Boleh Land :RM70k rental for cattle condo ‘unbelievable’, say property gurus

By Lee Wei Lian

November 18, 2011

KUALA LUMPUR, Nov 18 — The reported RM70,000 in monthly rental for not one but two condominiums owned by the National Feedlot Corporation (NFC) has property consultants and real estate agents shaking their heads in disbelief.
The experts say that the highest rental that can be expected for even the penthouse at Bangsar’s One Menerung condominium is about RM24,000 per month.

File photo of PKR members holding pictures of the One Menerung condominiums, outside the Selangor MACC office in Shah Alam on November 10, 2011. — Picture by Choo Choy May

They also point out that even if the tenants were renting the biggest condominium unit at One Menerung, which is between 6,000-7,000 square feet, the tenants would be paying least RM10 per sq ft, which is double or more the rate at KLCC’s Binjai On The Park, currently KL’s most expensive condominium address. The NFC also said yesterday that the rental yield for the two condominiums had hit 12.9 per cent, which is far in excess of the industry benchmark of three per cent or less.
“Who is the tenant?” asked one veteran property consultant. “It is unbelievable. To get RM70,000 for a condominium is unheard of. Usually when renters pay more than RM15,000 they expect to get a whole luxury bungalow.”
He pointed out that multinationals were very unlikely to have such a huge budget for rent and wealthy Arab businessmen would prefer to buy their own place rather than rent.
Real estate agents for One Menerung contacted by The Malaysian Insider said that it was “not possible” to get RM70,000 in monthly rent and that it would be difficult to find anyone willing to pay even RM4 a sq ft.
Figures from a valuation report on One Menerung obtained by The Malaysian Insider pegged rents for the penthouse at about RM24,000 and between RM14,000 and RM17,000 for the smaller units below 5,000 sq ft.
“Nobody would pay RM70,000 for a condo,” said one valuer.
NFC executive chairman Datuk Mohamad Salleh Ismail reportedly said at a press conference yesterday that it bought two condominiums at RM6.9 million and rented them out at RM70,000 a month, giving a yield of some 12.9 per cent. The size of the purchased units was not reported.
Salleh had also said that if it had put the money in fixed deposit instead, it would have earned only 2.6 per cent to 3.25 per cent returns.
Many luxury condominiums in the city however have had a hard time finding tenants with some landlords having to drop rents by as much as 50 per cent.
Property consultancy DTZ said in its third quarter report last Thursday that it expects demand for luxury residential units in KL to be slow with overall rents for high-end condominiums at about RM3.50 per sq ft.
Umno Youth chief Khairy Jamaluddin had said last week that the NFC decided to use funds earmarked for the feedlot programme to invest in luxury condominiums after the government ran out of money to develop satellite cattle farms as planned.
It has not been clarified however if the federally-funded NFC is allowed to make such alternative investments.

Cash belonging to robbery suspects goes missing

Malaysia really is a funny "Boleh Land"..

November 17, 2011

KUALA LUMPUR, Nov 17 — Cash belonging to two of the men charged with robbing money changers at KL International Airport (KLIA) in September has gone missing from the Selangor police headquarters.
In a statement released last night, Selangor police said RM11,700 in cash and a wallet were reported missing on Tuesday evening.

File photo of ringgit notes. — Picture courtesy of mybursa.wordpress

The cash is not part of the US$300,000 that was seized in relation to the robbery. Three Malaysian Anti-Corruption Commission (MACC) claimed trial last month for robbery and abetting a civilian in robbing three money changers of RM930,000 at KLIA in September.
The three officers, aged between 20 and 35, hold the ranks of acting assistant commissioner, senior assistant superintendent and assistant superintendent. The civilian, who had impersonated an MACC officer during the robbery, is still at large.
They allegedly robbed the money changers inside the satellite building at KLIA on September 15.
The trio were arrested two days later after they were picked out by the victim during an identification parade.
It was earlier reported that the money changers were at the airport intending to board a flight to Singapore when the robbery took place.
The three are understood to have been carrying foreign currencies amounting to about RM2 million, which they had declared to Customs.

Proton recent hike

PETALING JAYA: The recent sharp jump in Proton Holdings Bhd shares has given rise to speculation over a management buyout (MBO) as well as rumours of takeover proposals for the national carmaker.
Proton shares have gained 83 sen since Tuesday and closed yesterday at RM3.53.
On Wednesday, Proton warrants also jumped, with Proton-CG rising 4.5 sen to 13 sen while Proton-CH was up six sen to 12.5 sen at the close.

Research analysts and stockbrokers are surprised by the sudden surge in Proton's share price. They say the marketplace is abuzz with all sorts of rumours.
JF Apex Securities Bhd deputy managing director Lim Teck Seng said that Proton's share price usually would not see such a surge without an important corporate announcement or development.
“Perhaps investors are expecting some big announcement to be made. On the other hand, maybe there is a liquidity play as the “party” is still going on in the market with the recent heavy trading in penny stocks. Investors are looking for cheap stocks,” said Lim.
The Government's investment holding arm, Khazanah Nasional Bhd has a 42.74% stake in Proton, while the Employees Provident Fund (EPF) and Petroliam Nasional Bhd (Petronas) have stakes of 10.78% and 7.85% respectively.
In the past, conglomerates such as Naza Group and DRB-HICOM Bhd have been linked to potential deals involving Proton.
DRB-HICOM is unlikely at the moment to be involved in a takeover bid for Proton.
One research analyst said the possibility of a takeover bid by Naza and DRB-HICOM was quite low.
“DRB-HICOM has a lot on its plate such as the assembly of Volkswagen cars and the recent acquisition of Pos Malaysia Bhd.
“We are also unsure about the rationale for these rumoured takeover bids by Malaysian conglomerates as in our opinion, what Proton really needs is an automotive partner that can help the carmaker via technology transfer and fully utilising its production capacity,” she said.
Motor analysts were also sceptical about rumours of an MBO of Proton.
At RM3.53 a share, Khazanah's stake in Proton would be worth about RM828.6mil.
A recent report from AmResearch had estimated Proton's adjusted net tangible assets (NTA) per share at RM5.26.
“With an MBO, the questions of funding and the price per share for such an exercise would arise. Also, what would be the rationale for an MBO?” said one analyst.
However, a motor industry observer said a potential corporate exercise for Proton could not be dismissed in view of the Government's plan to rationalise the portfolio of GLCs (government-linked companies).
Another bank-backed motor analyst said she was told by the Proton management that it was not aware of any material developments or company updates which could have caused the sharp spike in the company's share price.
The analyst said the recent increase in Proton's share price might have been due to positive news flow this month such as the settlement of the legal dispute with Tan Sri Tony Fernandes and his 1Malaysia Racing Team concerning the “Lotus” and “Team Lotus” brand, the possibility of Proton re-entering Chile next year, and the opening of Lotus China's first showroom in Beijing.

Temasek in Talks With BofA to Buy CCB Shares

Temasek Holdings Pte. bought shares of China Construction Bank Corp. (939), a person with knowledge of the matter said, signaling its increased participation in China’s financial sector as U.S. banks retreat.
Temasek bought about a third of the stock that Bank of America Corp. (BAC) is selling at HK$4.93 apiece, another person with knowledge of the matter said, declining to be identified because the information hasn’t been announced. Two Chinese institutions will buy the rest of the 10.4 billion shares Bank of America is selling, the person said.
Foreign investors including Bank of America, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc have trimmed more than $25 billion of holdings in Chinese lenders since the beginning of 2009, according to data compiled by Bloomberg. Bank of America said it will sell the stock in private transactions for a profit of about $1.8 billion, leaving it with a 1 percent stake in the Beijing-based lender.
“This is an advantage that Temasek has at this time, especially when European and U.S. banks are trying their best to raise cash,” said Eugene Tan, an assistant professor of law at the Singapore Management University. “It suggests a quiet optimism. I get a sense that this deep interest in China at a time when companies and investors are generally wary suggests that Temasek is keen to have a first mover advantage.”
$2.2 Billion
Temasek paid about HK$17 billion ($2.2 billion) for the China Construction Bank shares, based on Bloomberg calculations. About 3.76 billion shares were traded yesterday in a private transaction at HK$4.93 each, according to data compiled by Bloomberg.
Stephen Forshaw, a spokesman for Temasek, declined to comment on “market speculation.” Mark Tsang, a Bank of America spokesman in Hong Kong, had no comment. Charlotte, North Carolina-based Bank of America said the buyers were a group of investors, without providing names.
This month, Goldman Sachs raised $1.1 billion selling shares of Industrial & Commercial Bank of China Ltd., trimming an investment first made in 2006 after the stock posted its biggest monthly rally in 2 1/2 years.
The three biggest Chinese banks posted their worst quarterly stock performance in the third quarter on concern that local governments may default on loans. The lenders’ credit outlook may sour in the absence of a government plan to deal with the issue, Moody’s Investors Service said in July, while regulators globally are demanding that banks increase buffers.

Investment Flip-Flop

Temasek bought shares in the Beijing-based lender in September for as much as HK$21.7 billion ($2.8 billion), buying 4.4 billion shares for as much as HK$4.94 each and increasing its stake to 8.1 percent of the Hong Kong-listed shares, according to a filing to the Hong Kong stock exchange that month. About eight weeks earlier, Temasek had sold 1.5 billion shares for HK$6.26 each.
The stock fell 0.5 percent to HK$5.56 as of 10:28 a.m. in Hong Kong.
Temasek, along with Government of Singapore Investment Corp., the city-state’s sovereign wealth fund, spent more than $25 billion buying stakes in U.S. and European banks in the past four years as the collapse of the subprime mortgage market led to more than $2 trillion in losses and writedowns worldwide.
Temasek sold its 3.8 percent stake in Bank of America in the first quarter of 2009 and also divested its 2 percent stake in London-based Barclays Plc. (BARC) The company, which managed S$193 billion ($149 billion) as of March, didn’t detail the size of its losses from the investments.

UBS Stumble

GIC, the biggest investor in UBS AG, faced a 6.7 billion- Swiss franc ($7.3 billion) paper loss two months ago after the Zurich-based bank announced a $2.3 billion unauthorized trading loss that led to the resignation of its chief executive officer.
Huijin, a unit of China’s sovereign wealth fund, is also interested in buying China Construction Bank stock from Bank of America, Hong Kong Economic Journal reported, citing people it didn’t identify. Huijin may form a group with Temasek and other investors to purchase the shares, the newspaper said. A call to Huijin’s Beijing media office wasn’t immediately answered.
Temasek, Advent International Corp. and at least three other investors are also in talks to buy a controlling stake in STP - Servicos & Tecnologia de Pagamentos SA, a Brazilian electronic-toll-collection company, two people familiar with the negotiations said. STP, based in Osasco, hired Banco BTG Pactual SA to sell an undisclosed stake to fund expansion, said one of the people, who declined to be identified because the transaction is private.

Intime Investment

GIC is also boosting its stake in Intime Department Store Group Co., a retailer in eastern and central China, helping its founder raise HK$747 million. The fund, which manages more than $100 billion of the city’s reserves, will raise its stake in Intime to 9.1 percent by buying shares from the company and founder Shen Guojun at HK$9.90 each, according to a filing late yesterday. That’s 7.5 percent lower than the closing price on Nov. 14, the day before the stock was suspended.
Intime, based in Beijing, competes against Chinese department-store chain operators Parkson Retail Group Ltd. and Golden Eagle Retail Group Ltd. in an economy that grew 9.1 percent in the third quarter.
GIC also bought 55.1 million shares, or 0.6 percent, in the July initial public offering in Hong Kong of Sun Art Retail Group Ltd., China’s largest hypermarket operator.
To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at

The World Is Drowning in Debt, and Europe Laces On Concrete Boots

Three metaphors describe Europe: drowning in debt, circular firing squad and trying to fool the money gods with an inept game of 3-card monte.

The world's major economies are drowning in debt--Europe, the U.S., Japan, China. We all know the U.S. has tried to save its drowning economy by bailing out the parasite which is dragging it to Davy Jones Locker--the banking/financial sector-- and by borrowing and squandering $6 trillion in new Federal debt and buying toxic debt with $2 trillion whisked into existance on the Federal Reserve's balance sheet.

It has failed, of course, and the economy is once again slipping beneath the waves while Ben Bernanke and the politico lackeys join in a Keynesian-monetary cargo-cult chant: Humba-humba, bunga-bunga. Their hubris doesn't allow them to confess their magic has failed, and rather than let their power be wrenched away, they will let the flailing U.S. economy drown.

Europe has managed to top this hubris-drenched cargo-cult policy--no mean feat.First, it has indebted itself to a breathtaking degree, on every level: sovereign, corporate and private:

Germany, the mighty engine which is supposed to pull the $16 trillion drowning European economy out of the water, is as indebted as the flailing U.S.

Second, the euro's handlers have already sunk staggering sums into hopelessly insolvent debtor nations, for example, Greece, which has 355 billion euros of outstanding sovereign debt and an economy with a GDP around 200 billion euros (though it's contracting so rapidly nobody can even guess the actual size). According toBusinessWeek, the E.U. (European Union), the ECB (European Central Bank) and the IMF (International Monetary Fund) own about $127 billion of this debt.

Since the ECB is not allowed to "print money," the amount of cash available to buy depreciating bonds is limited. The handlers now own over 35% of the official debt (recall that doesn't include corporate or private debt), which they grandly refuse to accept is now worth less than the purchase price. (The market price of Greek bonds has cratered by 42% just since July. Isn't hubris a wonderful foundation for policy?)

In other words, they have not just put on concrete boots, they've laced them up and tied a big knot. We cannot possibly drown, they proclaim; we are too big, too heavy, too powerful. We refuse to accept that all these trillions of euros in debt are now worth a pittance of their face value.

When you're drowning in debt, the only solution is to write off the debt and drain the pool. The problem is, of course, that all this impaired debt is somebody else's asset, and that somebody is either rich and powerful or politically powerful, for example, a union pension fund.

Third, the euro's handlers have set up a circular firing squad. Since the entire banking sector is insolvent, the handlers are demanding that banks raise capital. Since only the ECB is insane enough to put good money after bad, the banks cannot raise capital on the private market, so their only way to raise cash is to sell assets--such as rapidly depreciating sovereign-debt bonds.

This pushes the price of those bonds even lower, as supply (sellers) completely overwhelm demand from buyers (the unflinching ECB and its proxies).

This decline in bond prices further lowers the value of the banks' assets, which means they need to raise more capital, which means they have to sell even more bonds.

Voila, a circular firing squad, where the "bulletproof" ECB is left as the only buyer who will hold depreciating bonds longer than a few hours, and all the participants gain by selling bonds before they fall any further. This is the classic positive feedback loop, where selling lowers the value of remaining assets and that drives further selling.

As many have noted, soaking up all the Greek debt--a mere sliver of the eurozone's impaired debt-- would essentially wipe out the entire EFSF "stability" rescue fund.

The "solution" to the cargo-cult crowd is "obvious"--print, baby, print, and use that new paper to buy 3 trillion in mostly-worthless bonds. But that is just another circular firing squad, as Nobel prize winning economist Thomas Sargent noted: "There's a fundamental truth that everyone has to understand: what the government spends, the public will pay for sooner or later, whether in taxes or inflation or having their debt defaulted on."(Source: BusinessWeek 11/20/11)

The 3 trillion euros comes of somebody's pocket, one way or the other; there is no free lunch.

Even worse, debt is the only engine of "growth" left in the developed world. This chart shows how America's "growth" since 1980 has been fueled by debt that expanded by 136% ($30 trillion) beyond actual economic growth. The same is also true of Europe, where Italy, for example, borrowed 1 trillion euros over the past decade or so in return for essentially zero growth.

This reveals the key dynamic of the past decade: the diminishing productivity of debt. What happens when an economy is so burdened by the friction of inefficiency and indebtedness that borrowing a trillion euros just keeps the economy barely above water? The next trillion won't even keep "growth" at zero, and the economy sinks beneath the waves.

The world has reached the point of debt saturation. Creating more debt no longer generates "free lunch" growth, even in China, though the central bank in China is still playing as if shifting debt off-balance sheet into a "shadow" system will fool the money gods. It won't.

Everybody in Europe is playing the same sort of games, hoping to fool the money gods and keep the "free lunch" economy "growing." While everybody focuses on the circular firing squad in Italy, untold billions of euros of impaired private mortgage debt in housing-bubble-popped Spain still sits on the books of Spanish banks at full value, lest a sneeze of reality send Spain's entire banking sector to Davy Jones Locker.

Though no official publicly admits it, nobody really knows how much debt there is in Greece, or who even holds it. Here's the fig leaf confession: "Scarce data makes estimates difficult." Yes, I'm sure it does. So the true size of Europe's debt is unknown because everyone with a stake in the charade is trying desperately to keep the true scope hidden. (Ditto in China.)

The debt will get renounced, and debt as the "engine of growth" will also be renounced.

Europe is an inept 3-card monte player attempting to swindle the money gods. The gods aren't fooled by such shallow shuffling games, in fact they are greatly annoyed that humans even dare to attempt such flimsy tricks. Their wrath is building, and human hubris will only make the reckoning worse.

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