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Inflation, Investing and Everything

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Wednesday December 26, 2007

Fuel prices seen stoking Malaysia inflation in 2008

This article belongs to the Malaysia inflation watch story arc.

businesstimes.com.sg :

Malaysia's consumer price index (CPI) shows inflation hit a nine-month high in November [2007] and looks like it is accelerating. Figures released by the Statistics Department show November's inflation rate jumped to 2.3%, from 1.9% in October. The rise was driven largely by a 3.8% surge in the price of food and soft drinks - the biggest in two years and a direct result of the higher global prices of flour, cereal and dairy products. A Deutsche Bank survey two years ago calculated that the real rate of inflation in the Klang Valley was closer to 8%.

Inflation will gain impetus next year because of pending increases in the prices of fuel and public transport. Price rises could also put pressure on the government, which is likely to call a general election next year. Fuel prices will be a particularly tricky problem for the government. They are being reviewed, and while details so far have been sketchy, most analysts reckon fuel could go up by at least 20-30 sen (9-13 Singapore cents). The government has already announced toll rate hikes on six highways ranging from 9-50%. The upshot of all this, according to investment bank CIMB, is an inflation rate of 3.3-3.8% in 2008.

Updated :

1. Angry citizens protest as Malaysia eliminates subsidies, raising petrol prices 40% overnight
2. Malaysia petrol and diesel price hike to bite Singapore hard, worsening record inflation rate

(2007-12-26 19:16:51 SGT) [Biz] Permalink Comments [1]

Cashed-up China set to hunt down more US bargains

channelnewsasia.com :

Fresh from a five-billion-dollar investment in Morgan Stanley, China's cashed-up government is set to go shopping for more bargains as it takes advantage of the financial turmoil in the United States. China's sovereign wealth fund created global headlines on Wednesday [19 Dec 2007] when it seized on Morgan Stanley's credit problems and grabbed a 9.9% stake in one of Wall Street's oldest and most storied investment firms. "It wouldn't surprise me if there were more Chinese investments in financial institutions in the US," Paul Cavey, a Hong Kong-based economist with Macquarie Bank, told AFP.

CIC acted with exquisite timing on Morgan Stanley, according to Zhang Ming, from the China Academy of Social Sciences, who agreed that the fund would strike again as it took advantage of the credit crisis in the United States. In Morgan Stanley's case, it needed cash after it booked a 3.59-billion-dollar fourth-quarter loss due to its involvement in the subprime mortgage fiasco. CIC's counterparts in Singapore and the Middle East have also bought into large financial firms recently in similar circumstances.

CIC raised some eyebrows in Washington in May when, four months prior to its official launch in September, it bought into US private equity group Blackstone for three billion dollars. When CIC launched, many analysts predicted it would be careful not to invest in politically sensitive areas such as the energy sector, but Cavey said this may now not be the case. "Energy and resources are very likely areas for CIC to buy into," he said, adding the entire world, and not just the United States, must be prepared for China.

(2007-12-26 18:40:49 SGT) [Biz] Permalink

"Energy sector is hot right now"

This was caught by a spam filter recently :

The Selloff is over
HUge Volume spike today all on an UPtick
This s t o c K is going to soar in coming days
XXXXX ...
Energy sector is hot right now, and everyone wants in

- Talk about spam catching on to the latest trends. Great timing too, as NYMEX crude oil has broken above consolidation around the $90 level, and the oil index has gone above its trading range as well.

(2007-12-26 18:14:07 SGT) [Musings] Permalink

Toshiba builds ultra-small nuclear reactor

hardware.slashdot.org -> nextenergynews.com :

Toshiba has developed a new class of micro size nuclear reactors that is designed to power individual apartment buildings or city blocks. The new reactor, which is only 20 feet by 6 feet, could change everything for small remote communities, small businesses or even a group of neighbors who are fed up with the power companies and want more control over their energy needs.

The 200 kilowatt Toshiba designed reactor is engineered to be fail-safe and totally automatic and will not overheat. Unlike traditional nuclear reactors the new micro reactor uses no control rods to initiate the reaction. The new revolutionary technology uses reservoirs of liquid lithium-6, an isotope that is effective at absorbing neutrons. The lithium-6 reservoirs are connected to a vertical tube that fits into the reactor core. The whole process is self sustaining and can last for up to 40 years, producing electricity for only 5 cents per kilowatt hour, about half the cost of grid energy.

Toshiba expects to install the first reactor in Japan in 2008 and to begin marketing the new system in Europe and America in 2009.

- You can be pretty sure that's not quite what those environmentalists were envisioning when they were yelling for "distributed power generation". They were all probably thinking solar or wind instead of a nuclear reactor in the basement.

It does literally bring a new dimension to the question of "would you live next to a nuclear power plant?" The question now becomes "would you live on top of one?" I'm sure the anti-nuclear folks will go absolutely bonkers, but from the other point of view, it does look like they have sized it appropriately (200KW should serve about 200 apartment units at 1KW each), it will provide baseload power, and as an added bonus it could also provide heat in addition to electricity. Read this comment here.