Being Human, Humane, Humaneness, Humankind-redspirit

Beyond the 'Dong Zong issue'
by Azly Rahman
in Malaysiakini

I read with interest about ongoing governmental discrimination against Chinese schools, as highlighted by Dong Zong.

Why are quality teachers and an abundance of resources still channeled only to Malay-dominated schools? Why are children in Chinese schools criminalised by the �sanction on teaching staff� which will ultimately deprive students of a good mother-tongue education?

dong zong chinese school 325 protest 250312What actually is our illness with regard to denial of the students� right to their own language? Do policy makers actually understand the relationship between culture, cognition, consciousness and citizenship?

What does nationalism mean these days, and how do we understand it vis-a-viz use of language in schools? Whose brand of nationalism is being made dominant and what should an inclusive one look like?
What is the real issue behind the age-old request for the Chinese schools to have more teachers? How are the children criminalised by all this? Where is the peaceful path to this gentle profession called education?

When I think of education, I think of the children first and foremost. I think of each child as a gift brought into this world in all his/her cultural and cognitive complexities and of the pride of the family raising the child independent of what the �state� wants the child to become.

Schooling is a process of mass babysitting in a capitalist state, such that the child will be provided a place for eight hours a days, seven days a week, to be taken care of, like in a kibbutz, while the parents go to work, selling their labour to the state.

azlanThe child is supposed to behave and learn new things while the parents are supposed to be obedient and, as good workers, bring profit to the state. The state, through its apparatuses, uses the profits and products of �alienated labour� of  parents/workers and �develops� the country according to what the political and economic elite imagines what �development� means.

The child gets to be socialised to become citizens of the state. The mass baby-sitting agencies called public, private or parochial schools, tended by �managers of virtue� called teachers - and wardens� in boarding schools.
Their role is to ensure that the child learns to become nationalistic or even �patriotic� in accordance to what this means vis-a-viz state ideology. In Malaysia, the current ideology is perhaps called �1Malaysia�.

Polarised education system
Are schools a happy place for the child? How shall the child be moulded? What language will he/she be proficient in? Whose culture will he/she inherit? In Malaysia, will it be the culture of the Malays? Or a hybrid of the Malay-Muslim culture? Who defines what will be it in the best interests of the child?

What actually is Malaysia's philosophy of education in this age and time of growing restlessness demanding for radical change, inclusiveness, linguistic diversity and competency, and the demands of a globalised world?

dong zong chinese school 325 protest  250312Why not let the child be schooled well first in his/her mother-tongue to develop cultural pride, and next let the medium of instruction at the secondary level be in English primarily?

Why not teach even the subject of Islamic Studies and Moral Education in English, and next prepare the child well for tertiary education that is predominantly English-speaking, with courses such as Philosophy, Ethics, and Cultural Studies as compulsory first-year subjects?

Malaysians: Let us not be dishonest, ignorant or hypocritical in the way we design the best cultural and cognitive environment for the child to grow up to become world-wise and productive citizens. As it is now, Malaysia's education system is polarising and inspired by the apartheid system.

The products of the Malaysian educational system have for several batches passed through the conveyor belt. The issue of race relations has become more and more exacerbated, partly as a consequence of the inability of the education policy makers to design peaceful educational settings and peaceable learning environments to allow respect and appreciation for each other�s culture to flourish.

NONEPublic discourse is becoming more plagued with calls by this or that racist-fascist groups in defence of the bankrupt and morally and nationally bankrupting ideology of Ketuanan Melayu or �pseudo-Malay idiotic pride� as I would translate it.

Has there been any effort by the Education Ministry to design and implement a curriculum on multicultural education? Has there been an interest in it at all, given the nature of Malaysia�s communal politics that has evolved into the state of ethno-psychopathology bordering on irrationality, greed and massive corruption?

As an educator involved in the teaching of cultural perspectives, philosophy, and education, I�d like to see children in Malaysian schools bring their culture with pride into the classroom, to be shared with others in a deeply engaging creative learning context.

This is so that we bring in what the philosopher Charles Taylor would call the �ethics of authenticity� - of the ethical traditions of culture - into the learning process and not have these young curious cultural minds evolve into become �knockers or boosters� of this or that brand of ultra-ethnocentrism.

Let us see how the Education Ministry will resolve this Dong Zong issue once and for all, before another regime takes this important  task more seriously.

DR AZLY RAHMAN, who was born in Singapore and grew up in Johor Baru, holds a Columbia University (New York) doctorate in International Education Development and Master�s degrees in the fields of Education, International Affairs, Peace Studies and Communication. He has taught more than 40 courses in six different departments and has written more than 300 analyses on Malaysia. His teaching experience spans Malaysia and the United States, over a wide range of subjects from elementary to graduate education. He currently resides in the United States.

Texas Holdem (Ways To Lose Your Money Other Than Playing Stocks)

This is my favourite card game, and the only game I would play when I am at a casino, which meant that I do not frequent the casinos in Malaysia and Singapore. They do not have Texas Holdem for players only (the Carribean and other versions are stupid odds-favouring the casino bullshit games) because its a low yielding game. Money basically changes hands among the players themselves and the house just takes a cut after every hand. Too small for the casinos in Malaysia and Singapore apparently.

I don't undrestand that because the biggest gaming place is Macau and Texas Holdem is very big there as in everywhere else.Most people like poker, but nothing can compare to Texas Holdem because of the various possibilities. Many people who play like to think they are good players, me included (lol), just like many people who invest in stockmarkets like to think they are better than the average (again, wrong). To make money in stockmarkets you NOT only have to be better than 50% of the players. You have to be in the top 20% because only 20% or so really make money over the long run, the other 80% will eventually lose - want to know why, come to the seminar on 14 April and remind me to tell you.

Anyway, back to the game, got nothing to write about the local markets for the past many weeks cause its a punting penny stocks phase. If I write, then I am becoming too speculative, so better not to write anything. Only thing worth writing about, which I have written already, is plantations. I think if you stick to second tier plantations, you should be getting 30%-50% return if you hold for rest of the year (i.e. NOT IOI Corp, Sime Darby, UM,  ... go for those I did not mention).

I like the game because its not about cards or what you have, most games end up not having to flip over any cards, so I don't know why people are so enamoured over what two cards they have in the first place. The first video is the great Johnny Chan, why, he shows us clearly never to fall in love with high pairs. Be them aces, kings, queens ... many people will never get away from them. The flop shows 6, J, J .... and you have two players in as well. Chances are high that at least someone will "decent high cards", i.e. J (one out of 4 cards in the other two persons).. not to mention anyone having a solo 6 to boot, your pocket Aces is almost worthless after the flop. But how many will still keep playing them with gusto, and wondering why they lost.

Play the players and your math skills. People wondered why they never make a lot of money when they have big cards, they curse when they get small pots when they have high pairs ... then that person does not understand and appreciate the game that well. Big pots has to do with somebody else having a hand and the flop has to be open and having some thing for everyone.

Among the current crop of players I really like is Tom Dwan, he is young and has balls of steel. Watch how he plays in a CASH game. He never needs to have the best hand. His skill is trying to make others think you have the ultimate best hand. After the K came out on the turn, his cards does not matter anymore. All Tom is doing is making the other person think he has the best hand. Maybe it does not work all the time because the ultimate best hand usually only happens 1 in 10 hands. But you still need balls of steel.

Because in a hand, when Phil Laak has the K pair, he can be beat by trips 5s, hidden pairs of 3s, or trips Qs.

Which is why, if you want to master the game (you will never, btw) instead of watching great wins, study the great folds. Ask yourself, would you have folded if you held those hands.

Music Empowering Women

I still remembered the recent talk show section in BFM which focused on why women aren't climbing the corporate ladder more successfully. The world has never been treating women nowhere near fair since the beginning of time. Just pluck any cross section from historic times. We have made strides over the past 100 years or so but oh, we still are so far from being "fair".

In the corporate world, much has been said about women being represented in the board rooms and top management. The US being a much touted place for equality, and even Australia, are still poorly represented in those areas.

Do we dare to say women are not as capable? I don't think so. Look at the academic results for the past 20 years, given a fair go, women generally outperform men. Maybe success and a career in the corporate world requires more than just academic excellence, for sure actually. Leadership skills, charisma, interpersonal skills,  soft skills, high EQ, ambition, resilience of character, risk taking ability ... while most of those may "favour men" in their "natural makeup", it is not absolute.

The burden for women when it comes to child bearing, family, birth control, victims of sexual discrimination and abuse, etc... is for all to see. For a woman to make it to the same position as a man demands even more "productivity", perseverance and intelligence from them. Luckily for many women, that is not too difficult because men are generally assholes, yes, especially in the corporate world of chumminess, scratch my back - I scratch yours, old school ties, collusive behaviour, etc..

Sadly, the same can be said for women in relationships. Many are still locked in a time warp. Taking charge, knowing your worth as a person, self actualisation, being responsible for your own happiness ... are important objectives for a well functioning person of any gender. To rely on men to "open up" the boundaries for women is too passive. Too many women still play the role of "victims", docile in too many ways that represses the character. Too reliant on the other party for one's happiness and well being.

Equality for the sake of equality is hollow an ideal. Equality because we know its the right thing to do, because we are different yet the same, respecting the soul and integrity of a person ... then that means the world.

There are wonderful songs about empowering women (no, not I've Never Been To Me ... which is very much the exact opposite to what I have been writing):

Lesley Gore's "You Don't Own Me" back in 1964 says so much ...

Burt Bacharach's wonderful song sung resolutely by Dionne Warwick in 1963. "Don't Make Me Over".

What a song title by Meredith Brooks, all about the angst of being a female, in the roles of a girlfriend, mother, wife, daughter, lover.

Tori Amos' Silent All These Years, a thinking woman's empowering song, note the gut wrenching lyrics.

Excuse me but can I be you for a while
My dog won't bite if you sit real still
I got the anti-Christ in the kitchen yellin' at me again
Yeah I can hear that
Been saved again by the garbage truck
I got something to say you know
But nothing comes
Yes I know what you think of me
You never shut-up
Yeah I can hear that

But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These Years

So you found a girl
Who thinks really deep thougts
What's so amazing about really deep thoughts
Boy you best pray that I bleed real soon
How's that thought for you
My scream got lost in a paper cup
You think there's a heaven
Where some screams have gone
I got 25 bucks and a cracker
Do you think it's enough
To get us there

Cause what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These...

Years go by
Will I still be waiting
For somebody else to understand
Years go by
If I'm stripped of my beauty
And the orange clouds
Raining in head
Years go by
Will I choke on my tears
Till finally there is nothing left
One more casualty
You know we're too easy Easy Easy

Well I love the way we communicate
Your eyes focus on my funny lip shape
Let's hear what you think of me now
But baby don't look up
The sky is falling
Your mother shows up in a nasty dress
It's your turn now to stand where I stand
Everybody lookin' at you here
Take hold of my hand
Yeah I can hear them

But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice [x3]

For pure fun, Shania's "Man! I Feel Like A Woman!". Nuff said.

Chart Of The Year

I have always had the same chart, only instead of level of income, I had the level of development of each country. The less developed would see more corruption and so on. The chart below says the same thing but on matters that speaks clearer to us. You want to know how to get higher income per capital (i.e. the average annual income per person for that country)... yes, less corruption.

To be fair, there are a few discussion points to the above chart. Indonesia for example has an abnormally large number of islands and people living in secluded areas which may be difficult to reach or partake of the general business economic activity. They may be classified as self sustaining farmers at best, people really living off the land and sea. Hence when you average them out as well, Indonesia's real figure should be a lot higher. Same goes for China. 

To be fair, corruption exists in every country, its the level of pervasiveness and the relative amount of leakages. We know that Taiwan and Korea are not very clean as well, the ties between the triads and government officials in Taiwan is well known, the unusually cozy relationships between major corporate figures and the Korean government is also well documented.

We cannot be too optimistic that eradication of corruption can be done in 10 years or even 20. I mean HK took at least 20 years and Singapore needed a heavy handed treatment for a very long time. Hence even if we do effect a change in government in the next elections, safe to say its just baby steps, but at least we must move forward.

This makes Malaysia's position even more untenable. Except for HK, I believe Malaysia's per capita income was higher than Korea, Singapore, Taiwan some 35 years ago ... vellapan ... do we need to ask why, we all know why. That is why when I hear politicians championing how good Malaysia's growth had been  for the last 20 years ... we have actually been grossly underperforming.

Vellapan To the Markets?

A good friend just got back from holidays with her kids and asked what happened to the Malaysian markets? She said that I wrote about the bull market being back and so on. I said, yes, everywhere else the bull is moving steadily... but in Malaysia there are two things which pulled it back. 

One was the article saying EPF had sold so much shares. That article was true and factual but not complete. And by being incomplete, it gives off the wrong signal to a lot of retail investors. We all know how much retail investors' participation there was since the beginning of the year. Go to any broking gallery now and ask them what shares they are buying, they'd be saying how to buy shares when even EPF is selling.

The article is incomplete in that to be a fair article, it has to note the times when EPF has been selling, how about every March for the past few years? I suspect it is portfolio rebalancing rather than an actual selling because, seriously, the article did not note the amount of local shares EPF is holding. It is more likely to be a seasonal effect, just as EPf is more likely to do window dressing towards year end closing. 

As a percentage of holdings its so miniscule. But if you did not elaborate, the general public will think something is amiss. Anyway, bygones be bygones.

The second effect which is a relatively new phenom, as families grew richer, school holidays are a must to venture somewhere. It is almost akin to the Western world's Christmas holidays. This is a relatively new phenom, maybe for the past 3 years or so. There you go, shifting cultural and social norms. I can safely say that almost one third of the movers and shakers in the market place were on holidays - how to move the markets?

Then I tried to extricate myself by saying, the bulls are primarily first into indexed stocks, which is why index wise everywhere have held up. Then after a while, it will move to the broader market. I know one and all are hoping that I am right.

Global Capital Flows - Developing Markets

Excellent analysis piece from Bloomberg Markets, my fav biz mag, on global capital flows to developing and frontier markets. Some call it emerging markets, but we need to divide them to developing and frontier to be more precise. Following the sub prime crisis and the subsequent Euro-crisis, the trend towards more exposure for emerging markets should be increased. 
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How investors allocate their funds is what we call capital flows. Owing to the size of the recipient countries, such flows can make a huge difference to these markets. As much as investors can plough into MSCI markets, they can also take out funds. Last year, the MSCI valuations dropped some 20% on the view that the Europe's debt crisis would curb global growth. In January 2012, the figure was 30% off its historical average. 

Realising a calmer settlement to the Greece-led debacle, it is fair to say that valuations and funds should start coming back to MSCI countries. However, not all will benefit in the same manner, fund managers will index some of their holdings but many will allocate according to "outlook".
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Using IMF data 2012-2016, Bloomberg Markets have created a top markets for attractiveness:
(country)  (cumulative GDP growth) / (gov debt/GDP) / PE / (ease of doing business, lower the better)
1  China             46.7% / 16% / 11.5x / 91
2  Thailand         23.3% / 45.3% / 12.5x / 17
3  Peru              23.7% / 13.6% / 11.6x / 41
4  Chile             19.4% / 10.7% / 18.2x / 39
5  Malaysia       18.6% / 56.8% / 17.3x / 18
6  Poland          19.7% / 55.9% / 8.3x / 62
7  Turkey          16% / 35.4% / 11x / 71
8  Russia           23.3% / 15% / 5x / 120
9  Indonesia      30.3% / 21.4% / 16.7x / 124
15 India            35% / 60.7% / 15.3x / 132

There are a few notables, the BRICs which were the flavour of the decade, have slipped enormously. Despite China still holding onto the number one position, its attractiveness in terms of growth has slowed, and that is understandable owing to the much larger base that they have grown to. Brazil has dropped out of the top 15, mainly owing to very exorbitant inflation and extremely high PE valuations. India has also dropped to #15 mainly due to inflation which is expected to average 6% for the next few years. 

One main determinant in attractiveness, which I have not put up is inflation rate expectations. The ones downgraded have exceptionally high inflation, which cancels out much of the growth and puts in a lot of side economic and operating problems. Russia's inflation is expected to average 6.8%, while the rest are maintaining below 3%.One can also argue that certain countries published inflation rate may be managed, which may explain why China is not as attractive now despite posting a likely inflation rate of just 3.1% for the next few years as many deem that to be way understated.
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Indonesia which is way more favoured by foreign funds than Malaysia is ranked lower because of its 5.3% inflation rate. Malaysia seems to come out well from the rankings, and must continue to improve its ease of doing business as that has helped a lot. However our government debt as a percentage of GDP has to come down to below 30% soon or it will just spiral out of control. Inflation is at 2.4% but we all know its actually closer to 3.5%, don't we. We also have the problem of managing inflation via excessive subsidy, and that is a bad thing. The sooner we dismantle them except for critical items, the better.

One bad sign creeping in among big listed Malaysian firms is the "tidak payah" attitude in soliciting foreign funds investment. A couple of international houses which did major roadshows to the US and Europe saw only a couple of Malaysian firms willing to join while they get some 15 firms from Indonesia. Is it because many of them are GLCs? But even the multi millionaire Malaysian owners are not keen. While the Indonesian contingent are made up of mostly billionaire owners - go figure.

I believe this attitude stems primarily from the local funds (PNB and EPF) being very substantial shareholders of many of the Malaysian big listed firms. This is not a good development for many reasons. When everything is so cosy, there tend to be too much government to big listed firms contract given at the expense of smaller players. Business becomes for the big boys only. The cosier the relationship, the more likely you are to be loose on corporate governance, related party transactions and even transparency issues. 

We have to ask ourselves honestly, are we propping up the listed index with our own money? If we reduce EPF and PNB funds by half, will foreign funds come in to buy? If not, do you know why? Or we just don't care! 
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CD Of The Year So Far

Winnie Ho has built up her repertoire well since winning the Astro singing competition many years back. Her resume include two quite brilliant albums under the guise of 2V1G, with master guitarist Roger Wang. I have been waiting for a long time for this to come out since Winnie did a few concerts dubbed as The Jazzy Sounds of Teresa Teng. Those who have been to those concerts know fully well what I am talking about. While Teresa Teng has a very special place in most Chinese music lovers, some of her tunes do sound dated, nothing much she can do about it really.

The simply ingenious music arrangement by Tay Cher Siang basically shone a warm brilliant light on Teresa's songs. Coupled with Winnie's resonating yet layered vocals, we have a wonderful album indeed. You will hear and appreciate Teresa all over again, you will fall in love with both Teresa and Winnie, all over again.

Its always dangerous to do full covers of just one artiste, and one such as Teresa's stature which is numero uno to the max. Fittingly, Cher Siang also composed a song dedicated to Teresa's legacy called Songbird, exquisitely sung by Winnie.

There have been tons of tribute albums of Teresa's songs, and this one is so high up the top of the heap. Just so happens to be fully Malaysian made. HK and Taiwan critics who have heard are surprised and making inquiries to bring the album to HK and Taiwan. Get it before being told by your HK and Taiwanese friends how wonderful this album is (malu-la).

CD Rama (Popular Bookstores) is having their annual musical carnival at 1 Utama, go get Winnie's album at a discounted rate. CD Rama has strongly supported this album by procuring 3,000 copies (mind you, Jay Chou and Eason Chan only sell around 1,500 albums in Malaysia with each release). CD Rama is also having a big sale on the ground floor of the new wing, many wonderful albums going for just RM9.90 ... go see it to believe. Best buy has to be The Police's 3 discs set for RM9.90, which include 2 live concerts CDs and one DVD of their live performance (and I paid RM50 for the same thing 3 weeks back)!!!

Smart Fund Raising Move By Khazanah

This is a smart fund raising by Khazanah, well advised by the investment bankers involved. This enabled Khazanah to lock in better than zero rates funding. It is also potentially giving up its stake (i.e. selling around current price) in Parkson Retail. Only when PR moves much higher will bond holders exchange into PR shares, technically at least 5%-7% upside from here before they consider switching. Its a good strategy if you think PR does not present much further upside (more than 20% over the next 2-3 years). Even so, locking in better than zero rates has to be worth something much more, Khazanah would be paying at least 2.5% I think, so thats a $7m savings a year at least.
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The other consideration is the USD exposure. Make your own conclusions. Some listed Malaysian companies may want to consider such equity-exchangeable bonds as alternative fund raising - of course if its in the same listed vehicle, then its actually a convertible bond. Some companies hold lesser stakes in other listed vehicles, that may be the way to go. I am thinking about Vincent Tan's Facebook stake, sigh, I think this advice alone is worth RM2m ... somebody write me a cheque!!! If its Facebook, and before listing, I think VT can raise funds at WAAAY below zero rates. Say Facebook is going for an IPO price of $90 a share - VT could issue a bond to raise a similar amount but convertible at $120 over 3 years. This way, you lock in a good selling price, possibly negative rates, maybe -5% for $500m (provided VT has better use to reinvest the $500m of course ... maybe Ananda's power assets, locking in the yields differential). .... OK give me my fees now!!!
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FINANCEASIA: Khazanah Nasional last night returned to the equity-linked market with a $358 million exchangeable Islamic bond, which was aggressively priced and confirmed that there is indeed huge investor appetite for deals backed by strong credits. The bonds are exchangeable into Hong Kong-listed Parkson Retail Group and are backed by Khazanah�s remaining 220 million shares in the company � one of the largest nationwide department store operators in China.

The deal attracted more than $1.5 billion of demand and well over 100 investors. It was also priced at best terms for the issuer, including a slight negative yield. This meant it pushed the envelope a bit further than triple-A rated Temasek, which issued two exchangeable bonds in the fourth quarter last year at a zero coupon and zero yield.

The fact that Khazanah is the investment arm of the Malaysian government and therefore viewed as a top-quality issuer was clearly part of the attraction, but the ability to hedge the underlying equity, the lack of equity-linked supply so far this year and continued optimism about the China consumer story all helped draw investors into the deal, sources said. Parkson may no longer be growing at 30% to 40% every year, but it is still viewed as a good story, one source said. However, according to Bloomberg data, 22 of the 28 analysts covering the stock currently have a �hold� recommendation on it. The rest are split evenly between �buy� and �sell�.
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This is the first time in four years that Khazanah is tapping the equity-linked market and the fourth time that it sells exchangeable bonds that are compliant with Shar�iah law. The most recent deal, in March 2008, was also exchangeable into Parkson. Indeed, a portion of the shares underlying this latest deal are also underlying the previous bond, of which 55% is still outstanding.

However, the 2008 bonds are well out of the money and are not expected to be exchanged for equity before they mature in March next year. As a result, Khazanah has received approval from Shar�iah scholars to use those same shares to back a new transaction. The 220 million shares account for 7.8% of Parkson�s share capital and at the final terms, the total size of the new exchangeable bond is $357.8 million.

The bonds, or zero periodic payment exchangeable trust certificates as they are called for the purpose of complying with Shar�iah law, have a seven-year maturity, but can be put back to the issuer after three years at a price of 99.25. The long remaining maturity after the put � referred to as a certificate-holder optional dissolution � is a reflection of the fact that interest rates are at record lows right now and Khazanah is taking the opportunity to lock bondholders in for an additional two years at that same rate if they decide not to put the bonds back after three years. The normal practice is to leave only two years after the put, i.e. a five-put-three or seven-put-five maturity. There is also an issuer call after three years, subject to a hurdle of 130%.
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The coupon, which on Islamic issues is referred to as a periodic payment, was fixed at zero percent at launch, but the yield was offered in a range between -0.25% and zero percent and the conversion premium came at 25% to 30%. As noted, both were fixed at the issuer friendly end, resulting in a yield of -0.25% and an exchange premium of 30% over Parkson�s closing price of HK$9.71 yesterday. The latter gave an initial exchange price of HK$12.623 � a level that Parkson hasn�t traded above since February 2011.

This is the first non-yen equity-linked deal in Asia with a negative yield since May 2011 when Taiwan�s United Microelectronics Corp sold $500 million of convertible bonds with a yield of -0.25% and a 39% conversion premium.However, that deal was linked to the new Taiwan dollar, although it was settled in US dollars. Looking at dollar-denominated transactions, there hasn�t been any issues with a negative yield since 2009.

The Khazanah bonds traded up to about 101 in the grey market during the two-and-a-half-hour bookbuilding, which boosted investor confidence in the deal even further.

The buyers included a mix of investors, including traditional CB hedge funds and outright investors, but also a lot of cross-over accounts, some credit accounts and some straight equity accounts, one source said. The demand from Islamic investors was lower than on Khazanah�s previous exchangeable sukuk, however, which may partly be due to the fact that they take longer to make investment decisions. Following the real estate crisis in the Gulf region there are also fewer investors looking at asset classes outside of straight bonds, one observer said.

The source estimated the Islamic, or Middle Eastern, demand at about 20% of the total, with Asia accounting for about 50% and Europe the remaining 30%. Khazanah�s latest two Islamic exchangeables � the 2008 deal into Parkson and a 2007 deal into Malaysia-listed Plus Expressways � got about 50% of demand from the Middle East

The latest bonds were marketed at a credit spread of 150bp, a dividend yield of 2% and a stock borrow cost of 50bp. Sources noted that there is plenty of borrow available in the market, but in case it becomes more difficult to access later on, the bookrunners will provide borrow through a stock lending agreement with Khazanah.

At the final terms, this translated into a 92.8% bond floor and an implied volatility of about 27%, which compares with a historic vol of about 35%.

The deal came after two Hong Kong-listed companies tapped the convertible bond market for a combined $434 million on Tuesday, breathing new life into a market that had seen only three deals so far this year.  The two issuers �361 Degrees and China Overseas Grand Oceans Group � offered two very different deals in the sense that one of them was viewed as quite expensive (361 Degrees) while the other one was very cheap. Both saw good demand, however, suggesting that investors are happy to use the CB market as a less risky way to gain exposure to Asian equities as the regional markets continue to recover from last year�s slump.
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Earlier in the year, CB investors were very cautious about deals that were not hedgeable and said they would prefer to see more paper from high-grade issuers. Khazanah seems to have listened, and its decision to monetise its remaining shares in Parkson a year ahead of the maturity of the initial exchangeable has clearly paid off � if the bonds aren�t exchanged into equity, the company is even getting paid to take investors� money for at least three years.

Khazanah invested $69 million into Parkson at the time of its Hong Kong IPO in November 2005 and when the Malaysian investment company issued its first exchangeable into the stock it owned about 9.8% of the company. The 2008 exchangeable was sold concurrently with a $96.8 million placement, which reduced Khazanah�s overall stake and left 220 million shares (adjusted for a five-for-one stock split) to back up the $550 million exchangeable.

About 45% of that first bond was put back in March 2011, leaving about 110 million shares still tied up in that exchangeable. The deal is exchangeable into equity at a price of HK$19.45 per share, and given that the stock is currently trading at about half that price it is unlikely that it will ever be converted. However, if the share price were to recover, Khazanah has the option to settle the exchange of both bonds in cash, meaning there is no risk that it will get caught out with too few shares to deliver to investors on either deal.

The exchangeable was jointly arranged by CIMBDeutsche Bank and J.P. Morgan.

The Curse Of Being Rich In Natural Resources (Yes, You, Malaysia!)

We have heard this again and again, the curse of being too reliant on natural resources. There are of course exceptions, countries which are resource rich and deployed their gains well, invested in their people and education system, such as Australia and Norway ... but by and large resource rich nations are always underperforming.

Josh Haner/The New York Times
Thomas L. Friedman won the 2002 Pulitzer Prize for commentary, his third Pulitzer for The New York Times. He became the paper�s foreign-affairs Op-Ed columnist in 1995. Previously, he served as chief economic correspondent in the Washington bureau and before that he was the chief White House correspondent. In 2005, Mr. Friedman was elected as a member of the Pulitzer Prize Board.
Mr. Friedman joined The Times in 1981 and was appointed Beirut bureau chief in 1982. In 1984 Mr. Friedman was transferred from Beirut to Jerusalem, where he served as Israel bureau chief until 1988. Mr. Friedman was awarded the 1983 Pulitzer Prize for international reporting (from Lebanon) and the 1988 Pulitzer Prize for international reporting (from Israel).

EVERY so often someone asks me: �What�s your favorite country, other than your own?�

I�ve always had the same answer: Taiwan. �Taiwan? Why Taiwan?� people ask.

    Very simple: Because Taiwan is a barren rock in a typhoon-laden sea with no natural resources to live off of � it even has to import sand and gravel from China for construction � yet it has the fourth-largest financial reserves in the world. Because rather than digging in the ground and mining whatever comes up, Taiwan has mined its 23 million people, their talent, energy and intelligence � men and women. I always tell my friends in Taiwan: �You�re the luckiest people in the world. How did you get so lucky? You have no oil, no iron ore, no forests, no diamonds, no gold, just a few small deposits of coal and natural gas � and because of that you developed the habits and culture of honing your people�s skills, which turns out to be the most valuable and only truly renewable resource in the world today. How did you get so lucky?�
    That, at least, was my gut instinct. But now we have proof.
    A team from the Organization for Economic Cooperation and Development, or O.E.C.D., has just come out with a fascinating little study mapping the correlation between performance on the Program for International Student Assessment, or PISA, exam � which every two years tests math, science and reading comprehension skills of 15-year-olds in 65 countries � and the total earnings on natural resources as a percentage of G.D.P. for each participating country. In short, how well do your high school kids do on math compared with how much oil you pump or how many diamonds you dig?
     The results indicated that there was a �a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their high school population,� said Andreas Schleicher, who oversees the PISA exams for the O.E.C.D. �This is a global pattern that holds across 65 countries that took part in the latest PISA assessment.� Oil and PISA don�t mix. (See the data map at:
    As the Bible notes, added Schleicher, �Moses arduously led the Jews for 40 years through the desert � just to bring them to the only country in the Middle East that had no oil. But Moses may have gotten it right, after all. Today, Israel has one of the most innovative economies, and its population enjoys a standard of living most of the oil-rich countries in the region are not able to offer.�
    So hold the oil, and pass the books. According to Schleicher, in the latest PISA results, students in Singapore, Finland, South Korea, Hong Kong and Japan stand out as having high PISA scores and few natural resources, while Qatar and Kazakhstan stand out as having the highest oil rents and the lowest PISA scores. (Saudi Arabia, Kuwait, Oman, Algeria, Bahrain, Iran and Syria stood out the same way in a similar 2007 Trends in International Mathematics and Science Study, or Timss, test, while, interestingly, students from Lebanon, Jordan and Turkey � also Middle East states with few natural resources � scored better.) Also lagging in recent PISA scores, though, were students in many of the resource-rich countries of Latin America, like Brazil, Mexico and Argentina. Africa was not tested. Canada, Australia and Norway, also countries with high levels of natural resources, still score well on PISA, in large part, argues Schleicher, because all three countries have established deliberate policies of saving and investing these resource rents, and not just consuming them.
    Add it all up and the numbers say that if you really want to know how a country is going to do in the 21st century, don�t count its oil reserves or gold mines, count its highly effective teachers, involved parents and committed students. �Today�s learning outcomes at school,� says Schleicher, �are a powerful predictor for the wealth and social outcomes that countries will reap in the long run.�
    Economists have long known about �Dutch disease,� which happens when a country becomes so dependent on exporting natural resources that its currency soars in value and, as a result, its domestic manufacturing gets crushed as cheap imports flood in and exports become too expensive. What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills.
    By, contrast, says Schleicher, �in countries with little in the way of natural resources � Finland, Singapore or Japan � education has strong outcomes and a high status, at least in part because the public at large has understood that the country must live by its knowledge and skills and that these depend on the quality of education. ... Every parent and child in these countries knows that skills will decide the life chances of the child and nothing else is going to rescue them, so they build a whole culture and education system around it.�
    Or as my Indian-American friend K. R. Sridhar, the founder of the Silicon Valley fuel-cell company Bloom Energy, likes to say, �When you don�t have resources, you become resourceful.�
    That�s why the foreign countries with the most companies listed on the Nasdaq are Israel, China/Hong Kong, Taiwan, India, South Korea and Singapore � none of which can live off natural resources.
    But there is an important message for the industrialized world in this study, too. In these difficult economic times, it is tempting to buttress our own standards of living today by incurring even greater financial liabilities for the future. To be sure, there is a role for stimulus in a prolonged recession, but �the only sustainable way is to grow our way out by giving more people the knowledge and skills to compete, collaborate and connect in a way that drives our countries forward,� argues Schleicher.
    In sum, says Schleicher, �knowledge and skills have become the global currency of 21st-century economies, but there is no central bank that prints this currency. Everyone has to decide on their own how much they will print.� Sure, it�s great to have oil, gas and diamonds; they can buy jobs. But they�ll weaken your society in the long run unless they�re used to build schools and a culture of lifelong learning. �The thing that will keep you moving forward,� says Schleicher, is always �what you bring to the table yourself.�

    Who Is Yu Heng?

    Well, for once my banner has eclipsed my "Malaysia Finance" tag line, and for good reason, the poster is for promoting a showcase concert for a true blue Malaysian singer songwriter, Yu Heng (pronounced as "Yue Herng"). If you have not heard of her, well, take it from me, you are looking at a future superstar. Earlier in her career, she was under a Taiwan label, but sadly was mis-managed and had to spend two years in Beijing doing nothing, but she confessed that she did write a lot of songs during her enforced period in Beijing.

    Her songwriting ability is exceptional, in fact she has written hit songs for many, including Liang Jing Ru (Fish Leong). After the debacle with her previous label, she had to do it all again from afresh, starting her own production company, her own label. 
    If you talk about Malaysian singers who have made it big in Taiwan, there is Kuan Liang, Ping Kuan, Fish Leong, Penny Tai... to name a few .. seriously, I think Yu Heng is more talented than most of them. Her songwriting skills is the thing that will eventually allow her to shine. I sincerely believe she will find greater recognition than Tanya Chua and maybe on par with Stefanie Sun. Her voice is solid.

    Funny thing is that though she is a very lovely looking girl but never wants to promote her career through her looks. Look at her concert poster! Just have a listen to her songs from her latest album from the links below and be blown away.

    OMG, each and every original song is sooo solidly goood ...


    Armed with that new album and her barrage of new songs in her inventory for the future, how not to succeed. This showcase will be her last in Malaysia for a while as she will be leaving to live in Taiwan for a long while to chart her career. I don't even need to wish her success cause I know she will be very famous, not just a pretty face.

    Do I write as if I know her? Yes, I do know her, and I am so lucky to know her before she is really famous... hope she remembers me later when she makes it.


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