Malaysia ranked in top spot by Morgan Stanley analysts for third quarter investment
PETALING JAYA: The local bourse may see renewed interest among
investors as robust domestic demand and government spending on
infrastructure drive earnings among companies.
Morgan Stanley
Research analysts said in a recent report that the country was ranked
at the top spot for the third quarter based on valuation, profitability,
earnings and performance.
“Malaysia's attractive ranking is
driven by a combination of attractive dividend yields, under ownership
levels, improvement profitability and relatively strong performance
momentum,” they said.
They added that the country's current
dividend yield of 3% was higher than its three-year average. They said
that according to EPFR Global, a funds flow and asset allocation data
provider, investors continue to position the Malaysian stock market 210
basis points underweight compared to the MSCI Asia ex-Japan benchmark.
They
said profitability in terms of return-on-equity basis has improved to
12.7%, higher than the three-year average. “One quarter relative price
performance for MSCI Malaysia has also been strong as it was the second
best performing market in Asean,” they said.
While MSCI
South-East Asia consensus earnings growth estimates had been revised
down by 23 basis points last week, MSCI Malaysia earnings were revised
up by 54 basis points.
“MSCI Thailand estimates was revised down
the most, by 41 basis points, followed by MSCI Singapore 40 basis
points, MSCI Indonesia 10 basis points and MSCI
Philippines 4 basis
points,” they said.
They said consensus growth estimates for 2012
were 14.4% for Malaysia, Indonesia (9.3%), Philippines (8%), Singapore
(3.1%) and Thailand (14.2%).
On a year-to-date basis and relative
to the performance of MSCI Asia ex-Japan, MSCI Malaysia declined 1.5%,
MSCI Indonesia contracted 7.2%, MSCI Thailand gained 9.2%, MSCI
Singapore rose 12.4% and MSCI Philippines jumped 14.7%.
On a sectoral basis, Malaysian utilities was revised up 94 basis points while industrials was revised down 35 basis points.
Meanwhile,
The
Institute of Chartered Accountants in England and Wales said in a
report that although growth prospects for Asean had fallen substantially
in line with the deteriorating conditions around the world, “Malaysia
is still going fairly strong as domestic demand remains relatively
buoyant.”
It said that like other countries such as Indonesia and
the Philippines, the basic story of rising middle class incomes in
Malaysia persisted despite diminished prospects for investments due to
lower profits for exporters.
It forecasts growth to slow down to
an annual average of 3.8% in the second half (after growing 5.1% in the
first half) due to external headwinds.
“Elections this year or
next year bear some political risk, but in the event of a peaceful
outcome, growth should rise by 3.5% in 2013. A recovery of its trading
partners should see the country's gross domestic product rise by 4% in
2014,” it added.
By FINTAN NG fintan@thestar.com.my
Is Facebook director signalling to others to rush out of Facebook stocks?
SAN FRANCISCO:
Peter Thiel was the first investor to take a gamble on
Facebook Inc.
Now some people are wondering whether, in selling most of his stake,
the Facebook board member is signaling to others that it's time to rush
for the exits.
Thiel, the co-founder of
PayPal who invested in
Facebook in 2004, sold roughly $400 million worth of Facebook shares
last week as the first restrictions barring insider selling were lifted.
The
sales, which were conducted as part of a stock sale plan that Thiel
entered into in May, have dealt another blow to Facebook's reputation
among some investors in the wake of a rocky debut that has wiped out
roughly 50 percent of its market value. And it has raised questions
about whether Thiel's move conflicts with his responsibilities as a
Facebook director.
"It's a vote of no-confidence from a board member," said Max Wolff, an analyst at Greencrest Capital.
"If
he wants to serve primarily as a self-interested investor, that's fine.
But then you can't be the on the board. Boards of directors are not
made up of people whose primary interests are in their checkbook," said
Wolff, who said he believed Thiel should resign from the board.
A spokesman for Thiel declined to comment.
"From
a shareholder standpoint, if a VC is going to be on the board you'd
like to think that they still have a large position in the company and
that they're interested in making it be more valuable," said Walter
Price, a portfolio manager at RCM Capital Management which does not own
Facebook shares. "It sends a mixed message when they sell most of their
stock and they still stay on the board," he said.
The 44-year-old
Thiel still owns roughly 5.6 million shares of Facebook, worth around
$107 million at Tuesday's closing price of $19.14 per share.
That
stake means he still has "skin in the game," said
James Post, a
professor of management at Boston University who specializes in
corporate governance issues.
"The worst you can say is that it
may reflect perhaps a questionable judgment about getting rid of all
these shares at a time when such big questions are looming about
Facebook's future," said Post. But he said he believed that Thiel's
sales do not disqualify him from serving on the board.
The stock
sales are the latest in a seemingly endless string of setbacks and
controversies to plague Facebook since its highly anticipated IPO in
May.
The world's No. 1 online social networking website, with
roughly 955 million users, experienced brisk demand for its shares when
it was a private company and became the only U.S. company to debut with a
market value of more than $100 billion.
But technical glitches
with the Nasdaq stock exchange marred the stock's first day of trading
and concerns about the company's slowing revenue growth have pressured
the company's shares since then.
Thiel, who has an undergraduate
degree from Stanford University in philosophy and a law degree from
Stanford Law School, was among Facebook's first believers.
He invested $500,000 in Facebook at a $5 million valuation in September 2004, seven months after the company was created by
Mark Zuckerberg
in a Harvard dorm room. In 2006, one of Thiel's investment firms, the
Founders Fund, participated in a $27.5 million funding round along with
Greylock Partners, Meritech Capital Partners and Accel Partners.
The Facebook investment is by far the most successful of Thiel's investments, which have also included stakes in
LinkedIn Corp ,
Yelp Inc and SpaceX.
Thiel
sold 16.8 million shares of Facebook at the IPO for $38 a share, for
total proceeds of roughly $640 million. And he sold a significant number
of shares through a private transaction in 2009.
Facebook, which
declined to comment on Thiel's stock sales, said in its prospectus in
May that the company believes Thiel should serve on the board because of
his "extensive experience as an entrepreneur and venture capitalist,
and as one of our early investors."
It's common for early
investors, such as venture capitalists and angel investors, to have
seats on the boards of companies they've backed. And venture firms
typically distribute shares of the company to their limited partners
following an IPO, so that the venture fund's investors can get a return
on the investment.
But there are no "hard and fast rules" for
when those investors should exit the board after a company's IPO, said
Nick Sturiale, a partner at venture capital firm Jafco Ventures.
"It's
usually a discussion between the CEO and the board member and the
partnership whether they stay, and for how long," he said.
John Doerr, a partner at venture capital firm Kleiner Perkins Caufield & Byers, is on the board of
Google Inc and was on the board of
Amazon.com Inc until 2010 - both companies that Kleiner funded.
If
the fund that a director represents sells its stake after the IPO, the
director should also consider stepping down, said Charles Elson, a
University of Delaware finance professor specializing in corporate
governance.
The topic sparked a lively debate on Tuesday, as
venture capitalists and technology company executives unleashed a rash
of Twitter messages and blog posts to defend or criticize the insider
sales.
Fred Wilson, a principal with Union Square Ventures, noted
in a post on his personal blog that insider selling is to be expected
following an IPO.
"Those who took the risk of losing all the
capital they bet on 20 year old Mark Zuckerberg are entitled to their
return," wrote Wilson.
Earlier report from print edition
WASHINGTON:
If you bought Facebook shares in the May initial public offering (IPO)
and held onto them, by Monday you would have lost more than half your
investment and not see any encouraging signs of making your money back.
Three
months after the largest tech share issue ever on US markets, Facebook
fell to a new low below US$19 (RM60) a share, compared to the US$38
(RM120) underwriters charged for the 421 million shares they sold.
Although
the stock bounced back to close at US$20.01, IPO investors were still
holding huge losses with not much hope of a quick reversal, analysts
said,.
Some key investors were still cashing out on Thursday and
Friday, billionaire Peter Thiel, who invested in Facebook first in 2004,
sold off nearly 80% of his huge holding, according to a filing with the
Securities and Exchange Commission on Monday.
Thiel's average
price for 20.6 million shares was US$19.73 still a handsome profit for
such an early backer of the website, but not a demonstration of
confidence in the company's potential to rebound.
Facebook raised
US$16bil when it went public on May 18, giving it a nominal market
value of a stunning US$104bil and raising hopes of a new dotcom boom on
US markets.
The company's business promise was huge marketing
access to the 900 million users of the world's leading social network
and data about them that marketers prize.
But analysts said that
the large number of shares sold, the high IPO price, and the overall
skittishness of investors in a soft overall economy, had undermined
market support for the company.
“They just put way too many
stocks out at once... before the market was ready to absorb so many
shares,” said Michael Pachter of Wedbush Securities.
The price
struggled around the US$30 range in the weeks after the issue, with the
underwriters undergoing a beating and lawsuits for allegedly having
privately lowered their earnings forecasts for the company days before
the IPO.
The shares then fell to the low-US$20s range at the end of July when Facebook issued an uninspiring quarterly earnings report.
And
last Thursday the price plummeted when a ban on pre-IPO investors such
as Thiel selling their shares was lifted many apparently sold.
That
lockup applied only to 270 million shares. A further 1.2 billion
shares, those controlled by Facebook employees, will be freed from
lockup on Nov 14.
While undoubtedly Facebook founder Mark
Zuckerberg and other top figures will hold on to most of their shares,
anything added to market liquidity is, at this point, downward pressure
on the price.
Analysts are debating whether the stock is now a bargain based on Facebook's earnings potential.
“Over
the long term, the trade is about the fundamentals of the business, and
the fundamentals remain very positive,” Pachter told
AFP. He called the problem of a share oversupply “just noise”.
Social media expert Lou Kerner also downplayed the selling pressure.
“We remain very positive,” he said. “Facebook will figure how to monetise mobile, the dollars will find their way.”
New
York University finance professsor Aswath Damodaran was more sceptical.
After Facebook's quarterly earnings report, he cut his original US$27 a
share “intrinsic value” estimate to below US$24.
“The earnings
report was a disappointment to markets, revealing less revenue growth
than anticipated and an operating loss.” But at US$19, he still is not
sure of the investment's merit, given the potential overhang of sellers.
“Facebook
remains a company with vast potential (their user base has not shrunk),
no clear business plan (is it going to be advertising, product sales or
something else) and poor corporate governance,” he wrote on his blog
Musings on Markets.
“Eventually, the intrinsic' truths will emerge, but it may be a long time coming.”
Another
longtime bear on the stock, Trip Chowdhry of Global Equities Research,
retains deep doubts even at US$19 a share. “Facebook doesn't have the
technology to monetise social actions,” he said. “With what we know
right now, the price should be in the low teens.” - AFP
Citadel urges U.S. to okay Nasdaq's Facebook IPO payback plan
NEW YORK:
Citadel LLC urged U.S. regulators to approve
Nasdaq OMX Group's $62 million compensation plan for firms harmed by Facebook's May 18 glitch-ridden initial public offering.
Citadel's
market making unit bought and sold over $3.8 billion worth of Facebook
stock during the IPO and "incurred losses protecting retail investors
from the problems caused by Nasdaq," the firm said in a letter on
Tuesday to the Securities and Exchange Commission.
Nasdaq filed its all-cash plan with SEC in July.
Regulations
cap the exchange's liability at $3 million a month for problems caused
by technology issues, and the Facebook accommodation plan would
temporarily raise that amount, though not to a level anywhere near the
upward of $500 million lost by the major retail market makers in the
IPO.
"While the extent of exchange immunity from liability for
mishandling orders is an important and complex public policy issue, we
submit that any commission consideration of this issue should be
addressed at a later time," Citadel said.
Citadel lost around $30 million due to the IPO, a person familiar with the situation previously told Reuters.
Wednesday is the deadline for interested parties to submit comment letters to the SEC on Nasdaq's proposal.
The other top retail market makers involved in the IPO were Swiss bank
UBS AG,
Knight Capital Group, and
Citigroup's Automated Trading Desk.
UBS
said it lost more than $350 million when the lack of timely order
confirmations by Nasdaq caused UBS's internal systems to re-enter orders
multiple times.
A spokeswoman for UBS, which has said it may
take legal actions against Nasdaq to recover the full extent of its
losses, said the firm had no comment.
Knight said it lost $35.4
million due the IPO. A spokeswoman at Knight said it is still unclear as
to whether the firm will formally comment on Nasdaq's reimbursement
plan. A source familiar with the firm's plans told Reuters Knight is
likely to accept Nasdaq's offer.
A spokesman for Citi, which
sources have said lost around $30 million, could not confirm if the firm
would submit a comment letter.
The all-cash $62 million
reimbursement plan is $22 million larger than Nasdaq originally
proposed. The prior proposal was made up mostly of trading rebates,
which drew loud protests from other exchanges and market makers.
A Nasdaq spokesman could not immediately be reached for comment. Spokesmen for New York Stock Exchange operator,
NYSE Euronext,
and No. 3 U.S. equities exchange, BATS, said their companies did not
plan to file comment letters with the SEC. A spokesman for No. 4
exchange, Direct Edge, was not immediately available for comment.
In
a regulatory filing on August 3, Nasdaq said it is the subject an
investigation by the SEC, as well as eight lawsuits by investors and one
by trading firms, for its role in Facebook's problematic debut.
While
Nasdaq said it believes the lawsuits are without merit, it said it
expects "to incur significant additional expenses in defending the
lawsuits, in connection with the SEC investigation and in implementing
technical changes and remedial measures which may be necessary or
advisable." - Reuters
Facebook at half-price: Which way now?
WASHINGTON: If you bought
Facebook
shares in the May IPO and held onto them, by Monday morning you would
have lost more than half your investment -- and not see any encouraging
signs of making your money back.
Buy Malaysian shares, sell Facebook stocks?
