Don’t be greedy, Eldon advises retail investors
Tags: Bank Negara Malaysia | Bubble | David Eldon | DJIA | FBM KLCI | FIDE | Free economy | Global stock market rally | Greedy | Hang Seng Index | HSBC | Noble Group Ltd | regulators | Straits Times Index | Taiex | Take profit | Western economies
Written by Ellina Badri
Monday, 02 November 2009 11:40
KUALA LUMPUR: With the global stock market rally appearing to lose steam given a lack of fresh leads and a rally “fatigue”, investors are again forced to decide on their next course of action.
For one, a well-known former banker who has been in the corporate world for the past four decades, David Eldon, tells investors, particularly individuals, that it may be time to stop being greedy and to take profit when reasonable gains have been made.
“Don’t try to squeeze the last dollar of profit. Take profit when you’ve made a decent percentage,” he told The Edge Financial Daily in an interview.
Several markets, including the local bourse, reached their year’s highs in October, driven by optimism of a global recovery but have since retreated as key data signals to investors that they could be getting ahead of themselves.
The FBM KLCI reached its 52-week high of 1,270.44 points on Oct 21, while Taiwan’s Taiex rose to 7,811.92 points a day earlier. Singapore’s Straits Times Index rose to 2,739.55 points on Oct 15, while Hong Kong’s Hang Seng Index reached its year’s high of 22,620 points on Oct 23.
Eldon, a Scot who had been chairman, chief executive officer and executive director of the Hongkong and Shanghai Banking Corp (HSBC), and Malaysia CEO of the Saudi British Bank, believes the global recovery is currently unsustainable.
Indeed, markets faltered in the last week of October, after the US reported weak company earnings and an unexpected fall in September housing data.
The Dow Jones Industrial Average (DJIA), which rose to its 52-week high of 10,119.4 on Oct 21, after breaching the 10,000-point level for the first time in a year, failed to maintain its momentum amid the release of weak data.
Indeed, US markets suffered a pre-Halloween scare last Friday with the DJIA tumbling 249.85 points or 2.51% to 9,712.73.
“There is still some correction to come. It may be more selective, but there is a downturn to come, and let’s just hope people in Asia are wise to it.
“The problem in Asia, and perhaps other parts of the world, is that people are reluctant to take a profit if the stock market is still going up. Because they want to reach the top of the market — that doesn’t happen in reality,” Eldon said.
Eldon tells retail investors not to wait to squeeze out the last ringgit from their stock purchases. They should sell when they’ve chalked up a decent percentage. Photo by Chu Juck Seng
He was in Kuala Lumpur last week to give a talk to directors of financial institutions, as part of the financial institutions directors’ education (FIDE) programme, which is jointly offered by Bank Negara Malaysia and Malaysia Deposit Insurance Corp. (See page 8 for Eldon’s luncheon talk entitled Over-regulation and Other BS.)
Among other positions, Eldon is a senior adviser at PricewaterhouseCoopers Hong Kong, chairman of the Dubai International Financial Centre Authority and Singapore-listed Noble Group Ltd, a commodities trading company.
Eldon said stock markets were something he felt strongly about, as institutional investors often led the market’s rise or fall, leaving retail investors to pick up the pieces.
“When institutional investors enter the market, this becomes a bit of a self-fulfilling prophecy because once you start buying into equities, they start to rise. Then retail investors come in, because they see the market rising, and continue to go in as it keeps rising.
“Once things start to turn, for example if company results don’t come out as good as anticipated, or interest rates start to rise, and people can now put money in banks instead of stocks, institutional investors are the first to leave the market.
“Their money comes out in big chunks, so the market starts to fall. Who’s left holding the baby? Retail investors,” Eldon said.
Meanwhile, he said with more problems in the Western economies yet to surface, “there may very well be another downturn coming”, though it would not be as severe as the one just past.
Challenges for regulators
On the role of regulators in helping to stem crises, Eldon said it would be difficult for them to restrict businesses in a free economy.
“For example, do you tell Goldman Sachs there is a limit to the business they can do, and the authorities will regulate and that’s the end of the story? Do the good people of Goldman go off and start off their own company and do exactly what they were doing there, or should they be regulated in the same way?
“Where do you draw the line? This is one of the problems of doing business in a free economy. The moment you start putting restrictions, the economy has much less freedom in it,” he said.
Eldon also said while this might not be desirable, it was a fact that had to be accepted as such was the nature of the world economy.
But ultimately, he said, public opinion could have a big influence in how markets would be regulated.
On whether increased competition could help markets avoid the excesses seen in recent times, such as via the demerger of big banks, he said while this could happen, its implementation would depend on the willingness of the market to carry it out.
Asked what action could be taken once a bubble is perceived, he said this was not possible as people often thought situations differ from one crisis to another.
“History will tell you that we don’t seem to remember anything. If there was something that we could have done, we surely would have done it.
“But people say, it’s different this time. That was how the bubble was created the last time. And it very rarely is that different,” he said.
He also said if there were a way to “prick the bubble”, the question then arose of who would do it, adding it would be a major challenge for the world’s regulators to make a concerted effort to manage global economic and financial problems.
“It requires a lot of resolve from world leaders to actually say to themselves, we are going to effectively say to the world, this is what you’re going to have to put up with. For example, with the euro, because it is managed from a centre, monetary policy may suit Germany but not Spain, or benefit Ireland, but not other members.
“If you try to translate all of that into doing something for the globe, I think it will be extremely difficult to do,” he said.
Where Asia stands
During his talk at the FIDE programme, Eldon said one main reason why the Asian financial services industry had been shielded from the West’s financial crisis was the lack of sophisticated financial products here.
Despite this, however, he said the industry here had succeeded in growing and would continue to do so, albeit in a more controlled manner.
“That gives it a good future. You have two choices, either really let the brakes off, or you do it in a gradual way. You can take it step-by-step, and China is particularly good at this. If we continue that sort of policy, it’s fairly basic, and it may not be terribly exciting, but it’ll save you from getting into huge problems,” he said.
This article appeared in The Edge Financial Daily, November 2, 2009.
Tuesday, 3 November 2009
Malaysia has lost its way, says Ku Li
Malaysia has lost its way, says Ku Li
Tengku Razaleigh says many Malaysians are losing faith in their future despite the evidence of material progress. — File pic
KUALA LUMPUR, Nov 2 — Tengku Razaleigh Hamzah has urged the country to shed “crude nationalism” and come to terms with the reality that many Malaysians are losing faith in their future despite the evidence of material progress.
The veteran Umno man told the British Graduates Association at a dinner here last night that it was a fact that those Malaysians who “can stay away and settle overseas do so with the encouragement of their parents”.
“Their parents tell them to remain where they are, there is nothing for them here. The illusion of nostalgia does not explain why parents fight to send their children to private and international schools rather than the national schools they themselves went to.
“The very same politicians who recite nationalist slogans about our national schools and turn the curriculum into an ideological hammer send their own children to international schools here or in Australia and Britain.
“They know better than anyone else the shape our schools are in. It is no illusion that people do not have the faith in our judiciary and police that they once had,” said Tengku Razaleigh.
The former Finance Minister pointed out that the country inherited at independence a functional country with independent institutions.
These included “the Westminster model of parliamentary democracy, civil law grounded in a Constitution, a capable and independent civil service, including an excellent teaching service, armed forces and police, good schools, sophisticated trade practices and markets, financial markets”.
While he pointed out that the challenges of nation building were serious, but the country “faced them with an independent judiciary, a professional civil service and a well-defined set of relationships between a federal government and our individually sovereign states.”
Indeed we were able to face these challenges because these institutions functioned well.
“Institutionally, we had a good start as a nation. Why is it important to recall this?
“For one it makes sense of the feeling among many Malaysians and international friends who have observed Malaysia over a longer period that Malaysia has seen better days. There is a feeling of wasted promise, of having lost our way, or declined beyond the point of no return.”
He said that such a feeling was too pervasive to be put down to the nostalgia of always finding the good old days best.
Malaysians, Tengku Razaleigh contends, are losing faith in their future despite the evidence of material progress.
“We have lots of infrastructure. Lots of malls and highways. Especially toll highways. It is not for want of physical infrastructure, dubious as some of it is, that we feel we languish. It is a sense that we are losing the institutional infrastructure of civilised society.”
He said that if Malaysians felt a sense of loss, or tell their children not to come home from overseas, or are making plans to emigrate, it was not because they did not love the country, or were ungrateful for tarred roads and bridges.
“It is because they feel the erosion of the institutional infrastructure of our society. Institutional intangibles such as the rule of law, accountability and transparency are the basis of a people’s confidence in their society.”
He said it was time to shed the “crude nationalism” which refuses to acknowledge things “not invented here”.
He pointed out that Malaysia had a good start because it had inherited from the British a system of laws, rights and conventions that had been refined over several hundred years.
Malaysia, he said, also inherited the English language, and with that a strong set of links to the English-speaking world.
“There should be a rethinking of our attitude to the English language. By now it is also a Malaysian language. It would be sheer hypocrisy to deny its value and centrality to us as Malaysians.
“Do we continue to deny in political rhetoric what we practice in reality, or do we grasp the situation and come up with better policies for the teaching and adoption of the language?”
He urged Malaysians to reconnect with Britain as it is today instead of recycling stale colonial era stereotypes.
New Chinese stock exchange opens with a surge
New Chinese stock exchange opens with a surge
China’s GEM has been likened to a “VIP table on top of a big casino”. — Reuters pic
SHANGHAI, Nov 2 — The highly anticipated opening of China’s new Nasdaq-style stock exchange last Friday is already being seen as a watershed moment for the country’s capital markets, providing new opportunities for Chinese investors and an alternative source of financing for upstart companies.
Investors went on a wild buying spree during the first day of trading Friday on the Growth Enterprise Market, or GEM, sending the shares of some companies soaring as much as 210 per cent.
“This is potentially a major game changer in China’s high-tech industry,” said Yu Zhou, a professor at Vassar College in Poughkeepsie, NY “For about 10 years, the biggest problem for China’s innovative companies was finance. You know it is very hard for them to get loans from state-owned banks.”
The buying was so feverish that regulators, trying to calm the market, temporarily suspended trading in the shares of all 28 newly listed companies at different points on Friday, and analysts warned about the risks posed by excessive speculation and inflated stock prices.
Stocks on the GEM opened sharply lower today, with many shares down 10 per cent.
Still, the first batch of companies listed on the GEM — including film producers, software makers and pharmaceutical companies — raised about US$2 billion (RM6.8 billion) in their initial public offerings, far more than the companies had hoped.
By the end of trading Friday, the combined market value of the newly listed companies was more than US$20 billion, creating fortunes for the founders and investors in those companies.
China is already the world’s biggest market for initial public offerings, and its resurgent economy is flush with capital and investors with a big appetite for risk.
But trading experts have long complained that this country’s market system is seriously flawed, partly because of a misallocation of capital.
State-run banks lend primarily to state-owned companies, which tend to be inefficient. Listings on the Shanghai and Shenzhen stock exchanges are dominated by government enterprises. Young private Chinese companies generally list their shares overseas, in Hong Kong or on the Nasdaq or New York Stock Exchange, because there are few opportunities for stock listings inside the country.
But the government hopes to change that with the creation of the GEM, which is based in the southern boomtown of Shenzhen. The government is seeking to create a more efficient capital market system, one that would steer investment capital to small and midsize private enterprises — companies that can help reshape the economy through technology and innovation, rather than low-price exports.
Although the GEM, which is also known here as ChiNext, is tiny when compared with the Shanghai and Hong Kong stock exchanges, regulators hope it will eventually compete with Nasdaq and entice more Chinese companies to list with GEM.
The GEM is also expected to give a boost to China’s venture capital and private equity markets, which have been hampered by a system that until now has not provided wealthy investors with what industry insiders call an exit strategy, or a way to eventually cash out of their investments in small companies through a domestic stock market.
There are big hurdles to creating a stock exchange similar to Nasdaq, which includes companies like Microsoft, Intel and Google. For instance, volatile stock prices and high valuations could hurt the new bourse’s credibility with entrepreneurs and investors.
Chinese investors are known to speculate, favouring momentum buying and selling rather than the underlying fundamentals of a company, analysts say. Indeed, the casino-like nature of the Shanghai and existing Shenzhen exchanges, combined with government intervention, have added to the volatility of the Chinese markets.
Analysts warn that the GEM could also be prone to similar speculative frenzies.
Andy Xie, an economist who formerly worked at Morgan Stanley, is already calling the GEM a “VIP table on top of a big casino.”
Chang Chun, an expert on financial markets at the China Europe International Business School in Shanghai, said that China needed a market to serve start-ups, but “the issue is the maturity of Chinese investors.”
Before trading opened Friday, he said, regulators created rules to guard against excessive volatility and even warned investors that they would crack down on aggressive speculation. Still, Friday’s opening — with 28 companies beginning to trade at once — was marked by wild price swings.
One cause of concern was the huge valuations of the first batch of stocks listed Friday.
The average GEM-listed company has a price-to-earnings ratio of about 100 — meaning investors are paying about US$100 for every US$1 of 2008 earnings. By comparison, the Standard & Poor’s 500-stock index of big American companies trades at closer to 20 times earnings.
GEM stocks are also priced far above Shanghai stocks, which have long been considered inflated by United States standards.
Still, hundreds of Chinese companies are eagerly awaiting their turn to list on the GEM, and many analysts say the exchange will fill an important need: directing financing toward smaller start-ups that help rebalance economic growth. Zhou at Vassar said she had heard that there were over 1,000 companies in Beijing’s high-tech district alone that met the requirements to list shares on the GEM exchange.
Analysts say many more start-ups will be eager to list after seeing the riches made by the first group of companies to go public on the GEM.
For instance, Wang Zhongjun and his brother Wang Zhonglei are the founders of Beijing-based Huayi Brothers Media, one of the country’s leading film producers. Shares in their company jumped 148 per cent Friday, for a valuation of about US$1.7 billion. — NYT
China’s GEM has been likened to a “VIP table on top of a big casino”. — Reuters pic
SHANGHAI, Nov 2 — The highly anticipated opening of China’s new Nasdaq-style stock exchange last Friday is already being seen as a watershed moment for the country’s capital markets, providing new opportunities for Chinese investors and an alternative source of financing for upstart companies.
Investors went on a wild buying spree during the first day of trading Friday on the Growth Enterprise Market, or GEM, sending the shares of some companies soaring as much as 210 per cent.
“This is potentially a major game changer in China’s high-tech industry,” said Yu Zhou, a professor at Vassar College in Poughkeepsie, NY “For about 10 years, the biggest problem for China’s innovative companies was finance. You know it is very hard for them to get loans from state-owned banks.”
The buying was so feverish that regulators, trying to calm the market, temporarily suspended trading in the shares of all 28 newly listed companies at different points on Friday, and analysts warned about the risks posed by excessive speculation and inflated stock prices.
Stocks on the GEM opened sharply lower today, with many shares down 10 per cent.
Still, the first batch of companies listed on the GEM — including film producers, software makers and pharmaceutical companies — raised about US$2 billion (RM6.8 billion) in their initial public offerings, far more than the companies had hoped.
By the end of trading Friday, the combined market value of the newly listed companies was more than US$20 billion, creating fortunes for the founders and investors in those companies.
China is already the world’s biggest market for initial public offerings, and its resurgent economy is flush with capital and investors with a big appetite for risk.
But trading experts have long complained that this country’s market system is seriously flawed, partly because of a misallocation of capital.
State-run banks lend primarily to state-owned companies, which tend to be inefficient. Listings on the Shanghai and Shenzhen stock exchanges are dominated by government enterprises. Young private Chinese companies generally list their shares overseas, in Hong Kong or on the Nasdaq or New York Stock Exchange, because there are few opportunities for stock listings inside the country.
But the government hopes to change that with the creation of the GEM, which is based in the southern boomtown of Shenzhen. The government is seeking to create a more efficient capital market system, one that would steer investment capital to small and midsize private enterprises — companies that can help reshape the economy through technology and innovation, rather than low-price exports.
Although the GEM, which is also known here as ChiNext, is tiny when compared with the Shanghai and Hong Kong stock exchanges, regulators hope it will eventually compete with Nasdaq and entice more Chinese companies to list with GEM.
The GEM is also expected to give a boost to China’s venture capital and private equity markets, which have been hampered by a system that until now has not provided wealthy investors with what industry insiders call an exit strategy, or a way to eventually cash out of their investments in small companies through a domestic stock market.
There are big hurdles to creating a stock exchange similar to Nasdaq, which includes companies like Microsoft, Intel and Google. For instance, volatile stock prices and high valuations could hurt the new bourse’s credibility with entrepreneurs and investors.
Chinese investors are known to speculate, favouring momentum buying and selling rather than the underlying fundamentals of a company, analysts say. Indeed, the casino-like nature of the Shanghai and existing Shenzhen exchanges, combined with government intervention, have added to the volatility of the Chinese markets.
Analysts warn that the GEM could also be prone to similar speculative frenzies.
Andy Xie, an economist who formerly worked at Morgan Stanley, is already calling the GEM a “VIP table on top of a big casino.”
Chang Chun, an expert on financial markets at the China Europe International Business School in Shanghai, said that China needed a market to serve start-ups, but “the issue is the maturity of Chinese investors.”
Before trading opened Friday, he said, regulators created rules to guard against excessive volatility and even warned investors that they would crack down on aggressive speculation. Still, Friday’s opening — with 28 companies beginning to trade at once — was marked by wild price swings.
One cause of concern was the huge valuations of the first batch of stocks listed Friday.
The average GEM-listed company has a price-to-earnings ratio of about 100 — meaning investors are paying about US$100 for every US$1 of 2008 earnings. By comparison, the Standard & Poor’s 500-stock index of big American companies trades at closer to 20 times earnings.
GEM stocks are also priced far above Shanghai stocks, which have long been considered inflated by United States standards.
Still, hundreds of Chinese companies are eagerly awaiting their turn to list on the GEM, and many analysts say the exchange will fill an important need: directing financing toward smaller start-ups that help rebalance economic growth. Zhou at Vassar said she had heard that there were over 1,000 companies in Beijing’s high-tech district alone that met the requirements to list shares on the GEM exchange.
Analysts say many more start-ups will be eager to list after seeing the riches made by the first group of companies to go public on the GEM.
For instance, Wang Zhongjun and his brother Wang Zhonglei are the founders of Beijing-based Huayi Brothers Media, one of the country’s leading film producers. Shares in their company jumped 148 per cent Friday, for a valuation of about US$1.7 billion. — NYT
Wednesday, 28 October 2009
Sector Timing is a process of continuous upgrading your investment holdings to maximize portfolio returns.
A simple strategy for keeping your portfolio invested in the strongest sectors of the stock market at all times. The strategy behind the Sector Timing Report is a process of continuous upgrading your investment holdings to maximize portfolio returns. Our upgrading strategy works because as economic and market conditions change, new sector leaders rise to the top of our proprietary sector scoring system. We buy these top ranked sectors and hold them for as long as they outperform their sector peers. When a holding starts to drop in rankings we sell it and move on the the next hot sectors in the market. Rebalancing our holdings monthly keeps us in the latest leadership sectors at all times.
Market Timing: Taking advantage of the periodic bouts of market madness
The most important use of past information is to tell us when the market has moved too far out of line.
By looking at the chart, you would have noticed that the price rises of 1972 or 1981 or 1987 (or 1993 or 1996 or 2007) were excessive and could not possibly be sustained. If we were rational at that time, we should have liquidated our holding and got out of the market. (wishful thinking!! worth a serious look into!!!)
Similarly, in 1975 or 1976/1978 or 1986 (or 1998 or 2008), by looking at the chart, we could have seen that the market had become very undervalued and we should have increased our holding, even if it meant that we had to borrow money to do so. (shocking!!hmmm!!!)
For the rest of the time, we should buy individual shares as and when we believe they have become undervalued, keeping the chart in the background as a point of reference when we evaluate individual shares. So long as the market as a whole is not too far above the trend line, we can purchase shares which are undervalued according to our computation. Provided we are reasonably good in our valuation, the long-term improvement in the market should ensure that we make money over the long run. (very sound advice indeed)
At times, the market may fall below or even well below the level at which we have made our purchases. This should not worry us because we have based our purchases on good dividend yield and we do not need to sell. Furthermore, we can take the opportunity to buy more shares and average down the prices of our investments.
Occasionally, we may even stand to make a lot of money by selling out if our chart tells us that the market has gone mad, as it is prone to now and again.
We are therefore practising a very defensive strategy, only buying if the shares are undervalued and quickly selling to take advantage of the periodic bouts of market madness when they occur.
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
By looking at the chart, you would have noticed that the price rises of 1972 or 1981 or 1987 (or 1993 or 1996 or 2007) were excessive and could not possibly be sustained. If we were rational at that time, we should have liquidated our holding and got out of the market. (wishful thinking!! worth a serious look into!!!)
Similarly, in 1975 or 1976/1978 or 1986 (or 1998 or 2008), by looking at the chart, we could have seen that the market had become very undervalued and we should have increased our holding, even if it meant that we had to borrow money to do so. (shocking!!hmmm!!!)
For the rest of the time, we should buy individual shares as and when we believe they have become undervalued, keeping the chart in the background as a point of reference when we evaluate individual shares. So long as the market as a whole is not too far above the trend line, we can purchase shares which are undervalued according to our computation. Provided we are reasonably good in our valuation, the long-term improvement in the market should ensure that we make money over the long run. (very sound advice indeed)
At times, the market may fall below or even well below the level at which we have made our purchases. This should not worry us because we have based our purchases on good dividend yield and we do not need to sell. Furthermore, we can take the opportunity to buy more shares and average down the prices of our investments.
Occasionally, we may even stand to make a lot of money by selling out if our chart tells us that the market has gone mad, as it is prone to now and again.
We are therefore practising a very defensive strategy, only buying if the shares are undervalued and quickly selling to take advantage of the periodic bouts of market madness when they occur.
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
Market timing: The relative position of a share's price to its own intrinsic value is of greater importance.
The market's movements are not perfectly reflected in the movement of the individual share.
Market timing is more an art than a science.
- Even during the sharpest decline, some of the shares hold their value very well.
- During the bull run, some of the shares do not go anywhere.
- At the same time, some shares magnify the movements of the market by two or three times, while others (mainly blue chips) only partially reflect the market movements.
- Thus even if we get the market timing right, it is not possible to match exactly what is achieved by the market.
- The relative position of a share's price to its own intrinsic value is of equal if not of greater importance.
Market timing is more an art than a science.
- There are some people who are highly gifted and are able to make good market timing decisions. And yet precisely because market timing decisions only have to be made once every 5 years, it is critical that they are made in the correct way.
- One wrong decision can either leave one out of the market for several years (i.e. after missing the start of a new bull run) or suffer heavy losses (i.e. missing the start of a new bear run).
- There are few of us who can be like Warren Buffet who made two timing decisions in 15 years and both of them were nearly spot on.
- We can never hope to be like Warren Buffett but we can use records of past market movements to help our investment decision making.
Market Timing is difficult
Some of you may be tempted to think that it is easy to carry out market timing. They may think that all one has to do is to take an index chart and draw in the trend line, making purchases or sales whenever the market price gets too far from the trend.
There are, however, two enormous difficultites in trying to make market timing decisions based on past prices.
1. First, there is the problem of future changes in the companies' business and political environment.
2. Second, there is the problem of not knowing in advance how far will the market move above or below the trend.
There are, however, two enormous difficultites in trying to make market timing decisions based on past prices.
1. First, there is the problem of future changes in the companies' business and political environment.
- The world of business is never static. There will always be changes, some small and some large to the environment which the companies operate in.
- In order for the stock market to perform as well as it had done in the past, the country must continue to prosper and the political climate has to be stable. How can we be sure that the future growth trend will be the same as in the past?
- In order to be a good forecaster, one must have a very good knowledge of economics and political science. This is hardly a qualification that is within the reach of laymen. Even with such qualifications, forecasting can still be very difficult. Professional economists and moneymen can make collective forecasting errors very frequently.
2. Second, there is the problem of not knowing in advance how far will the market move above or below the trend.
- As we have seen from past records, the distance the market moved from the trend had been irregular and unpredictable.
- We can take the 1983, 1987, 1993, 1996 and 2007 booms as examples. Many professional market-watchers, did not anticipate correctly the heights to which the market went.
- Similarly, very few market-watchers anticipated the severe market declines of 1973, 1985, 1987, 1997, 2001 and 2008.
Find Your Financial Style -- and Avoid Its Pitfalls
Find Your Financial Style -- and Avoid Its Pitfalls
by Jonnelle Marte
Tuesday, October 27, 2009
provided by The Wall Street Journal
There are few relationships more complicated than the one we have with money.
Some of us are intimate with our finances, endlessly doing research and keeping track of every penny. Others are more distant; they have a general idea of where their money is going, but aren't sure if it's the right move or if it's enough. Then there are the emotional ones, those who cling to money at the wrong times and make impulsive decisions.
So, what kind of investor and saver are you?
Not sure? Ask yourself these questions: Do I consistently keep track of my spending? And do I do so weekly, monthly or annually? Do I feel that I'm OK financially as long as my checks don't bounce? Do I plan and save for big purchases or do I buy on a whim?
There also are online quizzes, such as J.P. Morgan Chase's "Financial Styles" found at ChaseFinancialStyle.com, that can help you determine your investing and saving profile.
Once you determine your style, you can use certain strategies and tools to reinforce the positive aspects of your approach -- and contain the negative ones.
Understanding your financial approach can help you figure out where your "strategy is most vulnerable to pitfalls or problems," says Hersh Shefrin, a professor of behavioral finance at Santa Clara University who helped J.P. Morgan Chase develop its quiz.
The Analytical Investor
You're a stickler for details and data. And while it's good to be thorough with your research, if taken to an extreme people can forget to take their personal situation and goals into account when making financial and investment decisions.
This type of investor can get hit with what some advisers call "analysis paralysis," where they have trouble making decisions because they can't help thinking there is always more research to be done.
"They're what I call 'see mores' -- they always want to see more," says Bryan Place, founder of Place Financial Advisors, a financial-planning firm in Manlius, N.Y. "Rather than overwhelming themselves and spending too much time digging through content," they should limit themselves to three or four reliable sources, he says.
If you have a tendency to delay acting on your financial goals, Mr. Place says, make a list of the pros and cons and give yourself a deadline to decide -- and stick to it.
While you may be great at budgeting, you might benefit from online expense-tracking tools offered by Mint.com or financial-planning software from Quicken (quicken.intuit.com) that can help you distance yourself from your day-to-day transactions to recognize spending and saving trends over time.
At Mint.com, you can build graphs that show how your spending, income, debt or net worth has changed over a specific period. You also can see changes in spending in certain categories, such as groceries.
The Big-Picture Investor
You know your bottom line, but you don't keep track of every transaction or plan every action or expense. While this approach can be less stressful if you're able to consistently save and meet your financial goals, it can leave you unsure about exactly where your money is going and where you can cut back.
To avoid falling into a set-it-and-forget-it routine and ending up with outdated and unsuccessful strategies for investing and saving, review your strategies at least once a year. For instance, the retirement-savings plan you started five years ago might not be on pace to fund the lifestyle you live today given the recession, so re-evaluate allocations at least once a year, says Carlo Panaccione, a financial planner in Redwood Shores, Calif.
Break down your expenses into two categories: "necessities," which would include mortgage payments, utility bills and food; and "lifestyle," optional costs such as cable television and gym memberships, says Larry Rosenthal, a financial planner near Washington, D.C. Tools at Mint.com and Quicken's software allow you keep track of spending in each category.
To monitor your spending, use a debit card or credit card instead of cash, says Mr. Place, and look at your accounts online at least once or twice a week. But make sure to pay off the credit-card balance each month.
Meanwhile, online calculators such as the one offered by Discover Financial Services, discoverbank.com/calculators.html, can help you devise a monthly plan for reaching a long-term savings goal.
The Emotional Investor
Emotional investors are reactionary, often making financial decisions based on what's happening at the moment and ignoring long-term needs and goals.
"They might look at it as 'Gee, my kid's education is really coming up soon, I have to focus on that and kind of put their retirement on the back burner," says Mr. Panaccione.
For such investors, he suggests creating two lists: one with short-term goals, such as a vacation or car purchase, and one with long-term goals, such as saving for retirement.
Then, set up savings or investing accounts for each goal -- one account for, say, the purchase of a house, one for retirement and another for college tuition. To ensure that each portion is funded consistently, set up automatic deposits to each account, says Mr. Rosenthal.
Matt Havens, partner at Global Vision Advisors, a financial-services firm in Hingham, Mass., suggests forcing yourself to plan for emergencies by building a cash reserve to cover at least six months of expenses. Having that safety net will help you avoid an impulsive move.
And when it comes to investing, don't make drastic changes to your asset allocation. "A main weakness of this group is that they tend to buy high and sell low because of emotion and fear," says Bryan Hopkins, a financial planner in Anaheim Hills, Calif. It might help to sit down with a planner to create a long-term investment plan.
http://finance.yahoo.com/banking-budgeting/article/108022/find-your-financial-style-and-avoid-its-pitfalls;_ylt=Aue6pPmm7eT0U980IRHY3ha7YWsA;_ylu=X3oDMTFhYjhrOGtsBHBvcwMzBHNlYwNwZXJzb25hbEZpbmFuY2UEc2xrA3NtYXJ0d2F5c3Rvcw--?mod=oneclick
by Jonnelle Marte
Tuesday, October 27, 2009
provided by The Wall Street Journal
There are few relationships more complicated than the one we have with money.
Some of us are intimate with our finances, endlessly doing research and keeping track of every penny. Others are more distant; they have a general idea of where their money is going, but aren't sure if it's the right move or if it's enough. Then there are the emotional ones, those who cling to money at the wrong times and make impulsive decisions.
So, what kind of investor and saver are you?
Not sure? Ask yourself these questions: Do I consistently keep track of my spending? And do I do so weekly, monthly or annually? Do I feel that I'm OK financially as long as my checks don't bounce? Do I plan and save for big purchases or do I buy on a whim?
There also are online quizzes, such as J.P. Morgan Chase's "Financial Styles" found at ChaseFinancialStyle.com, that can help you determine your investing and saving profile.
Once you determine your style, you can use certain strategies and tools to reinforce the positive aspects of your approach -- and contain the negative ones.
Understanding your financial approach can help you figure out where your "strategy is most vulnerable to pitfalls or problems," says Hersh Shefrin, a professor of behavioral finance at Santa Clara University who helped J.P. Morgan Chase develop its quiz.
The Analytical Investor
You're a stickler for details and data. And while it's good to be thorough with your research, if taken to an extreme people can forget to take their personal situation and goals into account when making financial and investment decisions.
This type of investor can get hit with what some advisers call "analysis paralysis," where they have trouble making decisions because they can't help thinking there is always more research to be done.
"They're what I call 'see mores' -- they always want to see more," says Bryan Place, founder of Place Financial Advisors, a financial-planning firm in Manlius, N.Y. "Rather than overwhelming themselves and spending too much time digging through content," they should limit themselves to three or four reliable sources, he says.
If you have a tendency to delay acting on your financial goals, Mr. Place says, make a list of the pros and cons and give yourself a deadline to decide -- and stick to it.
While you may be great at budgeting, you might benefit from online expense-tracking tools offered by Mint.com or financial-planning software from Quicken (quicken.intuit.com) that can help you distance yourself from your day-to-day transactions to recognize spending and saving trends over time.
At Mint.com, you can build graphs that show how your spending, income, debt or net worth has changed over a specific period. You also can see changes in spending in certain categories, such as groceries.
The Big-Picture Investor
You know your bottom line, but you don't keep track of every transaction or plan every action or expense. While this approach can be less stressful if you're able to consistently save and meet your financial goals, it can leave you unsure about exactly where your money is going and where you can cut back.
To avoid falling into a set-it-and-forget-it routine and ending up with outdated and unsuccessful strategies for investing and saving, review your strategies at least once a year. For instance, the retirement-savings plan you started five years ago might not be on pace to fund the lifestyle you live today given the recession, so re-evaluate allocations at least once a year, says Carlo Panaccione, a financial planner in Redwood Shores, Calif.
Break down your expenses into two categories: "necessities," which would include mortgage payments, utility bills and food; and "lifestyle," optional costs such as cable television and gym memberships, says Larry Rosenthal, a financial planner near Washington, D.C. Tools at Mint.com and Quicken's software allow you keep track of spending in each category.
To monitor your spending, use a debit card or credit card instead of cash, says Mr. Place, and look at your accounts online at least once or twice a week. But make sure to pay off the credit-card balance each month.
Meanwhile, online calculators such as the one offered by Discover Financial Services, discoverbank.com/calculators.html, can help you devise a monthly plan for reaching a long-term savings goal.
The Emotional Investor
Emotional investors are reactionary, often making financial decisions based on what's happening at the moment and ignoring long-term needs and goals.
"They might look at it as 'Gee, my kid's education is really coming up soon, I have to focus on that and kind of put their retirement on the back burner," says Mr. Panaccione.
For such investors, he suggests creating two lists: one with short-term goals, such as a vacation or car purchase, and one with long-term goals, such as saving for retirement.
Then, set up savings or investing accounts for each goal -- one account for, say, the purchase of a house, one for retirement and another for college tuition. To ensure that each portion is funded consistently, set up automatic deposits to each account, says Mr. Rosenthal.
Matt Havens, partner at Global Vision Advisors, a financial-services firm in Hingham, Mass., suggests forcing yourself to plan for emergencies by building a cash reserve to cover at least six months of expenses. Having that safety net will help you avoid an impulsive move.
And when it comes to investing, don't make drastic changes to your asset allocation. "A main weakness of this group is that they tend to buy high and sell low because of emotion and fear," says Bryan Hopkins, a financial planner in Anaheim Hills, Calif. It might help to sit down with a planner to create a long-term investment plan.
http://finance.yahoo.com/banking-budgeting/article/108022/find-your-financial-style-and-avoid-its-pitfalls;_ylt=Aue6pPmm7eT0U980IRHY3ha7YWsA;_ylu=X3oDMTFhYjhrOGtsBHBvcwMzBHNlYwNwZXJzb25hbEZpbmFuY2UEc2xrA3NtYXJ0d2F5c3Rvcw--?mod=oneclick
Past Market Movements: Big Booms Are Irregular
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
6. Big Booms Are Irregular
It appears that the big booms take place somewhat irregularly.
There have been three in the last 18 years from 1970 to 1988; 1972/1973, 1980/1981 and 1986/1987.
Not only are they irregular but they are of short duration, one to two years appears to be the usual length.
This means that it is difficult to catch a big boom at its beginning.
If one goes in after the market has already moved up a great deal, there is a big risk that the market will crash shortly after.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
6. Big Booms Are Irregular
It appears that the big booms take place somewhat irregularly.
There have been three in the last 18 years from 1970 to 1988; 1972/1973, 1980/1981 and 1986/1987.
Not only are they irregular but they are of short duration, one to two years appears to be the usual length.
This means that it is difficult to catch a big boom at its beginning.
If one goes in after the market has already moved up a great deal, there is a big risk that the market will crash shortly after.
Past Market Movements: Prices Move Volatile Upward
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
5. Prices Move Volatile Upward
It appears that prices can move very much further from the trend line on the up side than on the downside.
Except for a short period at certain times in severe bear market or market crash, the prices do not move very far from the trend line on the down side.
But it can move a considerable distance on the up side.
It would appear also that there are more up years than down years. This means that the prices tend to build up slowly over several years and then fall much faster than they rise.
However, big upward movements tend to be followed by sharp downward movements. It is thus a lot safer to buy when the prices are below their intrinsic value than when they are high.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
5. Prices Move Volatile Upward
It appears that prices can move very much further from the trend line on the up side than on the downside.
Except for a short period at certain times in severe bear market or market crash, the prices do not move very far from the trend line on the down side.
But it can move a considerable distance on the up side.
It would appear also that there are more up years than down years. This means that the prices tend to build up slowly over several years and then fall much faster than they rise.
However, big upward movements tend to be followed by sharp downward movements. It is thus a lot safer to buy when the prices are below their intrinsic value than when they are high.
Past Market Movements: Prices Can Be Very Volatile
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
4. Prices Can Be Very Volatile
The price movements even within a year can be considerable - the average is 38%.
The minimum movement within a year is still 19% from the highest to the lowest which is about six times greater than the average dividend yield.
This means that price changes can very quickly wipe out any return provided by dividend.
This means that the value of one's investment can vary considerably from year to year.
One must be able to sustain such losses if one wishes to invest in shares.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
4. Prices Can Be Very Volatile
The price movements even within a year can be considerable - the average is 38%.
The minimum movement within a year is still 19% from the highest to the lowest which is about six times greater than the average dividend yield.
This means that price changes can very quickly wipe out any return provided by dividend.
This means that the value of one's investment can vary considerably from year to year.
One must be able to sustain such losses if one wishes to invest in shares.
Past Market Movements: Irregular Price Patterns
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
4. Irregular Price Patterns.
Although the price movements appear to be centered around the trend lines, they do not appear to be regular. Small troughs can be followed by big peaks and vice versa.
The period in which the market prices stay above or below the trend line is not regular either.
The market can stay under or overvalued for some years.
This means that it is probably very difficult to predict accurately the direction of market movements over the short run.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
4. Irregular Price Patterns.
Although the price movements appear to be centered around the trend lines, they do not appear to be regular. Small troughs can be followed by big peaks and vice versa.
The period in which the market prices stay above or below the trend line is not regular either.
The market can stay under or overvalued for some years.
This means that it is probably very difficult to predict accurately the direction of market movements over the short run.
Past Market Movements: Trends Not Consistent
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
2. Trends Not Consistent
It is very difficult to draw trends to fit stock market movements.
The main problem is determining the starting point of the trend.
While it is true that statistical programmes can be used for trend determination, one still has to rely on subjective judgement to determine the beginning and ending point of a trend. The trend lines shown in charts are drawn based on the best available projected knowledge.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
2. Trends Not Consistent
It is very difficult to draw trends to fit stock market movements.
The main problem is determining the starting point of the trend.
While it is true that statistical programmes can be used for trend determination, one still has to rely on subjective judgement to determine the beginning and ending point of a trend. The trend lines shown in charts are drawn based on the best available projected knowledge.
Past Market Movements: Generally Upward Trend
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
1. Generally Upward Trend
We can see that although there are peaks and troughs, the overall tendency is for the market to be moving upwards. From 1970 to 1981, the Malaysian market was growing at an annual rate of about 12% (Singapore market 15%). From 1981 to 1987, the trend appears to be much less, around 4% per annum for the Malaysian market (6% for Singapore market). The reason for the slowdown in the growth trend from 1981 to 1987 was deflation and the negative growth experienced during the first half of the Eighties.
These trend lines may be regarded as equivalent to the intrinsic value of an individual share for they mark the inherent value of the market as a whole. The market seems to fluctuate around these trend lines.
In the future, the upward tendency of the market is most likely to continue although we are not sure what will be the actual growth rate.
However, by projecting a trend which is conservatively drawn we can have some idea where the market is heading. If we buy our shares when the market is at a reasonable level (that is when the index is around the trend line or below), we can rely on the long term rising trend to obtain our gain from the market.
Unless we buy shares near the top of the peaks, we should be able to profit from buying shares after a few years. It is therefore important to go for the long run.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
1. Generally Upward Trend
We can see that although there are peaks and troughs, the overall tendency is for the market to be moving upwards. From 1970 to 1981, the Malaysian market was growing at an annual rate of about 12% (Singapore market 15%). From 1981 to 1987, the trend appears to be much less, around 4% per annum for the Malaysian market (6% for Singapore market). The reason for the slowdown in the growth trend from 1981 to 1987 was deflation and the negative growth experienced during the first half of the Eighties.
These trend lines may be regarded as equivalent to the intrinsic value of an individual share for they mark the inherent value of the market as a whole. The market seems to fluctuate around these trend lines.
In the future, the upward tendency of the market is most likely to continue although we are not sure what will be the actual growth rate.
However, by projecting a trend which is conservatively drawn we can have some idea where the market is heading. If we buy our shares when the market is at a reasonable level (that is when the index is around the trend line or below), we can rely on the long term rising trend to obtain our gain from the market.
Unless we buy shares near the top of the peaks, we should be able to profit from buying shares after a few years. It is therefore important to go for the long run.
Past Market Movements: Malaysia KLSE
By using an index, we can very quickly have an idea of how much the market has moved within a noted period.
For example, if the index stood at 800 and it is now standing at 1200, we can say that the market as a whole has moved up 50% [(1200-800) divided by 800)].
Click: http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
This figure shows graphically the movements of the KLSE for the years 1999 to 2009.
What can we learn from the history of the overall market movements in the Malaysia stock market?
For example, if the index stood at 800 and it is now standing at 1200, we can say that the market as a whole has moved up 50% [(1200-800) divided by 800)].
Click: http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
This figure shows graphically the movements of the KLSE for the years 1999 to 2009.
What can we learn from the history of the overall market movements in the Malaysia stock market?
What is a stock market index?
A stock market index is a measure of the average price level of the shares traded in the market. Its use is analogous to the use of degree of celcius to measure the temperature. It is constructed by comparing the current price of a sample of shares with their prices at some earlier date.
The organization which is setting up the index (e.g. KLSE) has to make two decisions regarding the design of the index.
First, what are the companies to be included in the index?
Second, what is to be the starting point of the index?
Both decisions would involve a certain degree of compromise.
In general, 30 companies is a good compromise to represent the actual situation at the stock market. KLSE Indices have the starting date of 1st January 1970. The KLSE Indices are given the base value of 100 as at 1st January 1970.
There are various ways of computing an index but the easiest way to understand is probably the one using the market value of the companies included in the index.
The KLSE Industrial Index has a based value of 100 at 1st of January 1970. It stood at 700 at the end of August 1988. This means that the market value of the companies chosen for the index had increased their total value by 600 per cent since 1970 (an average annual increase of 11.5 per cent).
It is worthwhile to remember how indices are calculated and remind ourselves how much the market has gone up in the bull run. When the market is next in a manic phase, we have to ask ourselves if it is feasible for the market to continue its performance in the future.
Click:
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
FTSE Bursa Malaysia KLCI Index (^KLSE)
http://blog.limkitsiang.com/2007/03/06/rm149-billion-klse-losses-in-5-days-pmministers-not-stock-market-consultants/
RM149 billion KLSE losses in 5 days
The organization which is setting up the index (e.g. KLSE) has to make two decisions regarding the design of the index.
First, what are the companies to be included in the index?
Second, what is to be the starting point of the index?
Both decisions would involve a certain degree of compromise.
In general, 30 companies is a good compromise to represent the actual situation at the stock market. KLSE Indices have the starting date of 1st January 1970. The KLSE Indices are given the base value of 100 as at 1st January 1970.
There are various ways of computing an index but the easiest way to understand is probably the one using the market value of the companies included in the index.
The KLSE Industrial Index has a based value of 100 at 1st of January 1970. It stood at 700 at the end of August 1988. This means that the market value of the companies chosen for the index had increased their total value by 600 per cent since 1970 (an average annual increase of 11.5 per cent).
It is worthwhile to remember how indices are calculated and remind ourselves how much the market has gone up in the bull run. When the market is next in a manic phase, we have to ask ourselves if it is feasible for the market to continue its performance in the future.
Click:
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
FTSE Bursa Malaysia KLCI Index (^KLSE)
RM149 billion KLSE losses in 5 days
Market Timing
The fundamental approach to investment requires one to work out the intrinsic value of a share before its purchase.
"Why don't we just wait until the whole market is low enough and then go in and buy a wide selection of shares?"
This question suggests that one invests by means of "market timing". If practical, it will surely save us a lot of time and effort.
"Why don't we just wait until the whole market is low enough and then go in and buy a wide selection of shares?"
This question suggests that one invests by means of "market timing". If practical, it will surely save us a lot of time and effort.
- Is it possible to carry out consistently correct market timing?
- How easy or difficult is the art of of market timing?
KLSE 1994 to 2009
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
Is there a correct time to buy and sell?
Is there a correct time to buy and sell?
Tuesday, 27 October 2009
Insiders' actions in 3-A Resources
Click here:
http://www.klse.com.my/website/bm/listed_companies/company_announcements/changes_in_s_holding/index.jsp
Type of transaction Date of change No of securities Price Transacted ($$)
Disposed 15/10/2009 2,448,002
Disposed 16/10/2009 2,300,000
The recent budget introduces a mandatory basic insurance coverage
Insurance
A basic insurance and takaful scheme will be offered to provide mandatory basic insurance coverage for third party bodily injuries and death. The scheme is expected to be introduced by mid-2010.
Positive for insurance companies (Kurnia (NR), LPI (NR)) and banks with major insurance subsidiaries such AMMB (AmAssurance)
http://malaysiainfoedgezone.blogspot.com/2009/10/market-strategy-after-budget-2010-full.html
http://www.box.net/shared/uj9jmp9h63
A basic insurance and takaful scheme will be offered to provide mandatory basic insurance coverage for third party bodily injuries and death. The scheme is expected to be introduced by mid-2010.
Positive for insurance companies (Kurnia (NR), LPI (NR)) and banks with major insurance subsidiaries such AMMB (AmAssurance)
http://malaysiainfoedgezone.blogspot.com/2009/10/market-strategy-after-budget-2010-full.html
http://www.box.net/shared/uj9jmp9h63
Nestle 27.10.2009
http://spreadsheets.google.com/pub?key=tdjqbDNEEF54lSn6z6yORcw&output=html
Comment: Recent price has climbed faster than earnings.
Monday, 26 October 2009
Business model of Parkson Retail Group
PRG operates the Lion group's department store business in China.
The Hong Kong-listed PRG is sitting on cash reserves of RMB 3 billion (RM 1.49 billion). The retailer is a 51.6% owned subsidiary of Parkson Holdings Bhd, in which Lion group boss Tan Sri William Cheng holds a 21.9% direct equity stake and 32.5% indirect stake.
After stripping out debts of RMB 2.3 billion, PRG is in a net cash position of RMB 667.5 million.
The retail giant is in a cash-generating business and its department stores are ringing up good sales.
Business model of Parkson Retail Group
PRG's growing cash pile is also due to its asset-light strategy. It does not own many properties while its business model of letting out space to branded names does not tie up its cash with unsold inventories.
For instance, if John Master or Bonia has an outlet in Parkson, the inventory is held by the manufacturers themselves. Parkson lets out the space and gets a commission from sales. This way, it keeps its balance sheet light.
Lingering Concerns
Local fund managers do buy into PRG's growth story. It certainly does not take rocket science to figure out that China's robust growth augurs well for retailers such as PRG. However, there is always a lingering concern because of the state of other companies within the Lion group.
The concerns of investors are not entirely unjustified, going by the track record of other companies within the Lion group stable. For instance, Lion Corp Bhd and Lion Industries are in net debt positions. Further, Amsteel Corp Bhd, once the flagship of the Lion group, and Silverstone Corp Bhd were removed from Bursa Malaysia for failing to regularise their financial positions due to debt problems.
That explains why Parkson Holdings' share price on Bursa Malaysia has been lagging that of PRG's in Hong Kong. The stock does not command the premium it deserves despite its exposure to the sizeable consumer market in China plus Vietnam - another booming emerging economy.
PRG does not have a dividend policy
According to its managing director Alfred Cheng, PRG doesn't have a dividend policy. However, the group has been paying out almost half of its earnings as dividends since it was listed in November 2005. In the last financial year ended Dec 31, 2008, PRG paid out total dividends of RMB 405 million versus RMB 332.5 million in FY2207.
Paying regular dividends isn't a norm among the companies in the Lion group; PRG is probably the first to do so. And PRG needs to keep it up to maintain its status as the group's cash-generating jewel.
Ref: The Edge
The Hong Kong-listed PRG is sitting on cash reserves of RMB 3 billion (RM 1.49 billion). The retailer is a 51.6% owned subsidiary of Parkson Holdings Bhd, in which Lion group boss Tan Sri William Cheng holds a 21.9% direct equity stake and 32.5% indirect stake.
After stripping out debts of RMB 2.3 billion, PRG is in a net cash position of RMB 667.5 million.
The retail giant is in a cash-generating business and its department stores are ringing up good sales.
Business model of Parkson Retail Group
PRG's growing cash pile is also due to its asset-light strategy. It does not own many properties while its business model of letting out space to branded names does not tie up its cash with unsold inventories.
For instance, if John Master or Bonia has an outlet in Parkson, the inventory is held by the manufacturers themselves. Parkson lets out the space and gets a commission from sales. This way, it keeps its balance sheet light.
Lingering Concerns
Local fund managers do buy into PRG's growth story. It certainly does not take rocket science to figure out that China's robust growth augurs well for retailers such as PRG. However, there is always a lingering concern because of the state of other companies within the Lion group.
The concerns of investors are not entirely unjustified, going by the track record of other companies within the Lion group stable. For instance, Lion Corp Bhd and Lion Industries are in net debt positions. Further, Amsteel Corp Bhd, once the flagship of the Lion group, and Silverstone Corp Bhd were removed from Bursa Malaysia for failing to regularise their financial positions due to debt problems.
That explains why Parkson Holdings' share price on Bursa Malaysia has been lagging that of PRG's in Hong Kong. The stock does not command the premium it deserves despite its exposure to the sizeable consumer market in China plus Vietnam - another booming emerging economy.
PRG does not have a dividend policy
According to its managing director Alfred Cheng, PRG doesn't have a dividend policy. However, the group has been paying out almost half of its earnings as dividends since it was listed in November 2005. In the last financial year ended Dec 31, 2008, PRG paid out total dividends of RMB 405 million versus RMB 332.5 million in FY2207.
Paying regular dividends isn't a norm among the companies in the Lion group; PRG is probably the first to do so. And PRG needs to keep it up to maintain its status as the group's cash-generating jewel.
Ref: The Edge
Parkson's venture into Vietnam and Indochina
Revenues of Parkson at present are generated as shown:
75% from China
20% from Malaysia
6% from Vietnam
Parkson Holdings' total revenue for FY 2008 ended June 30 was RM 2.35 billion.
RM 1.55 billion from China
RM 718.9 million from Malaysia
RM 80 million from Vietnam
The growth in China is impressive.
It is equally exciting in Vietnam too. While small compared with the operations in China and Malaysia, Vietnam's contribution has nearly doubled from RM 41.9 million in FY 2007.
Vietnam is the stepping stone for Parkson Holdings to capture the market in Indochina, consisting of Vietnam, Cambodia and Laos. Parkson plans to open its first store in Phnom Penh in 1H2011.
Whether Parkson's success in China can be repeated in Vietnam and greater Indochina will depend to a large extent on how it utilises its first-mover advantage to fend off competitors.
Vietnam: Total retail sales in the first 8 months of this year rose 18.4% y-o-y to US$41.67 billion (RM 141 billion), according to the country's General Statistics Office. The growth was recorded in a year that the global economy was in turmoil and the dong (the Vietnamese currency) devalued.
Ref: The Edge
75% from China
20% from Malaysia
6% from Vietnam
Parkson Holdings' total revenue for FY 2008 ended June 30 was RM 2.35 billion.
RM 1.55 billion from China
RM 718.9 million from Malaysia
RM 80 million from Vietnam
The growth in China is impressive.
It is equally exciting in Vietnam too. While small compared with the operations in China and Malaysia, Vietnam's contribution has nearly doubled from RM 41.9 million in FY 2007.
Vietnam is the stepping stone for Parkson Holdings to capture the market in Indochina, consisting of Vietnam, Cambodia and Laos. Parkson plans to open its first store in Phnom Penh in 1H2011.
Whether Parkson's success in China can be repeated in Vietnam and greater Indochina will depend to a large extent on how it utilises its first-mover advantage to fend off competitors.
Vietnam: Total retail sales in the first 8 months of this year rose 18.4% y-o-y to US$41.67 billion (RM 141 billion), according to the country's General Statistics Office. The growth was recorded in a year that the global economy was in turmoil and the dong (the Vietnamese currency) devalued.
Ref: The Edge
Sunday, 25 October 2009
New KLCI 30 counter (July 2009)
New KLCI 30 counter (July 2009)
1066 "RHB Capital" FBM30
3786 "Malaysia Airline System" FBM30
4162 "British American Tobacco (Malaysia)" FBM30
6888 "Axiata Group Bhd" FBM30
3182 "Genting" FBM30
2445 "Kuala Lumpur Kepong" FBM30
1155 "Malayan Banking" FBM30
2194 "MMC" FBM30
4065 "PPB Group" FBM30
4197 "Sime Darby Bhd" FBM30
1961 "IOI" FBM30
4715 "Resorts World" FBM30
4863 "Telekom Malaysia" FBM30
5347 "Tenaga Nasional" FBM30
1015 "AMMB Holdings" FBM30
1562 "Berjaya Sports Toto" FBM30
1023 "Bumiputra-Commerce Holdings" FBM30
5819 "Hong Leong Bank" FBM30
2267 "Tanjong" FBM30
4588 "UMW Holdings" FBM30
4677 "YTL Corp" FBM30
6033 "Petronas Gas" FBM30
6742 "YTL Power International" FBM30
6947 "Digi.com" FBM30
5657 "Parkson Holdings" FBM30
5681 "Petronas Dagangan Bhd" FBM30
5052 "Plus Expressways" FBM30
3816 "MISC" FBM30
1295 "Public Bank BHD" FBM30
5076 "Astro All Asia Networks" FBM30
1066 "RHB Capital" FBM30
3786 "Malaysia Airline System" FBM30
4162 "British American Tobacco (Malaysia)" FBM30
6888 "Axiata Group Bhd" FBM30
3182 "Genting" FBM30
2445 "Kuala Lumpur Kepong" FBM30
1155 "Malayan Banking" FBM30
2194 "MMC" FBM30
4065 "PPB Group" FBM30
4197 "Sime Darby Bhd" FBM30
1961 "IOI" FBM30
4715 "Resorts World" FBM30
4863 "Telekom Malaysia" FBM30
5347 "Tenaga Nasional" FBM30
1015 "AMMB Holdings" FBM30
1562 "Berjaya Sports Toto" FBM30
1023 "Bumiputra-Commerce Holdings" FBM30
5819 "Hong Leong Bank" FBM30
2267 "Tanjong" FBM30
4588 "UMW Holdings" FBM30
4677 "YTL Corp" FBM30
6033 "Petronas Gas" FBM30
6742 "YTL Power International" FBM30
6947 "Digi.com" FBM30
5657 "Parkson Holdings" FBM30
5681 "Petronas Dagangan Bhd" FBM30
5052 "Plus Expressways" FBM30
3816 "MISC" FBM30
1295 "Public Bank BHD" FBM30
5076 "Astro All Asia Networks" FBM30
Differences between investment and speculation
Differences between investment and speculation
1. Investment: Investment is rationally based on the knowledge of past share price behaviour. From such knowledge, it is possible to compute the probability of future return.
2. Investment: Investment requires an investor to do some work before hand and decisions are made based on known facts and figure.
3. Investment: Investment is made for the long term (i.e. two years or more) based on the idea that one is much more certain when one is trying to predict the cumulative results of many daily movement. Once invests with the knowledge that over the long run, the real investors will always make a gain.
Speculation: Speculation is usually for the short run (i.e three months or less unless one is caught whence a speculator is then forced to become an investor), based on the idea that certain events may result in a rise in price (bonus, rights, takeovers, and others).
4. Investment: Over a long period of time, true investment tends to produce a positive result. Based on many years of research in the US and Europe, Long Term Investment consistently produced much higher return than fixed deposit or the inflation rate. The Malaysian experience has mirrored the Western experience.
Speculation: Since speculation is not based on anything concrete, its result is not at all predictable. Speculation can occasionally produce very high gains just as it can produce very high losses. Over a long period of time, speculation is most unlikely to produce better return than true investment.
5. Investment: True investors can sleep soundly at night since they have a fairly good idea of the possible extent of their loss and gain before hand. Besides, since they are investing for the long term, they can forget about short term movements and ignore the market most of the time.
Speculation: Speculation is likely to lead to many sleepless nights and anxious days since its result is so uncertain. The speculator will have to be always on the alert to take the necessary quick action to catch the right moment.
1. Investment: Investment is rationally based on the knowledge of past share price behaviour. From such knowledge, it is possible to compute the probability of future return.
- A common method of investment analysis is to study the past range of PER or DY of a particular share or a class of shares.
- From this study of its past price range, we can predict the likelihood of its price being out of this range in the future.
- By comparing its current price with the expected future price range (future price = future PER x future earnings) we know whether the current price is too high or too low and take the necessary action accordingly.
2. Investment: Investment requires an investor to do some work before hand and decisions are made based on known facts and figure.
- Such work typically may consist of estimating future level of Earnings Per Share and computing the past range of the PER.
- By multiplying the future EPS with the likely PER, we have an estimate of the future level of price.
- If the present price is very low compared with the future price, we buy and vice versa.
3. Investment: Investment is made for the long term (i.e. two years or more) based on the idea that one is much more certain when one is trying to predict the cumulative results of many daily movement. Once invests with the knowledge that over the long run, the real investors will always make a gain.
Speculation: Speculation is usually for the short run (i.e three months or less unless one is caught whence a speculator is then forced to become an investor), based on the idea that certain events may result in a rise in price (bonus, rights, takeovers, and others).
4. Investment: Over a long period of time, true investment tends to produce a positive result. Based on many years of research in the US and Europe, Long Term Investment consistently produced much higher return than fixed deposit or the inflation rate. The Malaysian experience has mirrored the Western experience.
Speculation: Since speculation is not based on anything concrete, its result is not at all predictable. Speculation can occasionally produce very high gains just as it can produce very high losses. Over a long period of time, speculation is most unlikely to produce better return than true investment.
5. Investment: True investors can sleep soundly at night since they have a fairly good idea of the possible extent of their loss and gain before hand. Besides, since they are investing for the long term, they can forget about short term movements and ignore the market most of the time.
Speculation: Speculation is likely to lead to many sleepless nights and anxious days since its result is so uncertain. The speculator will have to be always on the alert to take the necessary quick action to catch the right moment.
"Sure lose (gambling)" situations in investment
There is only one real difference between investment and gambling. In investment, one can expect to make a profit over the long run but gambling will always result in a loss over the long run although the gambler may not know it.
There are certain situations in the world of investment which resemble gambling and investors are well advised to keep clear of them.
1. To buy shares when the market is at its "hottest" is definitely gambling because like all bull markets, once everyone interested has been sucked in, there are no more lambs left and the market can only go down.
2. To sell shares which have been held through a long period of decline is also a gamble because the market is cyclical; it will recover after a long period of decline.
These are among the many examples of the "sure lose" situations in investment similar to gambling.
There are certain situations in the world of investment which resemble gambling and investors are well advised to keep clear of them.
1. To buy shares when the market is at its "hottest" is definitely gambling because like all bull markets, once everyone interested has been sucked in, there are no more lambs left and the market can only go down.
2. To sell shares which have been held through a long period of decline is also a gamble because the market is cyclical; it will recover after a long period of decline.
These are among the many examples of the "sure lose" situations in investment similar to gambling.
Probability of Return in Investment, Speculation and Gambling
The main difference between investment, speculation and gambling is the "ex ante probability of obtaining a reasonable return which is known at the time when each of these three activities is carried out".
Ex-Ante Probability of Return
Investment - Good
Speculation - Uncertain
Gambling - Negative
What this means is that we are fairly confident that we can make a reasonable amount of money by making a true investment; we are uncertain as to whether we can make money from speculation but we are sure that we will lose money by gambling.
The sidetracking of investors into speculation and even gambling is the worst enemy of good investment.
We must be ultraconservative and maximise the odds in our favour. If a stock analyst warns you that there is only a 10 percent chance that prices would rise above this level, you should avoid buying shares at that level. On the other hand, if he says that there is a 90 percent chance that share prices would not fall further, we should certainly grasp the opportunity and buy.
Ex-Ante Probability of Return
Investment - Good
Speculation - Uncertain
Gambling - Negative
What this means is that we are fairly confident that we can make a reasonable amount of money by making a true investment; we are uncertain as to whether we can make money from speculation but we are sure that we will lose money by gambling.
The sidetracking of investors into speculation and even gambling is the worst enemy of good investment.
We must be ultraconservative and maximise the odds in our favour. If a stock analyst warns you that there is only a 10 percent chance that prices would rise above this level, you should avoid buying shares at that level. On the other hand, if he says that there is a 90 percent chance that share prices would not fall further, we should certainly grasp the opportunity and buy.
Maxis May Raise Up to 12.4 Billion Ringgit in IPO
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
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Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)
Share | Email | Print | A A A
By Soraya Permatasari
Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.
The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.
The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.
“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”
Institutional Investors
The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.
“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”
The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.
About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.
Europe, U.S. Presentation
Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.
Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.
The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.
Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.
Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.
Mobile Subscribers
Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.
Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.
Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.
The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.
To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2009 02:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA
-----
Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)
Share | Email | Print | A A A
By Soraya Permatasari
Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.
The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.
The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.
“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”
Institutional Investors
The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.
“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”
The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.
About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.
Europe, U.S. Presentation
Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.
Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.
The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.
Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.
Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.
Mobile Subscribers
Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.
Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.
Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.
The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.
To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2009 02:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA
SOUTHEAST ASIAN STOCK MARKETS
SOUTHEAST ASIAN STOCK MARKETS
Change on the day
Market Current Prev Close Pct Move
Singapore 2715.34 2681.97 1.24
Kuala Lumpur 1267.10 1260.02 0.56
Bangkok 708.76 716.35 (closed)
Jakarta 2467.95 2433.18 1.43
Manila 2932.99 2888.72 1.53
Ho Chi Minh 615.68 624.10 -1.35
Change on year
Market Current End prev yr Pct Move
Singapore 2715.34 1761.56 +54.14
Kuala Lumpur 1267.10 876.75 +44.52
Bangkok 708.76 449.96 +57.52
(closed)
Jakarta 2467.95 1355.40 +82.08
Manila 2932.99 1872.85 +56.61
Ho Chi Minh 615.68 315.62 +95.07
Stock Market Volume (shares)
Market Current Volume ... Average Volume 90 days
Singapore 273,457,500 ... 370,578,304
Kuala Lumpur 110,653,800 ... 156,325,598
Bangkok 2,982,748 ... 4,575,457
Jakarta 4,462,989,500 ... 5,809,227,300
Ho Chi Minh 137,061 ... 56,606
Change on the day
Market Current Prev Close Pct Move
Singapore 2715.34 2681.97 1.24
Kuala Lumpur 1267.10 1260.02 0.56
Bangkok 708.76 716.35 (closed)
Jakarta 2467.95 2433.18 1.43
Manila 2932.99 2888.72 1.53
Ho Chi Minh 615.68 624.10 -1.35
Change on year
Market Current End prev yr Pct Move
Singapore 2715.34 1761.56 +54.14
Kuala Lumpur 1267.10 876.75 +44.52
Bangkok 708.76 449.96 +57.52
(closed)
Jakarta 2467.95 1355.40 +82.08
Manila 2932.99 1872.85 +56.61
Ho Chi Minh 615.68 315.62 +95.07
Stock Market Volume (shares)
Market Current Volume ... Average Volume 90 days
Singapore 273,457,500 ... 370,578,304
Kuala Lumpur 110,653,800 ... 156,325,598
Bangkok 2,982,748 ... 4,575,457
Jakarta 4,462,989,500 ... 5,809,227,300
Ho Chi Minh 137,061 ... 56,606
"Warren Buffett" of Malaysia
http://spreadsheets.google.com/pub?key=tkb0enVog-PjOHzgbMUXi_w&output=html
The returns from iCap's winning transactions were truly fantastic.
Are we looking at a budding "Warren Buffett" equivalent?
Wonder the 'cow' will jump over the moon?
The returns from iCap's winning transactions were truly fantastic.
Are we looking at a budding "Warren Buffett" equivalent?
Wonder the 'cow' will jump over the moon?
Saturday, 24 October 2009
iCap completed transactions - The Winners
http://spreadsheets.google.com/pub?key=tvUBvGFsmHcpydgvtogKM9Q&output=html
Analysing the Winners:
Total = 140 transactions
Holding Periods
less than 1 year
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
exceeding 1 year
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
exceeding 2 year
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
exceeding 3 year
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
exceeding 4 year
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
exceeding 5 year
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
exceeding 6 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 7 year
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
exceeding 8 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 9 year
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
exceeding 10 year
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
exceeding 11 year
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
Findings:
Of the 140 transactions:
Of those transactions giving more than 15% HPR or CAGR, 93% ( 83/89) were stocks held for less than 3 years:
Take Home Message:
1. Of 4 stocks selected, 3 were winners and 1 was a loser.
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
- 51 (36%) have a return (HPR or CAGR) of less than 15% and
- an amazing 89 (64%) have a return (HPR or CAGR) of more than 15%
- 50 of the stocks were held for less than 1 year
- 24 of the stocks were held for more than 1 year but less than 2 years
- 9 stock were held for more than 2 years but less than 3 years.
2. Of the 3 winners:
- 1 gives a CAGR of less than 15% and
- an amazing 2 give a CAGR of greater than 15%.
- 1 faltered,
- 1 did fairly alright and
- 2 did exceptionally well.
Completed Transactions of iCap (1989 to 9.7.2009)
http://spreadsheets.google.com/pub?key=tQvTWgP7osgpwBxXVtVyy_g&output=html
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
Friday, 23 October 2009
Past Stock Selections in i Capital
Past Stock Selections in i Capital
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
The stock market requires an endless supply of losers
Perhaps the most forceful statement on the need to act in the contrary mode appears Confessions of a Wall Street Insider by the self-named C.C. Hazard:
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
Leaning against that powerful tide
The crowd can be correct during much of a long trend, but always overstays and proves itself wrong at turning points. When the feeling of bullish rightness becomes universal and powerful, a top is immediately at hand.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
The key to success is to do what is not easy.
The key to success is to do what is not easy. What seems very easy will probably prove a mistake. Almost invariably when a buy looks compelling and overwhelmingly obvious, the investor actually is getting in too late.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
KNM upgraded to 'buy'
KNM upgraded to 'buy'
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Undertand both fundamentals and psychology of the market
Market moves are driven by an ever-shifting combination of fundamentals and psychology; to be successful, investors need to seek to understand both rather than ignore them.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
What is the annual turnover of stocks in iCap?
In their continuing efforts to stay atop the best, many mutual funds engage in 50% to 100% or faster annual turnover (rather than buying and holding.)
Just wondering, what is the annual turnover of stocks in iCap?
Just wondering, what is the annual turnover of stocks in iCap?
The price of investment success is constant vigilance.
Buying and holding for the long term assumes that one is willing to settle for whatever long-term average return is generated.
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Just 4.5pc of finance professional opted for a V-shape recovery from current slump
Recession: 95pc of finance professionals expect downturn to continue
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
A rally from extreme cheapness to excellent value
So what happens next? If that was a rally from extreme cheapness, what does the market do when it is merely excellent value?
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Overpriced:
Extremely overpriced = more than 50% above intrinsic value
Overpriced = more than 20% above intrinsic value
Fair price:
Fair value = +/- 20% of intrinsic value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
This bull market is not over. The bargain phase is over.
Anthony Bolton: this bull market is not over
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Thursday, 22 October 2009
Banks top gainers on Bursa
Banks top gainers on Bursa
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Maybulk served claim
Maybulk served claim
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Successful Investing-Not Magic
Successful Investing-Not Magic
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
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