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Money matters:
Graham Macdonald MBMG International Ltd.
Running Scared, part 1
The overriding theme today in just about every financial
market is uncertainty - the range of potential outcomes is greater than at any
time that I have ever known. That sounds scary but it isn’t as long as you adopt
the right approach to this. Mind you, if you don’t, then it is terrifying but
then as we get older, we seem to be finding that there are more things than that
terrify us than ever before. Strange noises outside, aches & pains that we have
never felt before, our inability to recall anything that happened an hour ago
and just the other day, a recommendation that we saw from an advisor to his
clients to invest 100% into emerging market equities.
As you can imagine, to us who are obsessive about diversification this was bound
to result in a blind panic. We have been here in Thailand since 1994 and
although we have seen the Thai market recover around 200% in recent years it
still languishes around 75% down from where it was in 1997 in Sterling terms.
On top of that, while we see pockets of exceptional value on the horizon for
certain emerging markets, it is far from clear to us that we are yet at the
buying opportunity stage. Furthermore, we are extremely worried about the way
that “Chindia” has become ‘de rigueur’ as a proxy for emerging market
investment.
In the same way that it isn’t in any atlas, ‘Chindia’ is not on the map of any
portfolio manager or investment analyst. It is just a creation of marketing
departments, like its ugly bloated elder stepsister, the BRIC.
We were far more in agreement with the altogether terrifying pronouncement of
Adrian Mowat, chief equity strategist at JP Morgan that he is underweight on
India and Korea because we are now in an environment of higher borrowing costs
with credit harder to come by and therefore economies with current account
deficits are the most vulnerable to funding constraints. Also, policymakers in
such economies will have less FX flexibility to manage a growth-inflation
trade-off. These markets have underperformed MSCI EM since the beginning of the
year. The respective currencies are also the worst performers against the US$
YTD. Added to which, despite recent price reforms, rising global oil prices will
worsen the trade balance of energy importing economies.
We are not the only ones who are nervous. Asia seems to be pondering two
questions in particular:
1. When will the US housing market stabilize?
2. How will global inflation develop and what does it imply on monetary policy?
These questions are inter-related. Global monetary policy is likely to stay
loose until US home prices stabilize. A weaker US dollar, despite its recent
strengthening, is partly the reason for the sharp rise in commodity prices.
Excessive liquidity provided by central banks has pushed up food and energy
prices, reinforced purchases by investors who regard commodities as a new
investment asset class, even though our portfolio advisors at Midas MitonOptimal
have been banging this particular drum for the last 5 years. In Asia, mutual
funds that invest in commodities have been the most popular product for the past
two quarters.
Many central banks claim that the recent surge in inflation is driven by high
food and energy prices. In fact, food prices have been pushed upward due to the
recent supply shocks, even though they are temporary supply disturbances. Global
oil prices have risen dramatically over the last couple of years and are mainly
attributable to the rise in demand. Demand in Asia, especially in China,
accounts for much of the rise in global demand. The high demand in China is not
going to vanish soon. This is because Chinese growth is energy intensive. So the
rise in energy prices is not temporary, even though in June 2008 we warned that
we were worried about a pullback from an overextended peak before the market
resumes its upwards trajectory.
According to CLSA, food is the single largest component of the CPI basket for
Asian economies. The surge in food prices, year-on-year, has forced central
banks in Asia to react. However, they have responded differently. For example,
the People’s Bank of China continues to raise Reserve Requirement Ratio to
control loan growth. India is expected to raise Capital Requirement Ratio.
Singapore, on the other hand, has expanded the trading bank of its currency to
curb inflation caused by the rise in imported food prices.
Currencies are clearly to the fore right now as a component of this worrying
trend of higher commodity price inflation.
Currencies
For the first time in my entire career we do not have a favoured long
or short term currency view right now - as events unwind we will and we will
keep you updated BUT for now every investor should either consider investing
almost exclusively in their base currency (ies), including Thai baht, OR they
should regard their currency choices as high risk and speculative.
Many readers of this article will be aware that MBMG International hosted a
client seminar in June. Our keynote speaker, Scott Campbell of Midas Capital
spoke of investment opportunities and the impact of the US and UK sub prime
mortgage crisis upon the rest of the world. Whilst the potential risks of
further depreciation in the US dollar and particularly the GBP remain, a number
of observers are also asking whether we are now close to the point where these
currencies have reached the bottom and if so to what extent and how quickly can
they recover?
Scott Campbell’s recent visit to Bangkok provided the clearest answers yet to
this conundrum and next week we will show MBMG’s latest currency view.
To be continued…
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The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on
[email protected]@mbmg-international.com.com
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Snap Shots: by Harry Flashman
Technocrat or artist?
 Would
you believe me when I say that there are some famous photographers whose
camera equipment consisted solely of a Polaroid camera? One is still
remembered today, 21 years after his death. His photographs recorded an
era of our society and some of the more way out people of that time. He
was an artist, and one who merely ‘recorded’ what was happening. His
name was Andy Warhol.
If we look at another famous photographer, this was a man who trudged
through the wilderness with a large plate camera and tripod and then
developed his own negatives and printed them according to the Zone
system. He was in comparison, a technocrat and his name was Ansel Adams.
Now Andy Warhol and Ansel Adams had very little in common, but both
recorded images of subject matter that was ‘there’. The immense
difference was in their subject matter, and the way they recorded those
images.
While Adams recorded the natural unspoiled beauty of the mountains,
Warhol was recording the totally spoiled ugliness of the human psyche.
Ansel Adams took his first long trip into the wilderness in 1920, when
he was just eighteen. His burro, Mistletoe, carried almost a hundred
pounds of gear and food; he himself carried a thirty-pound pack full of
photographic equipment. Adams was heir to a long tradition of American
wilderness photographers who lugged cameras, tripods, and even portable
darkrooms with them into the back country in order to capture its
breathtaking beauty.
The following list is a typical inventory for Adams: one 8 x 10 view
camera, 20 holders, 4 lenses - 1 Cooke Convertible, 1 ten-inch Wide
Field Ektar, 1 9-inch Dagor, one 6-3/4-inch Wollensak wide angle. Item:
one 7 x 17 special panorama camera with a Protar 13-1/2-inch lens and
five holders. Item: one 4 x 5 view camera, 6 lenses - 12-inch Collinear,
8-1/2 Apo(chromatic) Lentar, 9-1/4 Apo(chromatic) Tessar, 4-inch Wide
Field Ektar, Dallmeyer. Item: One Hasselblad camera outfit with 38, 60,
80, 135, & 200 millimeter lenses. Item: One Koniflex 35 millimeter
camera. Item: 2 Polaroid cameras. Item: 3 exposure meters. One SEI, and
two Westons - in case he drops one.
Item: Filters for each camera. K1, K2, minus blue, G, X1, A, C5 &B, F,
85B, 85C, light balancing, series 81 and 82. Two tripods: one light, one
heavy. Lens brush, stopwatch, level, thermometer, focusing magnifier,
focusing cloth, hyperlight strobe portrait outfit, 200 feet of cable,
special storage box for film.
On the other hand, Andy Warhol branched out into photography after his
original commercial art such as the famous Campbell Soup tins, but
rather than take carefully arranged photographs with boxes of equipment,
Andy Warhol went the other way, using a Polaroid camera to record
‘instant’ photographs, again in the anti-art genre. There are no well
lit, carefully posed, complementary background photographs from his
Polaroid era. Dreadfully cluttered backgrounds, and Andy Warhol could
not have cared less.
In fact, as he then began to move in the Hi-So circles, Warhol would go
out every night and capture the people on film. “You want to go out
every night because you’re afraid if you stay home you might miss
something,” wrote Warhol many years ago.
He had discovered that the life in America was like his Campbell’s Soup
tins. Everyone wanted to be exposed to the public, the more times the
better. The more recognizable, the more ‘famous’ you had become, and
Warhol was the man who would be there. The ‘ultimate’ street
photographer. Just as many famous photographic artists photographed the
ordinary people, Andy Warhol photographed the ‘out of the ordinary’
people. His relentless shots taken in Studio 54, the ‘in place’ disco,
are albums of freaks, hangers-on, minor celebrities, aging movie stars,
starlets eager for any publicity, drunks, transvestites, designers,
people with designs on being designers, the whole superfluous and
superficial crowd. And Andy got them all, and in some ways recorded an
era for posterity.
So who is right? Ansel or Andy? The jury is still out, but it is
interesting that Ansel Adams, later in his life, said, “Knowing what I
know now, any photographer worth his salt could make some beautiful
things with pinhole cameras.”
Modern Medicine:
by Dr. Iain Corness, Consultant
Getting hooked on hookworm
When you talk about ‘worms’, most people think of threadworms
that all children seem to get. The answer is always “a good worming”. Yes,
we’ve all been down to the chemist shop and bought a packet of ‘worming’
tablets.
However, you should not imagine that ‘worms’ stops there. I can assure you
that there are far more dangerous wrigglers in the community. And the sandy
beaches are the habitat for some of them.
My friends laugh at me when they see me walking along the beach. Instead of
letting the cool sand squish between my toes, I wear closed shoes. Does this
mean I am a pedantic pedestrian? Or a member of a weird anti-sandal sect?
Fortunately it is neither. I am just a trifle afraid of Ancylostoma
duodenale. And so should you!
Ancylostoma duodenale is one of the two hookworms that can get their hooks
into you (and me if I let them). The other is called Necator americanus.
These little chaps are roundworms between 7 to 13 mm long and are far from
rare. Approximately one-quarter of the world’s population is infected with
Hookworm.
So how do you get infected? Easy, the hookworm eggs are passed in faeces (or
poo if you prefer) and infection results when you come in contact with the
eggs from the contaminated soil. The larvae enter through the skin and
travel to the lungs through the blood. They ascend the lungs through the
bronchi and trachea and are then swallowed. As the larvae pass into the
digestive tract, they attach themselves to the wall of the small intestine.
Here they mature into adult worms, mate and feed on the blood of the host.
And adult hookworms may live up to ten years.
Unfortunately many hookworm infestations do not produce symptoms; however,
there may be local irritation of the skin where the worm penetrated or even
an itchy rash. While going through the lungs, there may be asthma-like
symptoms or even pneumonia. The most common symptoms of Hookworm infection,
however, are from their taking up residence in the intestine. Hookworm here
can lead to abdominal pain, diarrhoea, weight loss, loss of appetite and
excessive gas.
With long-standing infections, the intestine’s owner may become anaemic as
the worms feed on the individual’s blood. This in turn leads to the usual
anaemic symptoms including pale complexion, tiredness and weakness.
Diagnosis is done by looking for hookworm eggs in the stool (by using a
microscope). Blood tests will show the amount of blood loss and can be used
as a pointer towards the seriousness of the infestation.
Fortunately hookworm is treatable, generally with the drug mebendazole. This
drug cures more than 99 percent of all cases of hookworm if given twice per
day for three days. It kills both the worms and the eggs, but is
contraindicated during pregnancy. If anaemia has become a problem, then iron
supplements can be given as well. Once treated, the symptoms settle quickly
in a few weeks at most.
So what can you do to avoid hookworms? Well since hookworm infection comes
from non-hygienic practices and faecal contact in the soil, my shoes sound
like a great idea, don’t you think? Never mind the problems with hypodermic
needles found in the sand in many countries these days!
Hookworm infections should be dealt quickly and stringently. Known
symptomatic infections should be treated rapidly and treatment given to
asymptomatic family members or neighbours. Strict attention to cleanliness
and sanitary practices is needed when a hookworm infection is detected to
prevent its spread. This means hygienic disposal of human waste, limiting
skin contact with soil and even water, where there is untreated sewage.
Hookworm can be a very serious illness so it is essential to be aware of any
change in one’s health status. Any difficulty breathing, rapid heartbeat,
chest or abdominal pain, bloody diarrhea, blood with coughing, asthma-like
symptoms, skin rashes, abdominal swelling or bloating, lightheadedness or
weight loss should be brought to your doctor’s attention.
Me? I’ll just keep wearing shoes!
 Heart to Heart with Hillary
Dear Hillary,
Here is some advice to UK single pensioners, marry your Thai girl friend and get
a big pay rise (married man’s pension), then your wife will get also her UK
national insurance card, which will make her very happy. I know because I have
just done this, and we are both happy.
Archie
Dear Archie,
I sort of get the impression that your advice on getting married is the right
choice, but for all the wrong reasons! Being an old biddie with probably some
out of date ideas, I believe you should get married to show your commitment to
your partner and to share life together, not primarily as a way to extract money
from the British government. However, I am glad you are looking after your Thai
girlfriend, my Petal.
Peepo, Hillary,
Nit and Ying (the adorable, wee yum-yums) are not allowed the enclosed Yorkie
bar, but I dare you to have a nibble! It’s not for girls, you know!
Mistersingha
Letter to Hillary ‘by leg’
Dear Mistersingha,
Thank you for the letter, which I have printed in its entirety above, and
for the plastic bag containing a Tropical Orange Bacardi Breezer and the
Yorkies bar. Yes, I did try it, but I cannot really see why the manufacturer
wants to restrict the consumption to men only. I checked and it had not
produced any strange swellings or dangly things anywhere, so I don’t think
it is a chocolate answer to the blue diamonds. Perhaps they are trying to
stop us women putting on too much weight, I think. Anyway, thank you Petal,
it’s not quite French champagne and Swiss (or Belgian) chocolates, but, from
you, it’s a start! You can buy half bottles of bubbly, you know, if a full
bottle is a little too much for your weekly budget, especially as you have
the welfare off the twins to take care of! I should have probably made that
a ‘weakly’ budget?
Dear Hillary,
I think I’ve been taken for a ride, good and proper. On my first trip over
to Thailand last year I met what seemed to be a very nice woman who stayed
with me for the whole two weeks. When I found out just how basic and cramped
were her digs, I bought a condominium so she had somewhere better to stay.
This was all done very hurriedly, but she assured me it would be in my name.
It’s taken me a while to get back to Thailand, but I find the condo is owned
by some Swiss guy because she sold it, and it had never been in my name
anyway. Is there any way I can get my money back?
Ron
Dear Ron,
There’s a song which goes, “Fools rush in, where angels fear to tread…”
There’s also a very well known tenet in all legal dealings which goes
“Caveat emptor” (let the buyer beware). She has done nothing wrong in law,
even though her ethics are deplorable. Kiss her, and your money, goodbye.
Dear Hillary,
I have not been here too long, but have met a really wonderful woman who I
would like to marry. She is in her mid-40s, like me, and amazingly has never
been married, like me too. I have been dating with her for over six months,
and I am quite sure that she and I would make it as we are so alike in so
many ways as well. How difficult is it to get married here? Would a Thai
wedding be recognized by the authorities back home (UK)? I would like to
make sure that she would be protected if something should happen to me
afterwards.
John
Dear John,
Congratulations on finding your life’s mate, after what has obviously been a
long wait. I hope it will all have been worthwhile. Yes, your Thai wedding
would be recognized by the British authorities, but that covers the
registered wedding at the local Amphur office. The weddings celebrated in
the village are very elaborate affairs with much ceremony, such as counting
the “sin-sod” (dowry) and the tying of sacred threads around the wrists of
the couple (sai-sin) all in the presence of generally nine monks.
Unfortunately, despite the ceremony and payment of the dowry, these weddings
are not accepted by overseas authorities, so even if you have the ceremonial
wedding, you must also register yourselves as man and wife at the Amphur
office. This is not a simple affair either, as because you are a foreigner
you have to get an affidavit signed by your embassy to state that you are
free to marry (not currently married, and if divorced you have to show the
originals of divorce papers) and all this has to be translated into Thai,
the only official language accepted for legal documents in Thailand (funny
that) and verified by the Department of Legalization, a government office in
Bangkok. Go to the Amphur some weeks before the agreed wedding date to get
the full details required, as it is a lengthy process. However, there is one
little detail, but important one, my Petal. You must ask the lady first! You
may also be required to speak to her parents and get their permission.
Tradition is important in Thailand. Save me some chocolates and a bottle of
bubbly from the reception party!
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Quantum of Solace: UK/US Action – Starring Daniel Craig
and Judy Dench. Seeking revenge for the death of his love, secret agent
James Bond sets out to stop an environmentalist from taking control of a
country’s water supply.
Amusement: US Horror/Thriller – Three women are stalked by a
killer with a grudge that extends back to the girls’ child-hoods. Seems
there were a lot of problems with this film: many changes in the release
date, then a lot of rumors that it would be released direct to DVD, then
the company which was releasing it closed down. Bad show all around.
Rated R in the US for horror violence, terror, and disturbing images.
Tropic Thunder: US Comedy/ War – I heartily recommend the film
for those not easily shocked. You might just have the best laughs you’ve
had in years. Robert Downey, Jr. gives another amazing performance, this
time playing a black. It’s an action comedy about a group of
self-absorbed actors who set out to make the biggest war film ever.
After ballooning costs (and the out of control egos of the pampered
cast) threaten to shut down the movie, the frustrated director refuses
to stop shooting, leading his cast deep into the jungles of Southeast
Asia where they inadvertently encounter real bad guys. Generally
favorable reviews.
Coming Soon: Thai Horror – Oh, dear! To complete the Halloween
pleasantries, I suppose. To replace the cancelled Saw V, the Thais offer
up their own version of a bloody scream-fest. This one is about a
projectionist who decides to help a friend illegally film a newly
released horror movie, with dire consequences.
Queens of Langkasuka / Peun yai jom sa-lud: Thai Adventure/
Fantasy – Nonzee Nimibutr’s 200-million-baht historical action-fantasy,
more than three years in the making, is for me an entertaining Thai
blockbuster – big stars, loads of special effects, lavish costumes, and
an exotic seaborne setting. Sumptuous in production design, it has
whirlwind action sequences merging realistic Thai boxing with theatrical
90s Hong Kong style stunts. I think it has the nostalgic charm of
classics like Sinbad the Sailor, plus it has a truly exhilarating sea
battle at the end.
Max Payne: US Action/ Thriller – Starring Mark Wahlberg. Based on
the popular interactive video game, it’s the story of a maverick cop
determined to track down those responsible for the brutal murder of his
family. Basically for fans of the game and action movies, it
nevertheless has some striking and stylish visuals in a somber mood,
which I really enjoyed looking at, and an intense performance by
Wahlberg. Generally negative reviews.
City of Ember: US Adventure/Family/Fantasy – It has almost
everything one could want from a science fiction-based family film:
likeable characters, an imaginative setting, and a fast pace – plus a
subtly dark feel rarely seen in kids’ movies. But for me the fabulously
designed underground metropolis proved more involving than the teenagers
running through its streets. Mixed or average reviews.
Luang Pee Teng II: Thai Comedy – Bad boy becomes monk, meets
misadventures, makes merit. This second of the series has a new star,
Thai rapper and hip-hopper Joey Boy with a cast filled out by the usual
Thai TV comedians.
E-Tim Tai Nae: Thai Action/ Comedy – A boxer in a show in Pattaya
falls in love with a Japanese tourist. Looks dreadful.
Scheduled for Nov 13
Sex Drive: US Comedy – Eighteen-year-old Ian Lafferty sets
out on a cross country drive with his best friends Lance and Felicia in
order to lose his virginity to a red-hot babe he met on the Internet.
Randy and raucous, Sex Drive follows three friends on what the
publicists call the road trip of a lifetime!
Burn After Reading: US Comedy/Crime – This interesting movie is
scheduled for either November 13 or 20, and stars George Clooney, Brad
Pitt, Tilda Swinton, and John Malkovich (the whole team of serious
anti-government rabble-rousers) in another expose of dirty dealing and
incompetence in high places. But this time it’s a comedy! Clooney, for
example, seems to have a hobby of building homemade sex toys in his
basement. With Frances McDormand and Richard Jenkins. Directed by Ethan
and Joel Coen.
Teeth: US Comedy/ Horror – Directed by Mitchell Lichtenstein (son
of Pop artist Roy). Dawn, a high school student, works hard at
suppressing her budding sexuality by being the local chastity group’s
most active participant. A stranger to her own body, innocent Dawn
discovers she has a toothed vagina when she becomes the object of
violence. As she struggles to understand her anatomical uniqueness, Dawn
experiences both the pitfalls and the power of being a living example of
the vagina dentata myth. More enjoyable than I thought it would be, it
is still pretty sick and unpleasant, and with the number of appendages
that eventually litter the ground, I think Teeth bites off more than it
can chew. Mixed or average reviews.
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