Testing your own portfolio

Testing your own portfolio
By Daryl Guppy (China Daily)
Updated: 2010-11-15 10:41

Every investor and trader has a collection of stocks in his or her portfolio. Some are short-term trades, others are long-term investments. With investments in particular, it is easy to forget the original reasons for buying the stock. It is tempting to pay less attention to these long-term stocks and pay more attention to new stocks purchased more recently. The result is often a portfolio filled with under-performing stocks, or stocks that are doing serious damage to the overall return from the portfolio.

Every day every trade in my portfolio has to pass four tests. These tests are designed to make sure I remember why each stock was purchased. This daily review reminds me of my objectives and tells me if those objectives continue to be satisfied. When the trade, or investment fails, then it is time to exit the trade and look at other options. Applying the tests takes just a few moments if it is done every day, or at least once a week.

The four tests involve

1. looking at the cash situation, 
2. asking whether the stock is still worth buying, 
3. considering what could go wrong and 
4. analyzing the trading advantage.

The alternative to the current trade is always cash. If this capital allocated to the trade was held in cash, would it deliver a better return? The answer is not as simple as it looks. The return from the trade must be assessed against the interest return on cash over 30 days, 90 days, 120 days or longer. It is also a mistake to assume the price will increase steadily. Unlike a 90-day interest rate deposit, the market price always includes volatility because it is the nature of market activity.

The size of the expected reward is related to the number of days traders expect to wait for the reward. In a slow trend the expected time period for the price rise might be several weeks. In a fast moving rebound stock the expected time period for the anticipated profit might be a few days or a week.

The second question asks if one started today with cash would one buy the same stocks that are currently in one's portfolio? The question is designed to make one actively assess the value of one's stocks. It is easy to ignore stocks in the portfolio that are not performing well. They do not do any damage, but nor do they contribute actively to the portfolio performance. This question helps one take a new look at these lazy stocks.

There are some stocks one would not buy today because they are already too high. This is usually a good observation because it usually means these trades or investments are amongst the most profitable in one's portfolio.

The third question is designed to confront our tendency to fall in love with our stocks. Are you looking for reasons why your trade is good rather than reasons why the trade can go wrong? When we trade we give money to the market to support our opinion about a stock or the market development. It is a temptation to always look for reasons to convince us the trade is a good proposition, even when it is not performing as we expected.

When we first analyzed the trade we made a more objective assessment, looking at how the trade could succeed, and also how it could fail. Once we own the stock, we have an endowment bias. Because we own the stock we think it has more value than the price we paid for it. This bias prevents ongoing objective analysis.

Finally, what is the trading edge, or advantage in this trade? When the trade was started you believed you had an advantage. Perhaps it was superior analysis of a situation that led you to selecting this stock. Perhaps it was a chart pattern that you recognized before many others in the market. Perhaps the trade is a particular type of investment that yields a good dividend and a good capital gain.

Market conditions change, and this can change the conditions and advantages in the trade. The trading edge you had when the trade opened may disappear. You need to be aware of this so you can make a better decision about closing the trade. You will not always have an advantage, but this is not always a problem. It only becomes a problem when you think you have an advantage but the market has actually taken it away from you. This is one of the factors that keeps people in losing trades.

These are four questions essential for everyday portfolio management.

The author is a well-known international financial technical analysis expert.

http://www.chinadaily.com.cn/bizchina/2010-11/15/content_11549949.htm

Chinese shares tumble over tightening policy speculation

Chinese shares tumble over tightening policy speculation
(Xinhua)
Updated: 2010-11-16 15:54


BEIJING - Chinese equities slid Tuesday as investors worried prospects of higher interest rates and inflation control policies would hurt companies' earning.

Property developers, metal companies and banking shares fronted the sell-off with the benchmark Shanghai Composite Index down 3.98 percent, or 119.88 points, to close at 2,894.54.

The Shenzhen Component Index fell 4.61 percent, or 590.82 points, to end at 12,217.27.

Combined turnover expanded to 398.13 billion yuan ($59.96 billion) from 355.3 billion yuan the previous trading day.

Losers outnumbered gainers by 774 to 115 in Shanghai and 898 to 191 in Shenzhen.

http://www.chinadaily.com.cn/business/2010-11/16/content_11558056.htm

QE2 may have 'catastrophic consequences' for global economy

By Ren Jie (chinadaily.com.cn)

Updated: 2010-11-12 10:54

Cheng Siwei

The US Federal Reserve's recent move to issue $600 billion for restoring a foundering US economy may have catastrophic consequences for the global economy, according to Cheng Siwei, economist and former vice-chairman of the Standing Committee of the National People's Congress.

Cheng made the remarks at "A World Summit: The Ascent of China's Capital Markets" in Beijing on Wednesday.

Emerging-market stocks rose and prices of bulk commodities surged significantly last week following the US Fed's announcement on Nov 3 that it will buy $600 billion in Treasury bonds to boost the US economy, in a move known as "quantitative easing" (QE2), which triggered global debate. Many economists say they believe that the policy's effectiveness is uncertain.

Real estate sector shows signs of cooling Related readings: QE2 may aggravate global economic imbalance  Unknown consequences of QE2  Fed's QE2, a dangerous and unnecessary step: futures pioneer  QE2 may put huge pressure on emerging economies

Cheng said the US QE2 may trigger inflation in global markets, adding that the move will lead to an inflow of hot money to some countries and put appreciation pressure on the currencies of those countries.

Cheng also said there are many ways for hot money to enter in China, especially since the country's central bank is raising interest rates. He said busting underground banking rings will help the country curb hot money inflows.

Cheng also said he is a "prudential optimist" and is confident in the performance of Chinese stocks in 2011. He admitted that the A-shares are still in a bear market, but said the worst part of it is over. Chinese capital markets will gradually enter in a bull market next year as the nation's economy growth remains stable.

http://www.chinadaily.com.cn/business/2010-11/12/content_11541106.htm

Mieco

Date announced 16/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK MIECO C0DE  5001 

Price $ 0.64 Curr. ttm-PE 17.68 Curr. DY 0.00%
LFY Div 0.00 DPO ratio 0%
ROE 2.4% PBT Margin 3.9% PAT Margin 4.0%

Rec. qRev 41954 q-q % chg -6% y-y% chq -11%
Rec qPbt 1645 q-q % chg 63% y-y% chq 47%
Rec. qEps 0.80 q-q % chg 67% y-y% chq -207%
ttm-Eps 3.62 q-q % chg 75% y-y% chq -123%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 19.00 Avg. L PE 17.00
Forecast High Pr 0.88 Forecast Low Pr 0.46 Recent Severe Low Pr 0.46
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 57% Downside 43%
One Year Appreciation Potential 7% Avg. yield 0%
Avg. Total Annual Potential Return (over next 5 years) 7%

CPE/SPE 0.98 P/NTA 0.42 NTA 1.53 SPE 18.00 Rational Pr 0.65



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Hong Leong Bank

Date announced 16/11/2010
Quarter 30/09/2010 Qtr 1 FYE 30/06/2011

STOCK HLBank C0DE  5819 

Price $ 9.55 Curr. PE (ttm-Eps) 13.70 Curr. DY 2.51%
LFY Div 24.00 DPO ratio 35%
ROE 14.9% PBT Margin 58.8% PAT Margin 47.6%

Rec. qRev 539787 q-q % chg 4% y-y% chq 5%
Rec qPbt 317381 q-q % chg -8% y-y% chq 10%
Rec. qEps 17.72 q-q % chg -15% y-y% chq 10%
ttm-Eps 69.73 q-q % chg 2% y-y% chq 13%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 12.00 Avg. L PE 10.00
Forecast High Pr 10.68 Forecast Low Pr 8.31 Recent Severe Low Pr 8.31
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 48% Downside 52%
One Year Appreciation Potential 2% Avg. yield 3%
Avg. Total Annual Potential Return (over next 5 years) 6%

CPE/SPE 1.25 P/NTA 2.04 NTA 4.69 SPE 11.00 Rational Pr 7.67



Decision: 
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

OSK Research maintains Buy on Parkson, TP RM6.64

OSK Research maintains Buy on Parkson, TP RM6.64
Written by The Edge FinancialDaily
Tuesday, 16 November 2010 08:33


KUALA LUMPUR: OSK Research is maintaining its Buy call and target price of RM6.64 for PARKSON HOLDINGS BHD [].

Parkson reported a 1QFY11 revenue of RM656.5 million (+2.3% y-o-y) and net profit of RM76.2 million (+17.7% y-o-y). If not for the stronger RM against RMB and VND, net profit would have surged 28.4% y-o-y.

OSK Research said on Tuesday, Nov 16 the robust numbers were attributed to the impressive same store sales growth in all the countries under its umbrella, as well as new openings. Despite the higher expenses incurred for new openings, commission rates, direct sales and EBITDA margins were flat y-o-y.

“As the results were within our forecast, we maintain our FY11 and FY12 earnings estimates at RM373.6m and RM444.3m. Parkson has declared a 10 sen tax exempt dividend per share. Maintain BUY,” it said.

Medical insurance is something you take but hope never to have to use.

Sunday November 14, 2010

Security blanket

By DZIREENA MAHADZIR
starmag@thestar.com.my

Medical insurance is something you take but hope never to have to use.

WE read of young and healthy people who, without any warning, suffer a heart attack. Closer to home, your child may fall prey to the aedes mosquito and get dengue. Or, you could simply trip and break a leg.

Whatever it is, when the hospital bill comes in, you'll probably suffer another blow when you see how the cost of treatment and medication all add up.

Heng Zee Wang ... know what you want and ask lots of questions.

That is one reason why it is important to have medical insurance.

Some people argue that it is too expensive – you pay so much and get nothing in return. But that's the thing with insurance – you take it in the hope that you won't have to use it. But should you ever do, you will definitely be glad to have had the foresight to sign up for it.

And, the earlier you sign up the better. Premiums are lower if you purchase coverage at a younger age, and when you are still medically fit.

Those who insure themselves when they're older may have to pay higher premiums or be subjected to certain exclusions. And there have been cases of applicants being rejected because of their health.

As for the cost, there are various types of insurance to meet different needs. And you can tailor medical plans according to your budget, says Heng Zee Wang, chief product and marketing officer of Prudential Assurance Malaysia Bhd.

"The cost of hospitalisation is very high, so it's important that you have a medical card. You can have a basic insurance plan that comes with medical card for as low as RM100 a month, so it will cover room and board for that amount."

Before signing on the dotted line, there are some things to take note of.

"You must know what coverage you want and look at what's available. Even if you take a basic plan initially, you can upgrade it as you go along. Look at the terms and conditions, the inclusions and coverage waiting period. This is important to avoid disputes later on," Heng adds.

Some people reason that as long as they are working, their hospital bills will be taken care of by their employer because "my company already provides medical coverage".

What they may not be aware of is that once they leave the company, the cover will terminate. The same regulations apply come retirement. In Malaysia, most private company do not cover employees after they retire from work.

By then it will not be easy to purchase your own medical insurance because of the age factor, and the state of your health. Even if you do sign up for a policy, the premium will probably be higher, and certain illnesses may not be covered.

If you are aware of the benefits of medical insurance but are baffled by the different kinds of plans out there, here are some guidelines from insurance professionals.

To enjoy comprehensive health care protection, ideally you should have:

* A hospitalisation and surgical insurance plan which covers room and board, laboratory fees, use of special facilities, nursing care, and certain medicines and supplies which are medically necessary.

* A critical illness plan. With this, the policy-holder will get a lump sum cash payment from the insurance company if he/she is diagnosed with any of the critical illnesses listed under the policy.

* A hospital income plan that provides income replacement should the insured person be hospitalised due to an accident or illness.

* A disability income plan that covers the policy-holder's day-to-day expenses if he/she is unable to work due to an accident or illness.

How about complaints that "we pay so much for insurance but don't get anything in return"?

Heng says his company has introduced a medical plan which allows the policy-holder to get a no-claims bonus if he/she does not make any claims. It is an indirect way of rewarding customers for staying healthy.

The plan works very much like motor insurance: those who don't submit any claim during a policy year will get a bonus, which is automatically converted into additional units. These units will be invested in investment-linked funds of your choice, thus increasing the value of your policy.

Claims is another issue that is often the bane of many. Heng's advice is to ask the right questions before buying your policy. If you don't, you may encounter problems when it comes to making claims.

Presently, an e-mail is being circulated concerning the case of a woman in Singapore who found herself in a such a predicament. She says she has three policies which cover her for critical illness but has not been able to make any claims because they do not cover ductal carcinomas-in-situ or Stage 0 breast cancer.

What is the fine print that you should read carefully when it comes to a critical illness plan?

Heng explains that typically, this plan excludes medical conditions such as carcinoma-in-situ (or early stage cancer, where the cancerous cells have not moved out of the area of the body where they originally developed).

In Singapore, each of the critical illnesses stated in a policy contract follows a set of definitions given by the Life Insurance Association of Singapore. These standard definitions apply to the critical illness policies offered by life insurance companies in the country.

Insurance companies here follow definitions laid down by the Life Insurance Association of Malaysia (LIAM).

However, Heng adds, it is possible for the policy-holder who has been diagnosed with carcinoma-in-situ to claim for the cost of treatment for her condition, provided she has an existing medical plan. This may include expenses for her hospitalisation, surgery and post-hospitalisation treatment.

There are also certain insurance plans in the market which provide payouts for early stages of cancer.

So, it is vital to ask questions and know what you need. And be prepared to review your policy as your needs grow. One hopes never to have to turn to medical insurance, but it certainly is reassuring to know there is a security blanket at hand should the need ever arise.

Checklist

WHAT to do when buying medical insurance:

1) Understand what your needs are and how much you can put aside regularly. Seek your agent's advice before choosing a plan that suits you best.

2) Understand what the terms and conditions are, as well as the scope of cover provided under the policy. What are the benefits? What is NOT covered? How long is the coverage for? What is the waiting period? What is the limit (both annual and lifetime) you can claim?

3) Is there any co-insurance? Co-insurance is a cost-sharing arrangement between the insurer and policyholder. For example, co-insurance on a 10/90 basis means the policyholder will pay 10% of the bill, and the insurer will pay the balance, subject to the terms and conditions of the policy.

4) Will the premium remain the same amount throughout the duration of the policy, or will it increase according to age?

5) It is important to disclose details of your or your family's medical history (if any) at the time of purchase, to avoid any dispute in the future.

6) Take time to talk to your agent about the claims procedure, so you are aware of what's involved.

7) All insurance companies offer a 15-day free look. If you do not find the policy suitable and return it within that period, you are entitled to a refund of the premium paid (subject to terms and conditions).

8) Review your medical insurance plan at least once a year. This is important, especially with the cost of health care outpacing inflation. Chances are the plan you bought some years back may not be enough to meet future needs. Upgrade if you can afford it, so you will have the financial resources to meet rising medical costs, particularly after retirement.

http://thestar.com.my/lifestyle/story.asp?file=/2010/11/14/lifefocus/7418582&sec=lifefocus

Jobstreet

Date announced 16/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK Jobstreet C0DE 0058

Price $ 2.9 Curr. ttm-PE 25.48 Curr. DY 1.03%
LFY Div 3.00 DPO ratio 35%
ROE 23.7% PBT Margin 48.9% PAT Margin 31.7%

Rec. qRev 30425 q-q % chg 2% y-y% chq 24%
Rec qPbt 14867 q-q % chg -6% y-y% chq 42%
Rec. qEps 3.06 q-q % chg -13% y-y% chq 25%
ttm-Eps 11.38 q-q % chg 6% y-y% chq 59%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 21.00 Avg. L PE 12.00
Forecast High Pr 3.05 Forecast Low Pr 1.40 Recent Severe Low Pr 1.40
Current price is at Upper 1/3 of valuation zone.

RISK: Upside 9% Downside 91%
One Year Appreciation Potential 1% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 3%

CPE/SPE 1.54 P/NTA 6.04 NTA 0.48 SPE 16.50 Rational Pr 1.88


Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Term Life Insurance is Value for Money

Buy insurance for PROTECTION.  Don't buy insurance for INVESTMENT.  

For the same protection, term insurance is more affordable than the insurance that gives protection with investment included.

Insurance products that also include investments are unlikely to give spectacular investment returns as these insurance companies are regulated and can invest in certain 'safe and low risk assets' only.

The savings through buying term insurance can then be invested into other investment products that may potentially give better returns.

Q&A: What can be deducted from rental income?

Oct 21, 2010
Q&A: What can be deducted from rental income?

Answering a reader's question about deductions for rental income is PricewaterhouseCoopers Taxation Services Sdn Bhd (PwC) senior executive director Margaret Lee.

Lee holds a portfolio of clients from diversified industries. She has been with PwC for 20 years, and has been involved in the undertaking of corporate restructuring of companies, cross-border deal structuring, due diligence reviews and negotiations with the regulatory authorities on tax matters. Additionally, she advises clients on the income tax, real property gains tax and stamp duty implications of merger of multinationals, conglomerates, trading and manufacturing companies.



Dear Editor,

I've rented my condo and would like to know if these are deductible:
- Real Estate Agent's commission
- Sinking fund (imposed by condo management)
- Service charges for repairs (in addition to costs of repairs)
- Installation costs of air-cond and water heater requested by tenant

Thank you.

Regards,
Sharon

--------------


Dear Sharon,

My answers are as below:

- Real Estate Agent's commission
Answer: This is deductible, provided that this is not the first time the condo is rented out to generate rental income.

- Sinking fund (imposed by condo management)
Answer: Deductible, since this is an expense in connection with the production of rental income.

- Service charges for repairs (in addition to costs of repairs)
Answer: Deductible, as long as these are not capital expenditure but are revenue deduction incurred for the wear and tear of the premises.

- Installation costs of air-cond and water heater requested by tenant
Answer: Not deductible and not qualified for capital allowance (tax depreciation) since there is capital expenditure incurred by the landlord and the landlord is not carrying a rental business.

http://www.starproperty.my/PropertyGuide/Finance/7699/0/0

Billionaire Warren Buffett's firm tweaks its US$49bil US stock portfolio

Tuesday November 16, 2010 MYT 9:14:56 AM

Omaha, Nebraska: Warren Buffett's company has invested in Bank of New York Mellon and sold off stakes in NRG Energy, CarMax and Republic Services.

Berkshire Hathaway Inc. revealed a number of changes to its $49 billion U.S. stock portfolio Monday in documents filed with the Securities and Exchange Commission.

The company doesn't typically comment on its investment decisions.

Between the end of June and the end of September, the Omaha-based company that Buffett leads as chairman and CEO made several changes during an active quarter.

Those included cutting Berkshire's Comcast stake to 187,000 shares from 12 million, reducing Nike holdings to 3.6 million shares from 7.6 million, cutting an Ingersoll-Rand Company investment to 636,600 shares from 5 million and reducing a stake in Nalco Holding Co. to 6.1 million shares from 9.15 million. - AP

Latest business news from AP-Wire

http://biz.thestar.com.my/news/story.asp?file=/2010/11/16/business/20101116075634&sec=business

Proposals by Time dotcom signals important milestone to turn around GLCs

Tuesday November 16, 2010


Proposals by Time dotcom signals important milestone to turn around GLCs
Raison D'etre - Risen Jayaseelan

On the face of it, the deal does raise eyebrows. First, it a very big related-party transaction (RPT) and second, why is an individual being given control over an important GLC?

But a closer look indicates that there is not much to fret about. First, the RPT is fully disclosed and all interested parties in the deal, which include Afzal and Khazanah Nasional Bhd, aren’t going to vote on the deal, leaving the decision on whether to accept or reject the proposals entirely in the hands of the minority shareholders.

Second, is the question of whether the assets are being injected at a fair price.

Afzal said UBS Securities Malaysia was particularly picked by TdC’s board to advise on the deal as UBS has had a lot of experience in valuing assets such as data centres and submarine cables.

It is also understood that the replacement cost of the submarine cables is much higher than what TdC is paying for. (To recap, one of the companies TdC is buying owns a 10% interest in the trans-Pacific Unity North Cable system, which is a 9,620km Japan-US cable built together with Google, Bharti, KDDI, SingTel and Pacnet.)

But perhaps, most significant aspect of the deal is this: Afzal did not parachute into this deal from nowhere. He has been given the reins to run TdC since October 2008 and has been doing a pretty decent job at it. TdC used to be known as a company whose revenue and profits were erratic and interspersed with asset disposals and impairment exercises that left investors with little visibility of the future earnings of the company.

But since 2009, TdC has been consistently EBITDA (earnings before interest, tax, depreciation and amortisation) positive, has had strong operations cashflows and has had five consecutive quarters of revenue and earnings growth. TdC’s EBITDA and operating profit margin have also doubled in the first half of FY2010. Afzal says 2009 was a year of ‘detox and cleansing’, whereby the cash was conserved, processes re-engineered and the quality of their fibre optic networks – the core of their business – were improved.

A closer look at the deal also reveals that Afzal & Co are being paid for their assets largely in shares in TdC. The cash that TdC is paying out goes mainly to other shareholders of the assets, namely three private equity funds, which had pumped in the initial capital needed to part finance the construction of the submarine cable. This clearly indicates that Afzal and his team are in for the long run at TdC.

Minority shareholders, therefore, should consider these facts when it’s time to vote on this deal.

If this model works out – if Afzal and team do bring value to TdC – then it does set a good precedent for Khazanah and other government agencies on how to deal with valuable assets in their hands which are not reaching their full potential.

To be sure, it does seem that this is the model that Khazanah is also trying to follow for POS Malaysia Bhd. Alas, in that case, it does seem to be taking longer than expected. While bids have been submitted by various parties on their plans to take POS to the next level, little has been heard of the deal since. It is rumoured that one stumbling block remains to be the unwillingness of the Government to give up its powerful golden share. Hopefully, that problem will be sorted out over time.

·Deputy news editor Risen Jayaseelan reckons that the TdC example is a big improvement from the past where assets and licenses were dished out to certain connected individuals who didn’t increase the value of those assets or worse, flipped them to other parties at a profit.

http://biz.thestar.com.my/news/story.asp?file=/2010/11/16/business/7436719&sec=business

Be wary of runaway stocks in a bull run

15 NOV, 2010, 12.00PM IST, DHIRENDRA KUMAR,
Be wary of runaway stocks in a bull run

The Bombay Stock Exchange (BSE) Sensitive Index (Sensex) revisiting the previous high of 20873 points could not have had a better timing, with Diwali and stocks making a perfect combination.

However, notwithstanding the festive connection, the index filled a psychological breach by erasing the damage of the great crash of 2008. Or maybe not.

I’m sorry to be the fly in the ointment, but I do think that investors should be paying more attention to what didn’t come back up rather than what did.

There are a number of stocks that haven’t made it back anywhere close to the highs that they touched in January 2008. For instance, for Reliance Communications (the worst of the lot), the Sensex is still at around 4800 points compared to January 2008.

And for anyone still hanging on to their DLF stocks, the Sensex is still at around 6400. There are a number of other stocks that have done almost as badly. Predictably, these are mostly from the telecom and the real estate/infrastructure industries.

Interestingly, at the other end of the scale, there are only a couple of Sensex stocks that have actually outstripped the index over this period.

The moral of the story is obvious: In any kind of market rally, there are always some questionable stories that get sold. It all looks fine as long as the going is good, but when the cycle reverses, many of the stocks and sectors, which looked like great bets, turn out to have been over-hyped. Some of these never come back. How long will it take for a stock like DLF to capture its previous high on an inflation-adjusted basis? A decade, maybe two decades? I wouldn’t be surprised if it never did so.

Today’s markets are characterised by a huge flood of liquidity from foreign investors and, even more importantly, the expectation that this flood of liquidity will continue. Investors will do well to remember that in the stock market, the foundation of future fortunes are laid when stock prices are down. When the bulls are raging, then more often than not, investors are laying the foundations of future losses.

In today’s market (as in January 2008), there are good stocks that are overpriced and there are bad stocks that are overpriced. There may even be some good stocks that are rightly-priced. Good luck finding them.

(The expert is CEO, Value Research)

http://economictimes.indiatimes.com/personal-finance/savings-centre/analysis/Be-wary-of-runaway-stocks-in-a-bull-run/articleshow/6927176.cms

Rubber prices at 30-year high

Rubber prices have this week hit a 30-year high, causing tyre makers to raise their prices by 10pc to 15pc.
Futures on the benchmark Tokyo commodities index surged to $4,661 per tonne, their highest since February 1980, and cash prices in Thailand climbed to an all-time record. Forecast rain is likely to worsen a supply shortage and Chinese inflation boosted demand across the commodity sector.

According to technical analysts from ProSpreads: "The fundamental reasons for rubber's recent gains are clear and evident: increased car sales in China, coupled with bad weather across South-East Asia, further squeezing supply. It would take a brave speculator to sell into this rally."


http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8132582/If-theres-a-global-gas-glut-why-are-prices-rising.html

The rich are playing it safe, says Julius Baer CE

The rich are playing it safe, says Julius Baer CEO
Written by Kelvin Tan
Tuesday, 28 September 2010 11:05


SINGAPORE: Wealthy clients of private bank Bank Julius Baer are still in risk-aversion mode, according to its global CEO Boris Collardi. The bank’s top management and board of directors were in town recently to attend a strategy meeting and celebrate its 120th anniversary.

“People like cash and we are seeing clients going into gold. They have got out of risky assets such as hedge funds and private equity, and they are not entering these assets yet,” said Collardi, responding to Personal Wealth’s questions on where his clients are parking their money at the moment. “There isn’t much exposure — they are taking in complex structured products and their trading activities are not really rising. They have a cautious investment profile at the moment,” added Thomas Meier, Julius Baer CEO of Asia and the Middle East.

This comes as no surprise, the bank’s top executives told regional journalists at a media briefing. “When markets go up, clients — looking to the future — would be more positive and willing to take more risk and do more transactions. The reverse is true when markets go down. Clients get more scared, asset levels go down and transactions go down in the industry,” says Collardi.

Although wealthy clients on the whole continue to shun stocks as an asset class, Collardi is seeing some fund flows into emerging-market equities, value stocks and high dividend yielding plays. “Clients are waiting to see some (sustainable) trends in the markets that last more than a week before going back into riskier asset classes,” said the 36-year-old Swiss-Italian. — The Edge Singapore


This article appeared in The Edge Financial Daily, September 28, 2010

Eurozone debt crisis: the PIGS at risk

Financial Crisis
Eurozone debt crisis: the PIGS at risk
As Portugal becomes the latest European Union country to admit it could need an EU bail-out, here are the other countries, or PIGS, at risk.

5:17PM GMT 15 Nov 2010

Portugal

Government deficit: €15.7bn

Deficit as a proportion of GDP: 9.3 per cent

RELATED ARTICLES

• Contagion hits Portugal as Ireland dithers on Rescue

  15 Nov 2010

• Greek debt position worse than feared

  15 Nov 2010

• Irish debt crisis: timeline

  15 Nov 2010

• Irish bond yields dip as UK, EU urge calm

  15 Nov 2010

• Germany blamed for Irish debt soar

  15 Nov 2010

• Markets alert for credit crunch 2.0

  15 Nov 2010

Government debt: €127.9bn

Government debt as a percentage of GDP: 76.1 per cent

Ireland

Government deficit: €22.9bn

Deficit as a proportion of GDP: 14.4 per cent

Government debt: €104.5bn

Government debt as a percentage of GDP: 65.5 per cent

Greece

Government deficit: €36.1bn

Deficit as a proportion of GDP: 15.4 per cent

Government debt: €288bn

Government debt as a percentage of GDP: 126.8 per cent

Spain

Government deficit: €117.3bn

Deficit as a proportion of GDP: 11.1 per cent

Government debt: €560.5bn

Government debt as a percentage of GDP: 53.2 per cent

EU limits under the now-defunct stability and growth pact

What Brussels recommends

An annual budget deficit no higher than 3% of GDP (this includes the sum of all public budgets, including municipalities, regions, etc)

A national debt lower than 60% of GDP or approaching that value.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8135036/Eurozone-debt-crisis-the-PIGS-at-risk.html

Time dotCom to cancel 90c from each share, capital repayment RM50.61m

Time dotCom to cancel 90c from each share, capital repayment RM50.61m
Written by Joseph Chin
Monday, 15 November 2010 17:13


KUALA LUMPUR: TIME DOTCOM BHD [] is undertaking a corporate exercise which involved a share capital reduction, capital repayment and the acquisition of four companies as it seeks to expand into the regional telecommunications industry,

Time dotCom said on Monday, Nov 15 it would undertake a share capital reduction of its paid-up of RM2.53 billion, comprising of 2.53 billion shares of RM1 each by cancelling 90 sen of the par value.

It also proposed a share consolidation of the 2.53 billion 10 sen shares and consolidate them into 506.15 million shares, on the basis of five shares of 10 sen each to one share of 50 sen each in Time dotCom.

It also entered into two memoranda of agreements with the shareholders of Megawisra Sdn Bhd and Global Transit Ltd (Labuan) to acquire four companies for a total of RM286.5 million via the issuance of new shares and RM38.4 million cash.

The four companies are Global Transit Communications Sdn Bhd for RM106 million, Global Transit Ltd for RM105 million, Global Transit (HK) Ltd and Global Transit Singapore Pte Ltd for RM1 each and AIMS Group for RM128 million in cash and shares.

It also proposed a capital repayment of RM50.61 million or two sen per TdC share.

http://www.theedgemalaysia.com/business-news/177153-flash-time-dotcom-to-cancel-90c-from-each-share-capital-repayment-rm5061m.html


Related:
Time dotCom Analyst presentation slides and research paper

Green Packet 3Q net loss narrows to RM13.7m

Green Packet 3Q net loss narrows to RM13.7m
Written by Joseph Chin
Monday, 15 November 2010 19:04


KUALA LUMPUR: GREEN PACKET BHD [] posted net losses of RM13.71 million in the third quarter ended Sept 30, 2010, a decline from the net loss of RM31.84 million a year ago and expects margin erosion in the competitive broadband and voice business segments

It said on Monday, Nov 15 that revenue rose 60% to RM100.89 million from RM63.03 million. Loss per share was 2.1 sen versus eight sen. Green Packet said the net loss was lower in the just ended quarter due to an improvement in turnover.

Of the RM100.89 million in revenue, software, devices and engineering services accounted for RM25.56 million, up 169.4% from RM9.49 million a year ago, broadband services and solutions (RM55.16 million or up 37.7% from RM40.07) and communication/voice services (RM20.17 or up 49.6% from RM13.48 million).

“In line with the government initiative to allocate new spectrum, the broadband and voice business segments are projected to be increasingly competitive with expected margin erosion. Nevertheless, the board of directors expects the performance of the group to improve in tandem with the changing market landscape and planned increase in the subscribers base,” it said.

Green Packet’s total borrowings as at Sept 30 totalled RM237.01 million. Its total turnover was the nine-month period was RM277.71 million compared with RM160.99 million while loss per share was RM56.82 million compared with RM81.93 million.

http://www.theedgemalaysia.com/business-news/177158-green-packet-narrows-losses-3q-net-loss-rm137m.html

Amway net profit rises slightly in Q3

Amway net profit rises slightly in Q3
Published: 2010/11/16


AMWAY Malaysia Holdings Bhd’s net profit rose marginally to RM21.5 million for its third quarter ended September 30 2010 from RM20.5 million in the same quarter last year due to an increase in sales revenue.

Revenue rose 13.8 per cent to RM191.5 million mainly due to better distributors’ productivity driven by sales and marketing programme implemented in the period under review.

Amway said it is on track to achieve single digit growth in sales revenue for the current financial year.



Read more: Amway net profit rises slightly in Q3 http://www.btimes.com.my/Current_News/BTIMES/articles/20101116005538/Article/#ixzz15OgnGDwL

Transmile Q3 net loss climbs to RM135m

Transmile Q3 net loss climbs to RM135m
Published: 2010/11/16


Transmile Group Bhd (7000) reported an almost ninefold jump in third quarter net loss mainly due to the lower value of its aircraft.


The financially-troubled air-cargo company posted a net loss of RM135.1 million for the quarter to September 30 2010, up from RM15 million a year ago.

Transmile did not directly comment on its loss but said it made a smaller adjusted loss before tax and exceptional items of RM8.45 million as against RM20.4 million in the same quarter in 2009.

Revenue for the quarter was also two thirds higher at RM50.7 million.

The impairment loss on Transmile's MD-11 aircraft is RM143.8 million.
"The group is committed to dispose of its idle wide body aircraft to settle its loan obligations. Efforts to sell the aircraft are on going and accordingly, the aircraft are presented as held for sale," Transmile said in a statement to Bursa Malaysia.

The planes are now valued at RM242.1 million on its books.

The impairment loss reflects "the fair value less cost to sell based on the latest indicative offers received by the company for the wide body aircraft".

The company now owes more than RM500 million to creditors in the form of convertible bonds and medium-term notes (MTN), which it is unable to repay after freight traffic crashed in late 2008 to early 2009.

The MTN holders are owed RM105 million, with the EPF holding around half of those notes. Other MTN holders are Meridian Asset Management, OSK Group, Agrobank and AmBank Group, according to previous reports.

Transmile had fallen into the financially-troubled category of Practice Note 17 earlier this year. It has made little progress in restructuring its debt as it has failed to find buyers for its MD-11 aircraft.




Read more: Transmile Q3 net loss climbs to RM135m http://www.btimes.com.my/Current_News/BTIMES/articles/miletran/Article/index_html#ixzz15Og2awt2