MyEg and MyGirl Friday

Zana is a busy professional working in a prestigious organisation known for employing only the best in their fields. To keep up with the organisation's well known performance, the staff there have little time to dabble in shares market. They may have the money to invest but not the time to keep track. So many of them just confine themselves to mutual funds. Slow and steady alright but the fun is in the market.

Early this year Zana had a bonus bounty and had asked me to invest as I like for her. So I acted as her fund manager so to speak. She apparently has been impressed with the little success I've made over the years in the market despite my busy practice.

I told Zana to stick to my decisions and not to ask too many questions ( not the normal fund manager I must say! After all I am not paid for this task so could afford to be dictatorial :)

And with Zana's fund I went to the market and after some general research I chose to invest her fund in MyEg, the company which provides tax collection services system to the Custom Departments. I bought the shares at 2.93 and for awhile due to some delays in system implementation, had gone down quite badly. But I persisted telling Zana that the shares would rise once everything is in place. At times though, I was regretting putting all her fund in one basket!

Today MyEg hits 3.95 and hopefully will continue ascending

But as expected today MyEg has soared beautifully. Zana has made a tremendous capital appreciation well over her investment on those slow and steady funds. A real joy to see such investment rise and rise. I wish I had put my own fund in the stock and ride with it.

In the meantime, I have yet to inform Zana of her fortune. She would doubtlessly be pleasantly surprised if she happened to read my blog today.

 I must however disclose that Zana has helped me with a lot of tasks without taking the credit. Thanks Zana,  my Girl Friday!

ASNB Funds: Taxation of Dividends

All these years many of us have taken for granted that dividends derived from ASNB funds are not taxed forever unlike mutual funds managed by other companies. Well it's not strictly correct that these ASNB funds are going to be tax-exempted forever except perhaps for ASB.

Reading the Master Prospectus 2013 -2014 today , I discovered that the tax exemptions for all funds except ASB are temporary in nature and investors should not be taken by surprise if the time should come when all their dividends issued by the various ASNB funds will be taxed in the future.

The current taxation status of the funds are as below:

The Funds managed by ASNB are granted an exemption from income tax under Section 127(3)(b) of the Income Tax Act, 1967

Funds	Taxation Status
ASB	The Fund is exempted from income tax for the year of assessment 1991 and subsequent years.
ASN ASN 2 ASN 3 ASG-Pendidikan ASG-Kesihatan ASG-Persaraan ASW 2020 ASM ASD	These Funds are granted an extension on the period of exemption from income tax for the year of assessment 2007 to the year of assessment 2016.
AS 1Malaysia	The Fund is exempted from income tax for the year of assessment 2009 to the year of assessment 2018.

Source: ASNB Master Prospectus 2013 -2014

There are many other aspects of these funds which are unknown unless you care to read the voluminous Master Prospectus. The point is if so-called new developments are taking place, you cannot feign ignorance as they are all already stated in the prospectus . So, go on read the prospectus to increase your knowledge about the funds you are investing in.

Icon Offshore : The Shockingly Ugly Ride

It looks like my investment in Icon Offshore is going to stay there for the next two years. With the current downgrading of the oil and gas sector, we can expect many of the local players in this industry will be in the doldrums. There are several factors contributing to this state of affairs from delayed projects to the rising stiff competition from foreign concerns. And there is also the fact that this industry is cyclical in nature.

Lamenting after the event whilst irritating, need to be released so as to learn from the debacle that I let myself into and risk my fund to existing in a dormant state. I have had this heart-dipping experience before during the Global Financial Crisis (GFC) in 2007-2008 when I made extensive losses in my plantation and construction stocks. I used the "opportunity" to buy more into stocks such as MRCB,Sime Darby and HSL and managed to recoup my losses by 2010.

Icon Offshore  IPO was 1.85 on 25 June 2014
 and now on a tumbling ride

However this current scenario is different in the sense that the stock I bought is recently launched  as an IPO, though now I am encouraged to think that the stock was unfairly valuated at 1.85. It made only a slight premium for about ten days then it started falling and now it has fallen precipitously with the current declining contract rate for offshore transport services. That has sealed the fate for Icon offshore. I did think of dollar cost averaging but my instinct told me to let it go and I am glad I did just that.

Actually I was not successful in my application for Icon IPO instead I bought over the counter during those crucial 10 days after its launching and was nicely trapped by those who have prior knowledge of this industry and sold their shares relentlessly. It reminds me of the ugly Astro IPO but my loss on Icon this time is multiple that.

Then I remember a book on investment by Burton M Malkiel entitled " A Random Walk on Wall Street" where there was a warning about buying IPO stocks. He reminds that IPO stock is launched when somehow the people who own the company have negative knowledge about the environment in which it is operating. And these people are the ones who will sell their shares gleefully post IPO and make money from ignorant retail investors. They actually time their IPO launch and it is not a coincidence, it is a well thought out timing to share their losses with the public.

Remember JCY? That technology company which had made millions before deciding  to list on Bursa just before the hard drive industry started to decline? Yet had we  read the financial report of Western Digitals and Seagate which order its supplies from JCY, we would not have been so adventurous in buying into the company's stock. The financial results were showing a decline in profit! The price was from 1.60 (IPO) to as low as 0.35 sen in less than nine months. The stupid thing I did was to dollar cost average and got myself right down to the pit. No fun there I must admit.

I have not learnt my lessons simply because I thought Icon was related to some government-linked outfit and its association with Petronas, our national oil giant, and so would not go on this route of failed ride and lose 30% of my investment on paper.

Though my loss is partly compensated by the uptrend in TM stock, I found this experience humbling and will definitely think thrice about buying IPO stocks. The last eight years have seen unhealthy activities on IPO stocks like Caring which was propped up by a single wealthy person and when he sells at the height of the price, the whole stock price comes tumbling down. The market is indeed a jungle, enter at your own risk!

Ebola At Our Gate?

I was rather down when I read the statement from our immigration Department which stated that there would absolutely be no restriction of entry for Students coming from Africa despite the current Ebola crisis occurring  largely in West Africa and now has spread to Nigeria.

Rapid travel by air is the culprit. Those who travel are well advised to take precautions like washing hands with soap and water frequently and resort to wearing masks if the passenger next to you is coughing and sneezing all night on long-haul journey.

The news of an African student entering Malaysia with signs and symptoms which are suspected to be an Ebola infection is disheartening and frightening to say the least. Though Malaysia is equipped to deal with the scourge having dealt with the SARS problem ten years ago, we cannot but be highly concerned. Unlike SARS, Ebola Virus Disease (EVD) has a high case fatality rate, killing almost 50% of its victims and like SARS there is no cure, neither  is there a vaccine to prevent it.

The report of the fourth doctor to have died of the infection in Liberia is disconcerting though we understand the condition there is a lot less favourable in terms of detection, diagnosis, management of cases, contact tracing and isolation procedures. The problem there is compounded by poor education of the people and the belief in the unknown, poverty and the  mistrust of health personnel.

Though it is said that Ebola virus is hard to be transmitted, the risk of fatality to infection is high due to its virulence nature and massive immune response causing widespread internal bleeding in organs.

So do be careful when you are in the crowded international airports. You never know.

Mid-Autumn Mooncake Festival Celebration 2014

The Mid-Autumn Festival falls on the 15th day of the eighth month of the Chinese lunar calendar, it's a joyous festival celebrating the harvest (in the past), family and friendship.

One of the most important part of celebrating the Mid-Autumn Festival is to buy and give mooncakes to your friends and family.

For me the best part is surely eating slices of a mooncake together....

Yummy Lotus Paste Filling

The mooncake is round, like the moon, and this represents reunion of family and friends. When friends and relatives eat slices of the mooncake together, the moment signifies that they will be reunited in the future. And If you eat mooncakes given to you as a gift by other people, it is a sign that you will meet them again.... all good and happy thoughts! A beautiful tradition.

AMB Value Trust Fund 2014:Unit Split and Income Distribution

For financial year ending on 31 August 2014, AMB VTF has decided to go for a unit split of 1:6 that is one unit free  for every existing six existing units that an investor has on Thursday 28 Aug 2014 when the NAV was 0.5325. Transaction was suspended on Friday 29 Aug.

Spreading Love on MERDEKA day

Hence if you had 500k units then, you would have an additional 83,333.33 free on the following working day Tuesday 02 Sept. when the NAV was down to 0.4564 translated into an income of RM38,033.33 and your accumulated units now stand at 583,333.33.

Basing on the NAV on 28 Aug, your income distribution is at 14.28%. But to calculate your annual return on investment you have to go back to the total capital you have invested at the various NAVs over the period of investment.

I have been investing in this unit trust for just over two years (after holding off for a number of years due to lack of certainty ). When I compare this investment with say AS1M, the same capital over a two year period at a dividend rate of 6.60 sen per annum,  I must say AMB VTF has given me more return on my investment by about 16% over AS1M's return. For me this asset class in my portfolio is doing just fine.

So folk I have decided to let my money stay in AMB VTF for another three years to maximise the returns (barring any risk factors in the financial market of course). Another thing, I always look forward to celebrating Merdeka every year when more love is being spread by AMB VTF.

Polypharmacy - A Question of Ethics or Pure Ignorance

I have come across quite a number of patients coming to my clinic seeking for treatment for the same condition after having attended other private clinics. I have chosen a couple of paediatric cases. Both children, one is a three year-old toddler and another is one and half-year old. They both suffered from intractable diarrhoea and vomiting. The older one had been suffering for more than ten days and the latter for more than a week. They both looked listless and irritable. They had not been feeding well and appeared dry and thin. The little one's bottom was raw due to prolonged purging.

According to both mothers they had been to clinics and were prescribed medications which they kept giving to their children and yet the diarrhoea never seemed to ease let alone cease.

The mother (AR) of the older child was desperate and without being prompted had proceeded to take out from her bag all the medications prescribed by the clinic and altogether with consultation, she said she forked out RM75.00. I noticed that the woman was not really educated and yet had the sense of bringing all the medications which had failed to "cure" her child, to show them to me. I was impressed as not many would bring along their "failed" or ineffective medications and yet expect the next doctor to "cure" them.

The second mother (CP) did not bring the prescribed drugs but I made her go home to get them for me to see. I always tell this kind of patients that since I don't know what drugs have been given to them earlier, I might prescribe the same ineffective drugs and they would still not get better.

What I found was interesting. For simple diarrhoea, an array of drugs: an anti-diarrhoeal preparation, anti-vomiting, anti-fever,vitamin and anti-colic were prescribed between the two kids.

Five different types of drugs prescribed
for childhood diarrhoea (Mother AR)

Three different types of drugs to treat
diarrhoea in a child  (Mother CP)

All the kids needed was an oral rehydration therapy using a pre-packed oral rehydration salts. These should be given to them as directed till the diarrhoea stops  and other soft diet like porridge and milk can be continued.

In this case, the purging should not be prevented by giving an anti-diarrhoeal preparation as the body is throwing out "something" which is not safe for absorption by the body. Use of many drugs for this simple diarrhoea which 85% of the time is due to virus, would only prolong the diarrhoea and discomfort as happened in these two cases.

For most childhood diarrhoea only
oral rehydration salt (ORS) solution is needed

Why are these drugs prescribed? It seems to me either the practitioner is treating the symptoms such as vomiting rather than the root cause of the condition or for pure monetary considerations: the more drugs are prescribed, the more profit is generated (and likely the more side-effects). Either way, the patients suffer. It is an undesirable outcome.

For both children, I just advised their mothers to stop those drugs and offer them oral rehydration salt (ORS) and told them to return in 48 hours if the diarrhoea had not subsided. True enough they both recovered on that treatment alone and at the cost of RM7 (without consultation fee)

I have seen adults also being prescribed an anti-diarrhoeal preparation when all they need is only a replacement fluid therapy till their diarrhoea usually due to gastritis or food poisoning stops. Most diarrhoea except for bloody ones are supposed to be treated this way. Over treatment with several drugs will only worsen or prolong the gastrointestinal condition.

Polypharmacy is unethical and ignorance is unacceptable.