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Shayne Heffernan is an Economist, Trader, Fund Manager and Venture Capitalist based in Asia. He also serves as Editor and contributor at, Founder of The Heffernan Group and currently building the company's financial services business in China. Major shareholder and CEO... More
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  • Shayne Heffernan Says It's Time To Sell

    Economist Shayne Heffernan has identified the state of the European Economy, rising debt in the USA and a Global rise in unemployment as a reason to re-evaluate portfolio holdings and in many cases, it is time to sell. While many are trying to talk the market up, the reality is the economy has not seen improvement significant enough to reflect the growth seen on the US markets.

    As Warren Buffett has said, "be fearful when others are greedy and to be greedy only when others are fearful."

    Given the run up Wall St has had on very thin volume the market is now excessively overbought, the best buy right now is the VIX.

    Volatility levels as implied by the CBOE Volatility index or VIX, are at their lowest since June 2007 without any real justification.

    Europe stave's off collapse on a week to week basis, the conflict in Syria threatens to spill over in to a period of International tension, earnings season delivered poor performance even against dramatically reduced estimates.

    Everyone should be reviewing their current portfolio and selling off stock that are near their highs, sell anything trading at over 20 in PE terms, and if you are looking to buy then buy companies with low PEs and I would suggest a focus on Emerging Markets where the economies are still growing.

    <strong>USA Unemployment</strong>

    Unemployment rates rose in 44 U.S. states in July, the most states to show a monthly increase in more than three years and a reflection of weak hiring nationwide.

    The Labor Department says unemployment rates fell in only two states and were unchanged in four.

    Unemployment rates rose in nine states that are considered battlegrounds in the presidential election. That trend, if it continued, could pose a threat to President Barack Obama's re-election bid in less than three months.

    Nationwide, hiring improved in July after three months of tepid hiring. But the national unemployment rate ticked up to 8.3 percent from 8.2 percent. Monthly job gains have averaged 150,000 this year. That's barely enough to accommodate population growth. As a result, the unemployment rate is the same as when the year began.

    <strong>USA Debt</strong>

    The Outstanding Public Debt as of 19 Aug 2012 at 12:55:58 PM GMT is:

    $ 1 5 , 9 6 8 , 1 7 5 , 5 1 0 , 9 6 0 . 5 6

    The estimated population of the United States is 313,346,561

    so each citizen's share of this debt is $50,960.11.

    The National Debt has continued to increase an average of

    $3.90 billion per day since September 28, 2007!

    A year ago this month, Standard and Poor's downgraded the nation's coveted AAA rating to a AA-plus. When Barack Obama took office in January 2009, total U.S. government debt stood at about $10 trillion. Since then, more than $5.5 trillion has been added to the national debt, which is about to hit $16 trillion. This out-of-control spending and debt is the primary reason why all three credit rating agencies, Moody's, Fitch and S&amp;P, have negative outlooks on U.S. government debt, all but assuring further rating downgrades in the near future.

    A debt-driven collapse of the U.S is closer than most Americans realize. Consider what has happened in Spain and Italy, respectively, the world's 12th- and eighth-largest economies. Just ten months ago Spain and Italy carried AA ratings, but today their debt ratings have plummeted to near-junk levels, at Baa3 and Baa2, respectively, driving their 10-year bond yields above 6 percent.

    Things are worse today than they were a year ago when the U.S. lost its AAA rating from S&amp;P. The national debt has grown by nearly 11 percent while the economy has grown by only 2 percent. And over the past four years of various government spending programs, debt has grown by 60 percent while GDP has grown 7.7 percent. So much for the benefits of Keynesian stimulus. Washington's policies have left the country without shock absorbers or an effective insurance policy to counter another crisis.


    Debt in Europe</strong>

    European banks have been encouraged to buy up the bad debts of ailing economies in southern Europe by the European Central Bank. At the start of this year, the ECB made over a trillion euros available in cheap loans for such purchases.

    The current estimated total of bad loans is double the 2008 figure. The most rapid rates of growth in bad loans have been recorded by banks in Italy, Spain and Greece. The massive rise in bad debt in the vaults of European banks has in turn led to a marked downturn in interbank lending. In June, these interbank transactions reached their lowest level since the outbreak of the financial crisis in 2007.

    It was the collapse in interbank lending in 2008 that prompted governments in Europe and around the world to pump trillions into the international banking system. In September of last year, the president of the European Commission, José Manuel Barroso, admitted that: "In the last three years, member states-I should say, taxpayers-have granted aid and provided guarantees of €4.6 trillion to the financial sector".

    Europe's statistics agency, revealed that the economies of both the eurozone and the European Union, which has 27 countries, shrank by a quarterly rate of 0.2 percent in the second quarter of the year. In the first quarter, output for both regions was flat. A recession is officially defined as two straight quarters of falling output.

    Europe's debt woes have been blamed for the sharp deterioration in the global economic outlook over the last few months. The region is the U.S.'s largest export customer and any fall-off in demand will hit order books, as well as President Barack Obama's election prospects.

    The 17-country eurozone is grappling with sky-high debt levels and record unemployment of 11.2 percent. Compared with the second quarter of last year, the eurozone's economy is 0.4 percent smaller.

    The region's economy would have slipped into recession had it not been for better-than-expected GDP figures from its two leading economies, Germany and France. Germany, Europe's biggest economy, posted quarterly growth of 0.3 percent, better than the 0.2 percent uptick forecast. France also beat expectations of a small contraction in its output to record no change in its economy for the second quarter.

    For those countries at the front-line of Europe's debt crisis, the figures make for grim reading. Unsurprisingly, Greece is faring the worst - its economy is 6.2 percent smaller than a year ago and back at the level it was in 2005.

    Portugal suffered a big 1.2 percent drop in output in the second quarter, compared with the previous quarter's modest 0.1 percent drop.

    Both Greece and Portugal have received financial bailouts from the other eurozone countries and the International Monetary Fund and were required to adopt tough austerity measures in return.

    Italy and Spain, the eurozone's third- and fourth-largest economies, shrank by 0.7 percent and 0.4 percent respectively in the second quarter.

    Both countries are struggling to convince markets they have a strategy to get a grip on their debts. Spain has even agreed to a bailout of its banks.

    <strong>Unemployment in Europe</strong>

    The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs.

    Unemployment in the economy of the 17 nations using the euro reached a revised 11.2 per cent in May and held at that level in June, the European Union's statistics office in Luxembourg said today. That's the highest since the data series started in 1995. In Germany, unemployment climbed for a fourth straight month in July, a separate report showed.

    Policy makers are weighing options to counter the turmoil that has forced five euro-area nations to seek external aid, eroded investor confidence and pushed companies to trim their workforces. European Central Bank President Mario Draghi, who met with US Treasury Secretary Timothy Geithner yesterday in Frankfurt, has pledged to do everything to preserve the euro.

    Aug 29 9:20 AM | Link | Comment!
  • Apple Inc. NASDAQ:AAPL Vs Samsung (KRX:005930), iPad, Galaxy, iPhone, SmartPhone

    Apple Inc. NASDAQ:AAPL Vs Samsung (KRX:005930)

    We have not heard the end of this epic technology battle, the Apple win in the USA was countered by a win in Korea by Samsung. The Seoul ruling was a rare victory for Samsung in its arguments that Apple has infringed on its wireless technology patents, which previously have been shot down by courts in Europe where judges have ruled that they are part of industry standards that must be licensed under fair terms to competitors.

    The Seoul Central District Court ruling called for a partial ban on sales of products including iPads and smartphones from both companies, though the verdict did not affect the latest-generation phones - Apple's iPhone 4S or Samsung's Galaxy S3.

    This battle is far more complicated than many people think as Apple and Samsung are not only competitors in the fast-growing global market for smartphones and tablet computers, but also have a close business relationship.

    Samsung, the world's biggest manufacturer of memory chips and liquid crystal displays, supplies some of the key components that go into Apple products, including mobile chips that work as a brain of the iPhone and the iPad.

    The South Korean firm overtook Apple in less than three years in smartphone markets. In the second quarter of this year, Samsung sold 50.2 million units of smartphones, nearly twice as much as Apple's 26 million units, according to IDC.

    Samsung looks like a bargain in this market.

    Institutional Holders


    % Shares Owned:25.16%
    # of Holders:129
    Total Shares Held:5,744,565
    3 Mo. Net Change:-377,130
    # New Positions:8
    # Closed Positions:4
    # Increased Positions:37
    # Reduced Positions:34
    # Net Buyers:3


    Valuation Ratios


    P/E Ratio (NYSE:TTM)10.370.3579.17
    P/E High - Last 5 Yrs.12.3762.6741.55
    P/E Low - Last 5 Yrs.8.989.729.39
    Price to Sales (TTM)
    Price to Book (MRQ)1.430.811.32
    Price to Tangible Book (MRQ)1.821.001.57
    Price to Cash Flow (TTM)6.2810.7111.55
    Price to Free Cash Flow (TTM)105.350.7675.84

    Find out more about trading stocks in Asia

    Linda Johnson,
    Business Development Director - Private Client Group,
    Heffernan Capital Management


    3 Raffles Place #07-01
    Bharat Building Singapore 048617
    Tel: +65 6329 6408
    Fax: +65 6329 9699

    Disclosure: I am long OTC:SSNLF.

    Aug 29 6:05 AM | Link | Comment!
  • Shipping In Vietnam: Trai Thien USA Inc (PINK:TRTH)

    Trai Thien USA Inc (PINK:TRTH)

    Trai Thien USA is a fast-growing Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised of six geared bulk vessels specializing in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

    After China, the primary sources of future bulk demand are India, Brazil and Vietnam. The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy.

    The Asia Pacific region accounts for 60% of the world's population and almost 70% of world sea-borne trade in bulk commodities.

    In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia.

    The Company's Vietnam-based operations are located in Ho Chi Minh City, which together with the surrounding areas, accounts for more than seventy percent of Vietnam's total annual cargo traffic.

    Pink Sheets TRTH

    Current Price $0.18

    Current PE 4.19

    Revenue Growth 148%

    Target Price 2013 $3.40

    HCM Rating Strong Buy

    Financial Highlights

    The emerging economies of the Asia Pacific (ASEAN) region will continue their growth pattern despite the continuing financial crisis in Europe according to the Asian Development Bank.

    Free Trade Agreements including ASEAN, AFTA, CAFTA, ASEAN +3 will more than triple regional trade.

    · Year-end 2011 revenues increased over 20.9% as compared to the previous fiscal year, from $12,232,991 in 2010 to $14,794,939 in 2011.

    · Income from Operations increased over 148% from 2010 to 2011, from $1,051,543 to $2,615,000

    · Net Income increased from a loss of $539,452 in fiscal 2010 to a positive $1,377,391 in 2011.

    · The Company is operating a 21,990 DWT fleet comprised of six geared bulk vessels specialized in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

    The HCM Trade Forecast is predicting that world trade will grow by 73% in the next 15 years, with merchandise trade volumes in 2025 hitting $43.6trillion compared to today's $27.2trillion.

    Investing in Tra Thien

    ASEAN +3 is the Association of Southeast Asian Nations (ASEAN), the People's Republic of China (including Hong Kong), Japan, and South Korea. Home to 600 million people, ASEAN has a combined gross domestic product (NYSE:GDP) of US$1.8 trillion with total trade valued at $2 trillion among the countries.

    ASEAN is set to explode as an economic force in 2015 as financial, trade and investment rules become integrated and seamless. ASEAN last year secured $78.5 billion in investments. Regional trade also increased by 32.9 percent to more than $2 trillion and Trai Thien is well positioned to capitalize on the growing Inter-ASEAN +3 trade.

    ASEAN is beefing up various frameworks for cooperation and development within the region and with its trading partners, in preparation for regional economic integration by 2015.

    The changing trade barriers have seen fast paced growth in agricultural and mineral exports around the region, these changes have already reflected themselves on the books at Trai Thien USA as revenue has almost tripled in the last year.

    The Trai Thien fleet has the distinct advantage of having been designed to suit the region, while huge Dry Bulk Carriers service many areas. Most of the trade in agriculture and minerals is done from ports in ASEAN that cannot accommodate the large ships, nor can the large ships be loaded and unloaded at these smaller ports due to the lack of stevedoring infrastructure.

    Trai Thien smaller fleet can service these ports directly, removing the additional costs of trans-shipping and adding savings in terms of cash and time to purchasers.

    Based on corporate and market growth and given a conservative set of ratios in our financial model, we see Trai Thien trading over $3.40 in 2013.

    The Fleet

    • Fleet of highly versatile geared bulkers with average capacity of 3,700 DWT and average age of 3 years.

    • Optimal payload capacity for growing small and medium production sector that dominates economic activity throughout the region.

    • Focus on dry bulk commodities such as forestry products, grains, cement, steel, ore and coal.

    • Vessels equipped with deck-side cranes which provide flexibility in cargo handling and accessing and servicing underdeveloped, lower cost secondary ports throughout the region.

    • Draft efficiency and deck-side gears reduce dependency on major ports and reduce risk exposure to growing operational inefficiencies affecting them.

    • In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia, Trai Thien has made deposits to acquire six larger 7600 DWT capacity new-buildings, which depending on the company's ability to meet additional capital resource requirements, are expected to be delivered in 2011 and 2012.

    • Depending on the ability to raise approximately $50m in external funding required to cover outstanding balances due on vessels in construction, for which there is no assurance, the Company will focus on what it believes to be more profitable 7000-8000 DWT vessels in order to meet growing demand for larger payload capacities while still maintaining an ability to broadly access the secondary coastal and river ports that characterize the trade.

    • Located in Ho Chi Minh City, the economic heart of Vietnam's trade and transportation activity.

    • ASEAN satellite market benefits from geographic proximity to major world economic activity drivers China and India.

    Trai Thien and China

    Our research indicates that rising trade in ASEAN +3 will propel the ASEAN trade bloc of Southeast Asia nations to become China's largest trading partner by 2015.

    The China Council for the Promotion of International Trade said the 2010 ASEAN-China Free Trade Agreement removed trade barriers, and that the value of imports and exports between China and ASEAN states could surpass $500 billion within three years.

    As China moves away from its dependency on export markets and encourages more trade with countries with which it has signed FTAs, the value of goods moving between the ASEAN bloc and China is forecast to increase at a faster rate than imports and exports between China and its more established trade partners.

    "Thanks to zero tariffs, preferential trade policies and geographic advantages, both the increasing speed and scale of that trade will be in the forefront globally and ASEAN will become China's No. 1 trading partner by 2015," said Zhang Wei, vice chairman of the China Council for the Promotion of International Trade.

    First quarter 2012 trade between China and the ASEAN nations - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - increased 9.2 percent year-over-year. That is compared with a 2.6 percent gain in trade between China and the U.S. and a 1.6 percent decline in trade between China and the EU.

    That growth followed the 24 percent increase in trade between ASEAN and China last year when the ASEAN bloc surpassed Japan to become China's third-largest trade partner after the EU and the U.S.

    Trai Thien is located at the geographic centre of ASEAN +3 and is perfectly placed to capture increasing market share in a rapidly growing market.

    Aug 29 6:00 AM | Link | Comment!
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