of ashes". It has been long enough for them to fix the trouble, and they should have worked it out, since the bail-out action is not fresh to them. By this point, people will surely feel demoralized by this lingering flux, and the regulators are not too far from morally devious and reprehensible. It is likely that it is nothing but a morality issue when it comes to explaining who spent the borrowed money and who opened the gateway for their extravagance. Capitalism has been effective to upgrade welfare, yet should not be so laissez faire. 

Toxic food raises moral crisis in Taiwan

Moral hazard recently had forcefully and ruthlessly sank this once-beautiful island, Taiwan or Formosa (described by Portuguese), which has been demoralized by 2-month-long toxic food immorality events, along with prior corruption in hospital equipment. What a joke about their dirty doings. It hurts, and hurts you in a big way, causing an ultimate social instability and objection against moral norm as well. The panic over the contaminated edible food, including bread, syrup, bubble tea and beverage, and a number of medicines such as capsules and cosmetics, still goes on and on. The plasticizer used in those poisonous stuffs had greatly ruined the long-established, hard-earned reputation of Taiwan excellent brand mark – Made in Taiwan (MIT).

Meanwhile, the latest cross-Taiwan Straits retired generals meeting has dealt a blow to domestic military morale, as they announced both sides all belong to a same troupe. This “unintended” gathering will nevertheless create politically-negative moral sensitivity. Maybe, there must be an honest-to-God campaign to reignite public morality conscience, after bulls return from Babylon. Reasons of the series of sins include heat-up competition, revolving inherently-greedy mentality, and certainly, their amoral mistakes, - at least this is what they said, but they're not morons. No one has to be criticized, and the folks just have to find sanctuary. We're gluttonous consumers failing to control our lust for delicacy, as ranked by a global famous TV channel early this year. Plus, the government has done its best to burn tons of founded toxic food. Listed food firms, grilled recently by the outbreak, will regain their vigor, but not in the short term. They have received moral suasion, and will be punished by long-term jail if repeating the immoral error.

Taiwan stock market - Bulls look for a safe shelter

Bulls on TSE might have tried to seek refuge in June thus far, echoing a global bearish tone to dip to 8,636 last week. The pull-back below that round number level of 8,700 took place faster than I earlier expected. Part of market skittishness can be attributed to downbeat forecast by major techies which became cautious for 2H11 at shareholder meetings. While Taiwan exported USD128 bn worth of goods in Jan-May period, up 18% YoY and  all-time peak, they generally reckoned the continued record-setting string of monthly export in May (USD27.8 bn) as the last hurrah for 2011 bullish run. Macro factors, including tightening policy by China, which absorbs nearly 40-50% of Taiwan export, and still-irksome financial illness in EU, conjured up the darkening vision.

After a flip of stock rating, the TSE No. 1 highflyer, HTC (2498), nosedived below NTD1,000 to NTD998 last Friday. The global-caliber cellphone maker was dumped from the buy list by a NYC-based foreign house which slashed HTC target price to NTD1,500 from NTD1,600 before HTC started to retreat from the high ground around NTD1,300. Citing softer ASP, lowering tablet sale contribution and less upbeat outlook for HTC medium-priced handset, the house snapped its romance with the HTC which it bluntly touted the stock in early May, (If I’m not mistaken), as a profitable cash generator to earn more than NTD100 per share for 2011, doubling from NTD48 last year. That rosy prediction is a never-before record, if materialized, by a bellwether to grab triple-digit annual EPS on TSE history. However, most keep optimistic for HTC roadmap, with one rolling out target price as steadfast as NTD1,650.

Looking forward, TSE may play a domestic consumption-driven theme, with a jump over 9,000 still deemed as chances for taking profits. It’s reported that individual Chinese tourists can roam freely on the island beginning from June 28. A scheduled daily tally of 500 inbound headcounts will be definite positive to retail and hotel sectors, the twin possible safe havens at currently murky state of TSE. High-priced issues may be outshined by those oversold NB, LED and solar counters. Though a semi-annual window-dressing effect is widely hoped to provide buying arsenal, the unfavorable technical health at present, with heavy resistance over 9,000 and lack of market risk-on manner, does not prelude a swift rebound over 9,000. 


Don't worry too much! Global pundits will soon tell us what safety plays we would get, before the current financial turbulence is over.

Good Luck !

Link to Shelter me -

http://www.youtube.com/watch?v=fgi5xdftOIA&feature=relmfu

This is my little shelter. It was difficult to make a decision to use the same sky color from a photo picture. The painting of the house was not that difficult. Maybe, all the answers of financial market outlook are blowing in the wind ...... I am a great great fan of Cinderella .......