Wednesday, May 09, 2007
MARKET SLOW DOWNTREND
Our latest finding shows the overall market is heading downward except KLCI. If one counter rebound, take profit first, keep the cash cow on hand wait for End of May/Early of June to buy low is our strategy.
Tuesday, May 08, 2007
MARKET CORRECTION END MAY/EARLY JUNE
CI climbs to New High, break 1994 high (1,332). Limited selective counters such as LBS and QUEST going up slowly. 2nd & 3rd liners go up and down, ding and dong, going no where. These few days, market is slightly correct, looks like correction, but it is not. The market may have chance to rebound only within 2 weeks, eventually the real correction is forecasted to set in in last week of May/first week of June.
We would say our strategy is, if one counter gives 10% capital gain within next 2 weeks, we would take profit, keep our cash cow, waiting for the real correction in the last week of May/first week of June to buy low again.
We would say our strategy is, if one counter gives 10% capital gain within next 2 weeks, we would take profit, keep our cash cow, waiting for the real correction in the last week of May/first week of June to buy low again.
Saturday, May 05, 2007
CI TARGET 1,600 - 1,800
Our market has continued its strong bull momentum, our research shows CI may hit 1,600 - 1,800. Comparing to regional performance, CI is still considered laggard. This year, CI may extend its bullish to catch up the regional level.
Fundamentally, promising economic growth and corporate earnings are relected on Bursa Malaysia which is the barometer of Malaysia Economy. Technically, market is in the accumulating phase where the broad market may make another upside move within 2 months' time.
Fundamentally, promising economic growth and corporate earnings are relected on Bursa Malaysia which is the barometer of Malaysia Economy. Technically, market is in the accumulating phase where the broad market may make another upside move within 2 months' time.
Monday, April 30, 2007
WE ARE NOW BACK AT http://STOCTOUCH.blogspot.com
First of all, we would like to thank a supporter who emailed us and helped us to get rid of our blog address problem. We are now back at http://STOCTOUCH.blogspot.com as usual.
In here, we would like to share our view on the market as well. The quite market these few weeks shows the Accumulating Phase. Which in turn, we do think, there may be a market rally after this Accumulating Period. Before any aggresive market rally, take profit whenever one gives capital gain around 10% may be strategised.
Our monitor list : FARLIM, KIMBLE, BURSA-CD
In here, we would like to share our view on the market as well. The quite market these few weeks shows the Accumulating Phase. Which in turn, we do think, there may be a market rally after this Accumulating Period. Before any aggresive market rally, take profit whenever one gives capital gain around 10% may be strategised.
Our monitor list : FARLIM, KIMBLE, BURSA-CD
Wednesday, April 18, 2007
MARKET CORRECTION
CI formed Double Top at 1332, Market is expected to correct towards this week end. Market is likely to resume the uptrend next week.
We do feel pity of losing our original blog address, i.e. http://STOCTOUCH.blogspot.com The transition of Blogger Account has resulted the publishing error of our blog to http://STOCTOUCH1.blogspot.com as you are visiting now. Due to no technical support by Blogger, we has to publish our blog to http://STOCTOUCH1.blogspot.com until further notice.
We do appreciate if any fellow know how to solve this problem contacting us at stoctouch@gmail.com
We do feel pity of losing our original blog address, i.e. http://STOCTOUCH.blogspot.com The transition of Blogger Account has resulted the publishing error of our blog to http://STOCTOUCH1.blogspot.com as you are visiting now. Due to no technical support by Blogger, we has to publish our blog to http://STOCTOUCH1.blogspot.com until further notice.
We do appreciate if any fellow know how to solve this problem contacting us at stoctouch@gmail.com
Thursday, April 12, 2007
LOST ORIGINAL BLOG ADDRESS
A few weeks i didn't post any updates to my blog at http://STOCTOUCH.blogspot.com, now i couldn't publish my blog to this original blog address.
Log-in my account (www.blogger.com), i found out "the publish address" is automatically filled as http://STOCTOUCH1.blogspot.com. There is "1" at the back of my blog address STOCTOUCH. I tried to change it back to the original blog address, it showed "the address is not available".
I totally lost my visitors, after years i built it.
I have written to blogger staff a week ago, but it was not replied. I am feeling helpless for solving this problem. I do hope someone can help me up to solve this problem.
Whoever is willing to help me to solve this problem, please write an email to me at stoctouch@gmail.com
Thanks for help.
Log-in my account (www.blogger.com), i found out "the publish address" is automatically filled as http://STOCTOUCH1.blogspot.com. There is "1" at the back of my blog address STOCTOUCH. I tried to change it back to the original blog address, it showed "the address is not available".
I totally lost my visitors, after years i built it.
I have written to blogger staff a week ago, but it was not replied. I am feeling helpless for solving this problem. I do hope someone can help me up to solve this problem.
Whoever is willing to help me to solve this problem, please write an email to me at stoctouch@gmail.com
Thanks for help.
Monday, February 19, 2007
CIMB : MALAYSIA NEEDS MORE CALL WARRANT ISSUERS
(Business Times (Malaysia) Via Thomson Dialog NewsEdge) CALL warrants are crucial in boosting market volume and they are in great demand from retail investors, but Malaysia will need more issuers - typically investment banks with adequate capital and infrastructure - to grow this product, CIMB Group says. A market leader in the area, CIMB Group currently issues 85 per cent of call warrants in the domestic market.
"The number is way too high. We hope to see more players here," Datuk Nazir Razak, chief executive officer of CIMB Group, said yesterday in Kuala Lumpur. Unlike in Singapore and Hong Kong where there are more than 10 issuers in the market, only three players are issuing call warrants in Malaysia - CIMB, AmInvestment Group and OSK Investment Bank Bhd.Nazir said the warrant market holds great potential since the number of issues here is just a fraction of that of the more established markets such as Hong Kong and Singapore. Over the past three years, the Malaysian market has seen just under 50 new issues. Comparatively, Singapore, which launched the product in 2005, has had more than 400 issues a year, while in Hong Kong, there are over 1,000 new issues a year.
Nazir said demand for the product is big, especially from retail investors. This is because call warrants give them the exposure to underlying blue-chips at a lower cash outlay and provide leveraged exposure - with higher upside and downside than the mother shares themselves.
"Call warrants would also help address the low trading-velocity problem on Bursa Malaysia as the product has high trading volume. The hedging activities of the warrant manufacturer would create more activities in the underlying shares too," he added. Still, Nazir said the high level of infrastructure, risk management and capital required of a market maker mean that only banks with such capabilities can afford to issue call warrants.
"We are committed to market-making ... CIMB is there to buy back and sell and that's important. If investors want to sell, there'll need to be a buyer ... the liquidity is crucial to provide confidence to investors," he explained."It's a game for the banks and not the small, niche brokers," he added.
The banking group yesterday launched a public website called CIMB Warrants Portal, providing investors with education and information that they will need in trading call warrants. Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff, who launched the portal, said many investors have been attracted to warrants lately due to their relatively cheaper entry points compared to blue chip stocks.
"There is a lot more to warrants than just their pricing, and all these factors are vital for investors to know," he said. Yusli said more call warrants should be issued to increase market volume, adding that the current value is about RM85 million.
Call warrants in Malaysia now account for over 5 per cent of the total market volume compared with less than 1 per cent before 2005, when the Securities Commission revised guidelines to allow faster and simpler issuance of call warrants.
source : http://www.tmcnet.com/usubmit/2007/02/05/2311703.htm
"The number is way too high. We hope to see more players here," Datuk Nazir Razak, chief executive officer of CIMB Group, said yesterday in Kuala Lumpur. Unlike in Singapore and Hong Kong where there are more than 10 issuers in the market, only three players are issuing call warrants in Malaysia - CIMB, AmInvestment Group and OSK Investment Bank Bhd.Nazir said the warrant market holds great potential since the number of issues here is just a fraction of that of the more established markets such as Hong Kong and Singapore. Over the past three years, the Malaysian market has seen just under 50 new issues. Comparatively, Singapore, which launched the product in 2005, has had more than 400 issues a year, while in Hong Kong, there are over 1,000 new issues a year.
Nazir said demand for the product is big, especially from retail investors. This is because call warrants give them the exposure to underlying blue-chips at a lower cash outlay and provide leveraged exposure - with higher upside and downside than the mother shares themselves.
"Call warrants would also help address the low trading-velocity problem on Bursa Malaysia as the product has high trading volume. The hedging activities of the warrant manufacturer would create more activities in the underlying shares too," he added. Still, Nazir said the high level of infrastructure, risk management and capital required of a market maker mean that only banks with such capabilities can afford to issue call warrants.
"We are committed to market-making ... CIMB is there to buy back and sell and that's important. If investors want to sell, there'll need to be a buyer ... the liquidity is crucial to provide confidence to investors," he explained."It's a game for the banks and not the small, niche brokers," he added.
The banking group yesterday launched a public website called CIMB Warrants Portal, providing investors with education and information that they will need in trading call warrants. Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff, who launched the portal, said many investors have been attracted to warrants lately due to their relatively cheaper entry points compared to blue chip stocks.
"There is a lot more to warrants than just their pricing, and all these factors are vital for investors to know," he said. Yusli said more call warrants should be issued to increase market volume, adding that the current value is about RM85 million.
Call warrants in Malaysia now account for over 5 per cent of the total market volume compared with less than 1 per cent before 2005, when the Securities Commission revised guidelines to allow faster and simpler issuance of call warrants.
source : http://www.tmcnet.com/usubmit/2007/02/05/2311703.htm
ROOM FOR GROWTH IN WARRANTS MARKET
source : http://thestar.com.my/news/story.asp?file=/2007/2/1/business/16744084&sec=business
Warrants have yet to stamp a mark here even though markets like Singapore and Hong Kong saw increased derivatives trading in 2006, thanks to Asia’s bull run. Today’s first of a six-part fortnightly series explores this instrument.
Structured warrant markets in Asia underwent big changes in 2006, partly due to the buoyant regional market and the growing familiarity with the instrument.
With bullish sentiment, warrant trading now accounts for nearly 30% of Hong Kong’s total turnover compared with 7%-9% a few years ago. In Singapore, it contributes to 5%-10% of total daily turnover.
Such appetite for volatility is evident in Malaysia, despite slowed momentum since the new Securities Commission (SC) guidelines in May 2003. Bursa Malaysia shifted gears in the second half of 2006 with CIMB accelerating its warrants issuance programme, followed by AMMB and OSK Securities.
Still, the warrants market here is small and inactive - from 12 call warrants at the end of 2005 to 35 currently.
For 2007, expect to see further relaxation of listing requirements. The current placement methodology (new issues need to be placed to 100 holders, or 50 holders each subscribing to a minimum value of RM100,000) is a barrier to expanding the warrant market. .
Hong Kong and Singapore abandoned such regulations in 2001 and 2004 respectively, replacing them with the “warrant supermarket” approach where issuers list warrants and “shelve” them for public consumption.
Risk management takes effect when the warrants are consumed in the secondary market, causing an influx of warrant launches. Listing fees were lowered as an effect (not a cause) of the huge issuance supply.
Such supply-driven effects fuel structured warrant popularity. Currently, there are 20 issuers in Hong Kong and 13 for Singapore though only a few dominate the market.
They compete to issue or roll over new warrants with relevant strike levels as the market trended upwards throughout 2006.
There are 550 Singapore Exchange (SGX)-listed structured warrants, compared with Bursa's 35 (in 2003, both SGX and SC revised guidelines). Another implication is that the greater range of issuers and warrant issues will translate to depth and market making efficiency with warrants.
Prior to the current system, daily prices of structured warrants were based on supply and demand without liquidity guarantee. Nonetheless, the existing system is not foolproof. Examples include quotations of two call warrants - Resorts-CA and Genting-CA, which traded in opposite directions to their underlying stocks.
The challenge for Bursa is to induce inter-warrant competition from foreign issuers running on a global platform to improve overall market making efficiency.
Risks will increase as more issuers compete for a selective group of stocks. Any inconsistent pricing from volatility manipulation or failure to maintain tight bid-offer spreads will be quickly acknowledged by demand.
While the appetite for volatility can become more manageable on the delta- and gamma-hedging fronts, increasingly competitive supply will evolve and issuers will adopt less defensive techniques.
Bursa, the issuers and the distributing brokers are anxious to keep the warrant market moving. Thus they need investors to understand structured warrants. In Hong Kong and Singapore, warrant issuers actively provide data on warrants indicators and conduct product seminars on warrant trading.
The structured warrant market in Malaysia needs to grow. The typical buy-and-hold warrant trading strategy will only succeed with efficient market makers from a range of issuers. High delta in-the-money warrants will be replaced and rolled over fast with relevant strike levels, and issuers need not resort to defensive market making tactics (e.g. widening the spreads) and rapid implied volatility adjustments.
Otherwise, investors and traders will adopt shorter holding periods for structured warrants upon closer scrutiny of the various market-making mechanisms employed by the issuers. In markets like Singapore and Hong Kong, about 90%-95% of total turnover on structured warrants were day-trades, a result of three to four years of product adoption.
The Malaysian warrant market cannot at such an early stage implement this, where participation from day-traders prevails over actual retail clients.
Warrants have yet to stamp a mark here even though markets like Singapore and Hong Kong saw increased derivatives trading in 2006, thanks to Asia’s bull run. Today’s first of a six-part fortnightly series explores this instrument.
Structured warrant markets in Asia underwent big changes in 2006, partly due to the buoyant regional market and the growing familiarity with the instrument.
With bullish sentiment, warrant trading now accounts for nearly 30% of Hong Kong’s total turnover compared with 7%-9% a few years ago. In Singapore, it contributes to 5%-10% of total daily turnover.
Such appetite for volatility is evident in Malaysia, despite slowed momentum since the new Securities Commission (SC) guidelines in May 2003. Bursa Malaysia shifted gears in the second half of 2006 with CIMB accelerating its warrants issuance programme, followed by AMMB and OSK Securities.
Still, the warrants market here is small and inactive - from 12 call warrants at the end of 2005 to 35 currently.
For 2007, expect to see further relaxation of listing requirements. The current placement methodology (new issues need to be placed to 100 holders, or 50 holders each subscribing to a minimum value of RM100,000) is a barrier to expanding the warrant market. .
Hong Kong and Singapore abandoned such regulations in 2001 and 2004 respectively, replacing them with the “warrant supermarket” approach where issuers list warrants and “shelve” them for public consumption.
Risk management takes effect when the warrants are consumed in the secondary market, causing an influx of warrant launches. Listing fees were lowered as an effect (not a cause) of the huge issuance supply.
Such supply-driven effects fuel structured warrant popularity. Currently, there are 20 issuers in Hong Kong and 13 for Singapore though only a few dominate the market.
They compete to issue or roll over new warrants with relevant strike levels as the market trended upwards throughout 2006.
There are 550 Singapore Exchange (SGX)-listed structured warrants, compared with Bursa's 35 (in 2003, both SGX and SC revised guidelines). Another implication is that the greater range of issuers and warrant issues will translate to depth and market making efficiency with warrants.
Prior to the current system, daily prices of structured warrants were based on supply and demand without liquidity guarantee. Nonetheless, the existing system is not foolproof. Examples include quotations of two call warrants - Resorts-CA and Genting-CA, which traded in opposite directions to their underlying stocks.
The challenge for Bursa is to induce inter-warrant competition from foreign issuers running on a global platform to improve overall market making efficiency.
Risks will increase as more issuers compete for a selective group of stocks. Any inconsistent pricing from volatility manipulation or failure to maintain tight bid-offer spreads will be quickly acknowledged by demand.
While the appetite for volatility can become more manageable on the delta- and gamma-hedging fronts, increasingly competitive supply will evolve and issuers will adopt less defensive techniques.
Bursa, the issuers and the distributing brokers are anxious to keep the warrant market moving. Thus they need investors to understand structured warrants. In Hong Kong and Singapore, warrant issuers actively provide data on warrants indicators and conduct product seminars on warrant trading.
The structured warrant market in Malaysia needs to grow. The typical buy-and-hold warrant trading strategy will only succeed with efficient market makers from a range of issuers. High delta in-the-money warrants will be replaced and rolled over fast with relevant strike levels, and issuers need not resort to defensive market making tactics (e.g. widening the spreads) and rapid implied volatility adjustments.
Otherwise, investors and traders will adopt shorter holding periods for structured warrants upon closer scrutiny of the various market-making mechanisms employed by the issuers. In markets like Singapore and Hong Kong, about 90%-95% of total turnover on structured warrants were day-trades, a result of three to four years of product adoption.
The Malaysian warrant market cannot at such an early stage implement this, where participation from day-traders prevails over actual retail clients.
Wednesday, February 07, 2007
CI TO REACH 1,332.04 to 1,440.00
news from theedgedaily.com
By Kevin Tan & Isabelle Francis
http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_975b9750-cb73c03a-126c6ea0-997a4ce0
Bursa Malaysia is expected to surpass the Kuala Lumpur Composite Index’s (KLCI) all-time high of 1,332.04 in Januray 1994 based on the current rally, underpinned by the increased liberalisation of economy, accommodative fiscal and monetary policies and improving corporate returns on equity (ROE), analysts said.
CIMB Research forecast the KLCI could reach 1,440, outperforming the region for the first time in four years due to a confluence of positive macro factors.
This would be above the KLCI’s all-time high of 1,332.04 during the super bull run on Jan 5, 1994.
On Feb 6, the KLCI surged to its 10-year high of 1,236.63, up 10.9 points while the FBM Emas added 54.31 points to 8,155.14. Turnover surged to 2.09 billion units valued at RM3.41 billion with 451 gainers against 470 losers.
Index-linked counters were the major gainers. Among them were British American Tobacco (Malaysia) Bhd and IOI Corporation Bhd, which rose 50 sen each to RM45 and RM20, respectively.
Resorts World Bhd was 40 sen up to RM16.50, MISC Bhd-foreign 40 sen to RM9.80, and Bumiputra-Commerce Holdings Bhd-CA and SP Setia Bhd 35 sen each to RM5.45 and RM6.60, respectively.
Volume leader Affin-WC with 78 million units done surged 14 sen to 50.5 sen.
CIMB said foreign investors were giving the stock market a significant boost and the local institutional and retail investors should provide the follow-through.
Roadshows by major corporations recently had also been successful in bringing foreign funds into the market. CIMB had taken Khazanah Nasional Bhd and seven companies — AirAsia Bhd, Bumiputra Commerce Holdings Bhd (BCHB), Bursa Malaysia Bhd, Genting Bhd, Malaysian Resources Corporation Bhd, UEM World Bhd and YTL Corporation Bhd – for a one-day conference in London on Feb 2.
It said the response was very good, with nearly 40 representatives from 30 fund management companies attending the one-on-one and small group sessions.
UBS Investment Research Malaysia forecast the KLCI to reach 1,348 by year-end, underpinned by news flow of further mergers and acquisitions, either from new deals or completion of existing deals.
“A better political climate combined with commitment to maximise capital management should bode well for market sentiment,” said its head of research Colbert Nocom (pic).
He said the market was expected to benefit from development spending which is set to rise 24% to RM44.5 billion in 2007 with the onward implementation of the Ninth Malaysia Plan.
However, he said there could be a possible correction for the KLCI given its 32% run-up over the past six months.
“But we think this correction could be short-lived backed by clear signs of increased liberalisation of economy, accommodative fiscal and monetary policies supporting Gross Domestic Product (GDP) growth of 5.5% in 2007 even amid a soft landing for the US economy, and improving corporate ROE,” he said.
Nocom said in terms of ROEs, he expected them to rise to 14.2% this year from 13.4% last year. Earnings per share (EPS) growth was expected to be around 17% in 2007, he said.
UBS Malaysia’s strategy for the first quarter of 2007 was an overweight on the banking and property sectors, which would become proxies to fiscal pump- priming policies. It was overweight on plantations as crude palm oil price was expected to hit record levels.
On foreign investors’ interest in Malaysia, he said it should be sustainable as long as the country’s politics remained stable and corporate earnings are high. Among UBS Malaysia’s favourite stock picks for the year are Malayan Banking Bhd, BCHB, AMMB Bhd, Genting Bhd, KL Kepong Bhd, SP Setia Bhd and IGB Bhd. UBS Malaysia monitors a pool of 44 stocks listed on Bursa Malaysia, most of them with market capitalisation of over RM1 billion.
The laggards included IOI Corporation Bhd, Astro All Asia Networks Bhd and Uchi Technologies Bhd.
By Kevin Tan & Isabelle Francis
http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_975b9750-cb73c03a-126c6ea0-997a4ce0
Bursa Malaysia is expected to surpass the Kuala Lumpur Composite Index’s (KLCI) all-time high of 1,332.04 in Januray 1994 based on the current rally, underpinned by the increased liberalisation of economy, accommodative fiscal and monetary policies and improving corporate returns on equity (ROE), analysts said.
CIMB Research forecast the KLCI could reach 1,440, outperforming the region for the first time in four years due to a confluence of positive macro factors.
This would be above the KLCI’s all-time high of 1,332.04 during the super bull run on Jan 5, 1994.
On Feb 6, the KLCI surged to its 10-year high of 1,236.63, up 10.9 points while the FBM Emas added 54.31 points to 8,155.14. Turnover surged to 2.09 billion units valued at RM3.41 billion with 451 gainers against 470 losers.
Index-linked counters were the major gainers. Among them were British American Tobacco (Malaysia) Bhd and IOI Corporation Bhd, which rose 50 sen each to RM45 and RM20, respectively.
Resorts World Bhd was 40 sen up to RM16.50, MISC Bhd-foreign 40 sen to RM9.80, and Bumiputra-Commerce Holdings Bhd-CA and SP Setia Bhd 35 sen each to RM5.45 and RM6.60, respectively.
Volume leader Affin-WC with 78 million units done surged 14 sen to 50.5 sen.
CIMB said foreign investors were giving the stock market a significant boost and the local institutional and retail investors should provide the follow-through.
Roadshows by major corporations recently had also been successful in bringing foreign funds into the market. CIMB had taken Khazanah Nasional Bhd and seven companies — AirAsia Bhd, Bumiputra Commerce Holdings Bhd (BCHB), Bursa Malaysia Bhd, Genting Bhd, Malaysian Resources Corporation Bhd, UEM World Bhd and YTL Corporation Bhd – for a one-day conference in London on Feb 2.
It said the response was very good, with nearly 40 representatives from 30 fund management companies attending the one-on-one and small group sessions.
UBS Investment Research Malaysia forecast the KLCI to reach 1,348 by year-end, underpinned by news flow of further mergers and acquisitions, either from new deals or completion of existing deals.
“A better political climate combined with commitment to maximise capital management should bode well for market sentiment,” said its head of research Colbert Nocom (pic).
He said the market was expected to benefit from development spending which is set to rise 24% to RM44.5 billion in 2007 with the onward implementation of the Ninth Malaysia Plan.
However, he said there could be a possible correction for the KLCI given its 32% run-up over the past six months.
“But we think this correction could be short-lived backed by clear signs of increased liberalisation of economy, accommodative fiscal and monetary policies supporting Gross Domestic Product (GDP) growth of 5.5% in 2007 even amid a soft landing for the US economy, and improving corporate ROE,” he said.
Nocom said in terms of ROEs, he expected them to rise to 14.2% this year from 13.4% last year. Earnings per share (EPS) growth was expected to be around 17% in 2007, he said.
UBS Malaysia’s strategy for the first quarter of 2007 was an overweight on the banking and property sectors, which would become proxies to fiscal pump- priming policies. It was overweight on plantations as crude palm oil price was expected to hit record levels.
On foreign investors’ interest in Malaysia, he said it should be sustainable as long as the country’s politics remained stable and corporate earnings are high. Among UBS Malaysia’s favourite stock picks for the year are Malayan Banking Bhd, BCHB, AMMB Bhd, Genting Bhd, KL Kepong Bhd, SP Setia Bhd and IGB Bhd. UBS Malaysia monitors a pool of 44 stocks listed on Bursa Malaysia, most of them with market capitalisation of over RM1 billion.
The laggards included IOI Corporation Bhd, Astro All Asia Networks Bhd and Uchi Technologies Bhd.
Tuesday, January 23, 2007
LOCAL RETAIL INVESTORS ARE NOT AGREESIVE IN BURSA MALAYSIA
Yusli: Bursa lacks support of local investors
By KATHY FONG (Tuesday January 23, 2007)
http://biz.thestar.com.my/news/story.asp?file=/2007/1/23/business/16649924&sec=business
KUALA LUMPUR: Foreigners are more bullish on and have stronger interest in Malaysian stocks than local investors, according to Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff.
“Foreign fund managers are gung-ho on Malaysian stocks. However, local investors seem to have no faith in domestic companies,” Yusli commented after the launch of FTSE Emas Syariah Index yesterday.
He noted that foreign institutional investors were the net buyers on Bursa, accounting for 35% of last year's daily volume. Locals, especially retail investors, were still waiting on the sidelines although the market had rallied for more than three months.
“Retail investors have not returned to the market in a big way yet. “It would be a shame if our investors miss the rally on Bursa,” said Yusli, who blamed the slow retail interest on the lack of promotional efforts by stockbrokers. “There are many undervalued stocks. And yet retail investors do not know what stock to buy,” he said.
The bullish sentiment on Bursa gathered strength in the second half of last year, led by plantation stocks and companies that were undertaking merger and acquisition activities.
The strong rally had indeed overshot the expectations of many investment analysts.
The benchmark KL Composite Index ended last year above 1,000 points and continued to charge ahead, soaring near the 10-year high of 1,271 points to close at 1,157.85 yesterday.
Yusli said the market velocity had risen to 45% since the start of the year, compared with about 33% last year.
He, however, said the current level was still low relative to that in other regional markets. “The challenge for us now is to sustain the volume.” Market velocity is the measure of the total value of trades in a period in relation to the total market capitalisation. On market talk that Bursa would declare another capital repayment, Yusli said there was “no immediate plan for that” although it was Bursa's policy to return any excess capital to shareholders.
Bursa declared a capital repayment of 83 sen per share together with an interim dividend of 10 sen per share in August 2005. Bursa's share price shot up 60 sen to RM10.70 yesterday, with 5.49 million shares traded. On the newly launched FTSE Emas Syariah Index, Yusli said it would set a platform to introduce Islamic financial products.
He expected Islamic structured products, including futures, on the index to be rolled out as early as the second half this year. The existing KL Syariah Index will run parallel with the FTSE Syariah Index for nine months from yesterday.
By KATHY FONG (Tuesday January 23, 2007)
http://biz.thestar.com.my/news/story.asp?file=/2007/1/23/business/16649924&sec=business
KUALA LUMPUR: Foreigners are more bullish on and have stronger interest in Malaysian stocks than local investors, according to Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff.
“Foreign fund managers are gung-ho on Malaysian stocks. However, local investors seem to have no faith in domestic companies,” Yusli commented after the launch of FTSE Emas Syariah Index yesterday.
He noted that foreign institutional investors were the net buyers on Bursa, accounting for 35% of last year's daily volume. Locals, especially retail investors, were still waiting on the sidelines although the market had rallied for more than three months.
“Retail investors have not returned to the market in a big way yet. “It would be a shame if our investors miss the rally on Bursa,” said Yusli, who blamed the slow retail interest on the lack of promotional efforts by stockbrokers. “There are many undervalued stocks. And yet retail investors do not know what stock to buy,” he said.
The bullish sentiment on Bursa gathered strength in the second half of last year, led by plantation stocks and companies that were undertaking merger and acquisition activities.
The strong rally had indeed overshot the expectations of many investment analysts.
The benchmark KL Composite Index ended last year above 1,000 points and continued to charge ahead, soaring near the 10-year high of 1,271 points to close at 1,157.85 yesterday.
Yusli said the market velocity had risen to 45% since the start of the year, compared with about 33% last year.
He, however, said the current level was still low relative to that in other regional markets. “The challenge for us now is to sustain the volume.” Market velocity is the measure of the total value of trades in a period in relation to the total market capitalisation. On market talk that Bursa would declare another capital repayment, Yusli said there was “no immediate plan for that” although it was Bursa's policy to return any excess capital to shareholders.
Bursa declared a capital repayment of 83 sen per share together with an interim dividend of 10 sen per share in August 2005. Bursa's share price shot up 60 sen to RM10.70 yesterday, with 5.49 million shares traded. On the newly launched FTSE Emas Syariah Index, Yusli said it would set a platform to introduce Islamic financial products.
He expected Islamic structured products, including futures, on the index to be rolled out as early as the second half this year. The existing KL Syariah Index will run parallel with the FTSE Syariah Index for nine months from yesterday.
Tuesday, January 16, 2007
DOW JONES - SELL SELL SELL
25 Year Stock Market Top
by Howard S. Katz, Monday, 15 January 2007, http://news.goldseek.com/GoldSeek/1168903818.php
howardkatz@hotmail.com
Sell, Sell, Sell
In December 1981, I scooped Wall Street by predicting a grand cycle (10-20 year) bull market in stocks. Since that time, the DJI has gone from 800 to 12,000. Here in January 2007, I am predicting that this grand cycle bull has come to an end. A 10-20 year bear market in stocks (as represented by the DJI and S&P 500) is about to begin. Rough price objectives are 6000 DJI in nominal dollars and an 80% decline in real dollars. If you own stocks, then sell, sell, sell.
Cause and Effect
I have achieved a dramatically successful record in analyzing stocks over the past 30 years by practicing the scientific approach, by which I mean studying the cause and effect relations which govern stock prices.
The cause of the vast majority of major term (2-4 year) stock moves is the bond market. In the 19th and early 20th centuries, normal (earnings) yield for good quality stocks was 8%. Normal (real) yield for high quality bonds was 5%. This 8:5 ratio held for long periods of time and almost certainly reflects certain basic value judgements of our society (with stocks receiving the higher yield due to their greater risk).
What causes a major stock market move is that the U.S. central bank the Federal Reserve) adopts a policy toward interest rates. If the Fed lowers (short) rates, then this will cause a lowering of long rates and will disturb the 8:5 ratio. For example, the Fed came into existence in 1914 and immediately lowered short term interest rates from 6% to 3%. For the sake of easy calculation let us say that long rates fell from 5% to 2½.
This immediately disturbs the 8:5 ratio (changing it to 8:2½). Investors can now get a much better yield on stocks than on bonds; they sell their bonds and buy stocks. This selling of bonds and buying of stocks continues until the 8:5 ratio is reestablished, say by a stock yield of 4% (4:2½ = 8:5). If there is no change in stock earnings, then this can only be accomplished by a rise in stock prices, and indeed at this time the DJI doubled over a 2 year period.
Fear and Greed
The idea that major term stock moves occur because of emotions is a popular theory on Wall Street. You have undoubtedly heard that investors buy because of greed and sell because of fear. This has some validity on the intermediate term (several months), but it does not work on the major term. All you have to do is to look at a cyclical group, like housing or autos, and you will find that their P:Es are below the market average at tops and above the market average at bottoms. If people were wildly optimistic at tops, they would give these cyclical groups higher P:Es; vice versa at the bottoms.
Adherents of the fear-greed theory can always tell us after the fact that a certain period was a time of intense greed or enormous fear. But they can never tell us at the time. This is because their theory is all wet.
The Great Grand Cycle Bull Market of 1982-2007
Stocks have moved up from 1982-2007 because bonds have moved up from 1981-2005. This in turn was caused by a fall in short rates from 16% in 1981 to 1% in 2004 (nominal). In effect, we had 23 years of Fed easing.
It should be noted that there is no long term uptrend in (real) stock prices. Stock yields have to maintain a long term relationship of 8:5 with bond yields. For stock prices to continually go up, bond yields would have to continually go down. This can not happen without an artificial event: the easing of the Fed. Indeed, we have good indexes of stock prices from 1885 (the earliest Dow index) to 1932. And during this time stock prices were flat. In 1933, the Fed got the legal tender power, and it has been easing for most of the past 74 years.
The great grand cycle bull market was interrupted on occasion, but the cause was usually a temporary Fed tightening. The Fed tightened in 1983, leading to the bear trend of ’84. Then it tightened again in 1987, leading to the October crash. Minor Fed tightenings in 1990 and 1994 caused mini-bear markets.
The Fed tightened in 1999, causing the bear trend of 2000. This was then extended by the World Trade Center attack of 2001 and the brewing of the Iraq war in 2002. (The collapse of internet stocks from their overinflated bubble prices in 2000-2002 made the bear market seem worse than it was, but the majority of stocks were not hurt badly at this time, and the Value Line index (not capitalization weighted) showed that most stocks were still in their grand cycle bull trend.)
Why Should the Fed Tighten?
Some might argue, why should the Fed ever tighten? If easing makes stocks go up, then why not always ease? Then stocks would go to infinity, and we would all be millionaires.
Unfortunately, the principal way that the Fed eases is by creating money. This is sort of legalized counterfeiting. Creating money does not create real wealth for the country. It just makes prices go up. Right now the Fed is tightening because of the commodity pendulum.
In a simpler time, the Fed would ease for a few years. It would create money, and 1-2 years later consumer prices would rise. This changed with the Kennedy tax cut of 1963. Since 1963, commodities have been swinging wildly and have become a much more important factor in consumer prices than they used to be. Also, commodities take a long time to respond to the forces of supply and demand. They only respond to the Fed’s creation of money after a 10-20 year time frame.
After the big commodity upswing of the 1970s, commodities were overvalued, and they went down for 20 years. This undercut the rise in consumer prices and made “inflation” look tame. So the Fed was able to keep easing. Now, however, commodities are extremely undervalued. In 1999, their real value was half that of 1971 (which was the previous most undervalued point for commodities in American history). That is why they are rising explosively. This is feeding through into consumer prices, and Bernanke cannot figure out why the CPI is going up so rapidly.
But it is not necessary to debate what the Fed ought to do. It is only necessary to observe what the Fed is doing. Most Fed watchers are so up close to events that they cannot see the forest for the trees. Take the recent tightening as an example. There were two important sell-offs in the T-bond market as investors tried to discount a Fed tightening, mid-2003 and spring 2004. Yet the bond market made its (second half of a double) top in mid-2005 about a year after the tightening started. And the stock market continued to climb for another year-and-a-half beyond that. If these Fed watchers had cared a bit less about the news of the moment and a bit more about the cause and effect relationship which governs stocks, they had a great deal of time to get bearish.
There is an old saying that they don’t ring a bell on Wall Street (to signal a market top). But in fact this saying is wrong. They do ring a bell on Wall Street. Bonds go up, and that makes stocks go up. When bonds go down, it makes stocks go down.
In the last bear market (2000-2002), there was a 15 month lag between the bond peak (Oct. 1998) and the stock peak (Jan. 2000). Taking 15 months after the recent bond peak (Sept. 2005), we would be led to expect a stock peak circa Dec. 2006. Add the fact that New Year’s Day is often an important turning point, and it is easy to conclude that the one-day reversal of 1-3-07 may have been the grand cycle top of this stock market.
Keep an eye on commodity prices, and you will realize that the Fed has to keep tightening. But in any case the Fed will give you plenty of warning. You can make money rapidly in (stock) bear markets, and it is a lot more fun to make money when everyone else is losing.
# # #
Howard S. Katz was one of the early gold bugs of the late ‘60s and ‘70s, turning bullish on gold in 1965. His favorite gold stock, Lake Shore Mines, went from $3/share in 1970 to $39/share in 1980 (sold at $31). Katz turned increasingly skeptical about gold as it mounted its final rise in 1979, and he called the top after the close on Jan. 21, 1980 (with gold at $825.50/oz.). Katz traded gold in and out during the ‘80s and ‘90s and once again turned long term bullish in Dec. 2002. His thoughts on commodities, stocks, bonds and real estate are available in a letter entitled The One-handed Economist and published every two weeks giving specific advice on trades in stocks and futures. This letter is available (both electronic and paper copy) for $300/year with a 3-month trial for $100. Send to: The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055. (Include both electronic and mailing address.)
by Howard S. Katz, Monday, 15 January 2007, http://news.goldseek.com/GoldSeek/1168903818.php
howardkatz@hotmail.com
Sell, Sell, Sell
In December 1981, I scooped Wall Street by predicting a grand cycle (10-20 year) bull market in stocks. Since that time, the DJI has gone from 800 to 12,000. Here in January 2007, I am predicting that this grand cycle bull has come to an end. A 10-20 year bear market in stocks (as represented by the DJI and S&P 500) is about to begin. Rough price objectives are 6000 DJI in nominal dollars and an 80% decline in real dollars. If you own stocks, then sell, sell, sell.
Cause and Effect
I have achieved a dramatically successful record in analyzing stocks over the past 30 years by practicing the scientific approach, by which I mean studying the cause and effect relations which govern stock prices.
The cause of the vast majority of major term (2-4 year) stock moves is the bond market. In the 19th and early 20th centuries, normal (earnings) yield for good quality stocks was 8%. Normal (real) yield for high quality bonds was 5%. This 8:5 ratio held for long periods of time and almost certainly reflects certain basic value judgements of our society (with stocks receiving the higher yield due to their greater risk).
What causes a major stock market move is that the U.S. central bank the Federal Reserve) adopts a policy toward interest rates. If the Fed lowers (short) rates, then this will cause a lowering of long rates and will disturb the 8:5 ratio. For example, the Fed came into existence in 1914 and immediately lowered short term interest rates from 6% to 3%. For the sake of easy calculation let us say that long rates fell from 5% to 2½.
This immediately disturbs the 8:5 ratio (changing it to 8:2½). Investors can now get a much better yield on stocks than on bonds; they sell their bonds and buy stocks. This selling of bonds and buying of stocks continues until the 8:5 ratio is reestablished, say by a stock yield of 4% (4:2½ = 8:5). If there is no change in stock earnings, then this can only be accomplished by a rise in stock prices, and indeed at this time the DJI doubled over a 2 year period.
Fear and Greed
The idea that major term stock moves occur because of emotions is a popular theory on Wall Street. You have undoubtedly heard that investors buy because of greed and sell because of fear. This has some validity on the intermediate term (several months), but it does not work on the major term. All you have to do is to look at a cyclical group, like housing or autos, and you will find that their P:Es are below the market average at tops and above the market average at bottoms. If people were wildly optimistic at tops, they would give these cyclical groups higher P:Es; vice versa at the bottoms.
Adherents of the fear-greed theory can always tell us after the fact that a certain period was a time of intense greed or enormous fear. But they can never tell us at the time. This is because their theory is all wet.
The Great Grand Cycle Bull Market of 1982-2007
Stocks have moved up from 1982-2007 because bonds have moved up from 1981-2005. This in turn was caused by a fall in short rates from 16% in 1981 to 1% in 2004 (nominal). In effect, we had 23 years of Fed easing.
It should be noted that there is no long term uptrend in (real) stock prices. Stock yields have to maintain a long term relationship of 8:5 with bond yields. For stock prices to continually go up, bond yields would have to continually go down. This can not happen without an artificial event: the easing of the Fed. Indeed, we have good indexes of stock prices from 1885 (the earliest Dow index) to 1932. And during this time stock prices were flat. In 1933, the Fed got the legal tender power, and it has been easing for most of the past 74 years.
The great grand cycle bull market was interrupted on occasion, but the cause was usually a temporary Fed tightening. The Fed tightened in 1983, leading to the bear trend of ’84. Then it tightened again in 1987, leading to the October crash. Minor Fed tightenings in 1990 and 1994 caused mini-bear markets.
The Fed tightened in 1999, causing the bear trend of 2000. This was then extended by the World Trade Center attack of 2001 and the brewing of the Iraq war in 2002. (The collapse of internet stocks from their overinflated bubble prices in 2000-2002 made the bear market seem worse than it was, but the majority of stocks were not hurt badly at this time, and the Value Line index (not capitalization weighted) showed that most stocks were still in their grand cycle bull trend.)
Why Should the Fed Tighten?
Some might argue, why should the Fed ever tighten? If easing makes stocks go up, then why not always ease? Then stocks would go to infinity, and we would all be millionaires.
Unfortunately, the principal way that the Fed eases is by creating money. This is sort of legalized counterfeiting. Creating money does not create real wealth for the country. It just makes prices go up. Right now the Fed is tightening because of the commodity pendulum.
In a simpler time, the Fed would ease for a few years. It would create money, and 1-2 years later consumer prices would rise. This changed with the Kennedy tax cut of 1963. Since 1963, commodities have been swinging wildly and have become a much more important factor in consumer prices than they used to be. Also, commodities take a long time to respond to the forces of supply and demand. They only respond to the Fed’s creation of money after a 10-20 year time frame.
After the big commodity upswing of the 1970s, commodities were overvalued, and they went down for 20 years. This undercut the rise in consumer prices and made “inflation” look tame. So the Fed was able to keep easing. Now, however, commodities are extremely undervalued. In 1999, their real value was half that of 1971 (which was the previous most undervalued point for commodities in American history). That is why they are rising explosively. This is feeding through into consumer prices, and Bernanke cannot figure out why the CPI is going up so rapidly.
But it is not necessary to debate what the Fed ought to do. It is only necessary to observe what the Fed is doing. Most Fed watchers are so up close to events that they cannot see the forest for the trees. Take the recent tightening as an example. There were two important sell-offs in the T-bond market as investors tried to discount a Fed tightening, mid-2003 and spring 2004. Yet the bond market made its (second half of a double) top in mid-2005 about a year after the tightening started. And the stock market continued to climb for another year-and-a-half beyond that. If these Fed watchers had cared a bit less about the news of the moment and a bit more about the cause and effect relationship which governs stocks, they had a great deal of time to get bearish.
There is an old saying that they don’t ring a bell on Wall Street (to signal a market top). But in fact this saying is wrong. They do ring a bell on Wall Street. Bonds go up, and that makes stocks go up. When bonds go down, it makes stocks go down.
In the last bear market (2000-2002), there was a 15 month lag between the bond peak (Oct. 1998) and the stock peak (Jan. 2000). Taking 15 months after the recent bond peak (Sept. 2005), we would be led to expect a stock peak circa Dec. 2006. Add the fact that New Year’s Day is often an important turning point, and it is easy to conclude that the one-day reversal of 1-3-07 may have been the grand cycle top of this stock market.
Keep an eye on commodity prices, and you will realize that the Fed has to keep tightening. But in any case the Fed will give you plenty of warning. You can make money rapidly in (stock) bear markets, and it is a lot more fun to make money when everyone else is losing.
# # #
Howard S. Katz was one of the early gold bugs of the late ‘60s and ‘70s, turning bullish on gold in 1965. His favorite gold stock, Lake Shore Mines, went from $3/share in 1970 to $39/share in 1980 (sold at $31). Katz turned increasingly skeptical about gold as it mounted its final rise in 1979, and he called the top after the close on Jan. 21, 1980 (with gold at $825.50/oz.). Katz traded gold in and out during the ‘80s and ‘90s and once again turned long term bullish in Dec. 2002. His thoughts on commodities, stocks, bonds and real estate are available in a letter entitled The One-handed Economist and published every two weeks giving specific advice on trades in stocks and futures. This letter is available (both electronic and paper copy) for $300/year with a 3-month trial for $100. Send to: The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055. (Include both electronic and mailing address.)
Wednesday, January 10, 2007
OSK HAS TO SELL PROPERTY WING BY END 2008
January 8 2007
FINANCIAL group OSK Holdings Bhd will have to sell its property business to get its investment bank licence, under a condition set by the financial industry regulators.
OSK has a controlling 64 per cent in OSK Property Holdings Bhd, a medium-sized builder that is developing townships in Kedah, Seremban and Kajang.
It has until December 31 2008 to sell this stake, the company said in a statement on December 29. However, the sale has no further restrictions. This means that Ong Leong Huat, who owns about 30 per cent of OSK, is free to make a bid for the property arm. He also holds 5.7 per cent of OSK Property, its 2005 annual report showed.
"OSK can sell the shares to anyone as long as there is a good offer price. "There are no restrictions," a company source said. The 64 per cent block in OSK Property would cost some RM76.8 million based on the stock's last closing price of RM1.28. But OSK could also get proposals from other bidders, which could include listed property developers.
OSK's subsidiary OSK Securities Sdn Bhd was recently awarded a merchant banking licence by the Finance Ministry.
The licence enables OSK Securities, which will change its name to OSK Investment Bank Bhd by March, to be transformed from a universal broker into an investment bank.
"According to Bank Negara Malaysia's guideline, the holding company of a banking institution is not allowed to hold an investment in a property firm.
"As such, it is anticipated that OSK will sell all its shares in OSK Property," the source said.
Money earned from the deal would be used by OSK to invest in expansions in new markets, the source added.
For the nine months ended September 30 2006, OSK Property contributed about 5.4 per cent, or RM6.45 million, to the group's profit before tax of RM119.5 million.
Source : BusinessTimes (by Sharen Kaur, http://www.btimes.com.my/Current_News/BT/Monday/Frontpage/BT602513.txt/Article/)
FINANCIAL group OSK Holdings Bhd will have to sell its property business to get its investment bank licence, under a condition set by the financial industry regulators.
OSK has a controlling 64 per cent in OSK Property Holdings Bhd, a medium-sized builder that is developing townships in Kedah, Seremban and Kajang.
It has until December 31 2008 to sell this stake, the company said in a statement on December 29. However, the sale has no further restrictions. This means that Ong Leong Huat, who owns about 30 per cent of OSK, is free to make a bid for the property arm. He also holds 5.7 per cent of OSK Property, its 2005 annual report showed.
"OSK can sell the shares to anyone as long as there is a good offer price. "There are no restrictions," a company source said. The 64 per cent block in OSK Property would cost some RM76.8 million based on the stock's last closing price of RM1.28. But OSK could also get proposals from other bidders, which could include listed property developers.
OSK's subsidiary OSK Securities Sdn Bhd was recently awarded a merchant banking licence by the Finance Ministry.
The licence enables OSK Securities, which will change its name to OSK Investment Bank Bhd by March, to be transformed from a universal broker into an investment bank.
"According to Bank Negara Malaysia's guideline, the holding company of a banking institution is not allowed to hold an investment in a property firm.
"As such, it is anticipated that OSK will sell all its shares in OSK Property," the source said.
Money earned from the deal would be used by OSK to invest in expansions in new markets, the source added.
For the nine months ended September 30 2006, OSK Property contributed about 5.4 per cent, or RM6.45 million, to the group's profit before tax of RM119.5 million.
Source : BusinessTimes (by Sharen Kaur, http://www.btimes.com.my/Current_News/BT/Monday/Frontpage/BT602513.txt/Article/)
BULL RUN YEAR 2007? WHAT ANALYSTS SAY?
SO far, so good. The bullish undertone in the regional stock markets in the start of the year has been inspiring. With an expected soft landing in US, pent up expenditure, healthier corporate earnings and higher domestic consumption, fund managers are expecting a good amount of capital flow into Asia.
Most regional bourses (with the exception of Thailand) started the New Year with a grand bang. Hong Kong's Hang Seng Index continued to challenge new highs, and yet again scaled to another new high of 20, 310 on its first day of 2007 trading. Bourses in Taiwan and Jakarta also recorded their new highs on New Year's Day.
In Malaysia, the big question was whether the stock market would continue with its stubborn laggard legacies, or would there be a change in will? The answer came out loud and clear as the composite index (CI) spurted to life upon its opening bell. The CI gained 20.85 points, surpassing the 1,100 level, thus achieving a new six year high.
This could have been aided somewhat by a shift in investor sentiments towards Thai equities after the government imposed capital controls not too long ago. The rising siren of a military coup in Thailand has also shaved off significant value in Thai equities.
Down south, Singapore, was just fresh off awarding two billion dollar bids for its integrated resorts (IR), in Marina Bay and more recently in Sentosa Island. Malaysia is expected to benefit from the economic spillover effects.
So it seems that Thailand's loss is Malaysia's gain, and Singapore's gain, well, is Malaysia's gain. With that, fund managers opine that 2007 could be the year where Malaysia finally weans off from its laggard qualities.
The macro stage is set A large part of Bursa's 20% growth was achieved in the last two months of 2006. The excitement in the local bourse was palpable, what with the re-rating by foreign investors due to renewed interest in plantation and timber sectors, positive news flow among key blue chips and the potential upside of construction stocks following announcement of projects under Ninth Malaysia Plan (9MP).
On a macro economic basis, economists feel that Malaysia still has the ammunition to support the CI's uptrend.
Domestic demand is set to gain momentum with the acceleration of the 9MP projects and private investments. CIMB Securities expects the country to sustain real gross domestic growth (GDP) growth of 5.6% in 2007 and 6% in 2008, compared with an estimated 5.9% in 2006.
On the interest rate front, the central bank is expected to keep its overnight policy rate at 3.5% in 2007 to support domestic growth amidst ebbing inflation risk. The ringgit is also expected to strengthen from RM3.55 at end 2006 to RM3.45 at end 2007.
Externally, the US economy is headed for a soft landing while crude oil prices are expected to hover at US$60-US$65. Lower crude oil prices and stabilising commodity prices will help improve profit margins.
Expectations of a US interest rate cut by the second quarter of 2007 could also lead to a rebound in growth in the second half of 2007. “While we think growth will be strong in 2007, many believe that growth will be slower than 2006's growth due to external economies, which is expected to slow down, particularly that of the US and China. Having said that, we think the two big themes for the market – 9MP rollout and Visit Malaysia Year – will be good enough reasons for the economy to expand by about 5.5% in 2007,” says Kurnia Insurans (M) Bhd chief investment officer, Pankaj Kumar.
Sharing the same view is UOB-OSK Asset Management Sdn Bhd chief executive officer Lim Suet Ling who is positive on the stock market for a few reasons.
Firstly, government-linked companies (GLCs) reforms, which have been talked about for the last 18 months have “started bearing fruit as evident in the likes of Tenaga, MAS, POS Holdings and the merger of PNB group of companies,”
“With momentum gathering, we expect to see more GLC restructurings this year. Mergers & acquisitions will likely continue to be a theme for 2007 with the possible mergers or strategic alliances of the smaller banks as well as the takeover or privatisation of undervalued companies by locals as well as foreigners,” says Lim.
Alliance Investment Bank director and head of equity capital markets Sherilyn Foong adds that GLC reforms and market liberalisation have drawn positive response from foreign investors and has been a key driver of the CI performance. “Foreign investors will continue to keep Malaysia on their radar as they look for further improvements and more positive news flow,” she says.
While Hwang-DBS Investment Management Bhd chief investment officer David Ng feels that the macro front creates a conducive environment for the stock market, he cautions investors to be mindful that growth is likely to slow down although it won't be significant enough to crunch profits (as inflationary pressures will also subside, and liquidity remains abundant).
“Specifically for Malaysia, increase in private and public investment will also be positive for the economy. Nonetheless, optimism has risen amongst investors and markets have performed well. Hence, the markets will be prone to higher volatility,” he says.
Pankaj says that although Malaysia, in the past year, was marginalised, it is now beginning becoming more appealing to foreign funds, judging by some of the following seen not only among the larger cap stocks, but also the smaller cap stocks. “This is where I think some of the foreign brokers have done an excellent job in promoting Malaysia as they have helped to get small cap stocks on the radar screen. (However) While we may see more funds coming to Malaysia, the effective weighting may still be low as issues on liquidity and corporate governance take precedence,” he notes.
Prudential Unit Trusts chief investment officer Lynn Cheah adopts a more conservative approach, saying that that the impetus for Malaysian equities currently stems largely from regional markets. She opines that Malaysian equities are a beneficiary of the rising tide.
“There is a lot of work to be done and rethinking of goals and policies before Bursa Malaysia becomes a favourite to foreigners again,” she says.
Hwang’s Ng would hesitate to use the word “favourite” as the Malaysian market now carries a very small weighting in the regional indices. “Their participation will likely be limited to large caps and liquid themes. But measures by the government to liberalise the financial services will be viewed favourably. Increase in infrastructure spending, and more M&A activities will also stimulate interest amongst investors,” he says.
Ng adds that Malaysia’s strengths lie in its natural resources especially in the oil palm and the oil and gas industries. “The former especially, has been, and continues to be a major pull for foreign investors, as Malaysia will continue to remain as the target market for such investments,” he says.
While Standard & Poor’s (S&P) vice-president of Equity Research Lorraine Tan feels that Malaysia's economic fundamentals are relatively sound as a net exporter of oil, the government's spending constraints and gradual removal of petrol subsidies have taken a toll on consumer confidence. “The planned development of the South Johor Economic Region, the Penang infrastructure improvements, and the proposed merger of government-owned plantation companies should help boost confidence, although a lack of details has led to scepticism on the success of these plans,” she says.
Areas that need to be addressed
While Malaysia appears to be on sturdier footing, entrenched GLC cultures, protectionism and the lack of transparency in corporate Malaysia continues to weigh heavily on Malaysia's competitiveness, say some observers. If Malaysia is serious on becoming an investment haven, the political will to change and improve is paramount.
Tan remains concerned that Malaysia's regional competitiveness is slipping, which could limit growth, particularly when the country becomes a net importer of oil, estimated to occur in the next 11 years. “GLCs and the government need to ensure returns on invested capital are optimised to positively position the country for continued development particularly given that it enjoys favourable demographics, with 60% of the population below the age of 35.”
Financial markets wise, Pankaj thinks that it is important for the regulators to address some of the key concerns that the foreign fund managers have with respect to Malaysia.
“Chief among them are the liquidity issue, transparency and consistency in economic and financial policies. Freeing up ownership on some of the state-owned companies via cleverly structured derivatives or outright sale is welcome as it will encourage free float as well as improve liquidity,” he says.
Ng would like to see less protectionism and more transparency. “We need to harness the advantages of the country’s peoples and resources and enhance our competitiveness. Having said that, a more efficiently run delivery system with minimal red tape will make it easier for investors to get things done at a quicker pace.” Ng adds that Bursa Malaysia's recent move to introduce the FTSE Bursa Malaysia new indices provide a better reflection of global standards as they take into consideration the liquidity and free-float of each stock.
He opines that this will help improve the attractiveness of the local investment scenario.
Foong says that while Malaysia has been able to sustain investor interest in the face of this competition, as well as with the outflow of domestic funds from the unit trust industry, more needs to be done. “Broadly speaking, the key to portfolio investors is Malaysia's weightings in the benchmark MSCI indexes. Increasing the free floats of our large companies and well as new large initial public offerings will be an important step in this direction,” she says
Lim would like to see the government implement policies that are in line with embracing globalisation with continuous improvment on efficiency and transparency.
Public Mutual Bhd’s Lam Kam Yin says that due to increasing competition from low cost ASEAN neighbours as well as China, the domestic manufacturing sector has to focus more of its resources in higher-value added products. “At the same time, Malaysian companies providing tourism, education, financial and healthcare services have to continue enhancing their services to compete globally and regionally, he says.
Earnings expectations
Pankaj says that it is rather ironic that one end, market is effectively expecting a slower economic growth than the projected 5.8%-6% for 2006 while earnings growth on the other hand for most analysts in the market is in fact higher than 2006 projected growth of about 15.4%.
“Based on data compiled by us, the market is expecting earnings to expand by about 16.1% in 2007 while the market average Kuala Lumpur CI index value is about 1,255points,” says Pankaj. He explains that if one were to assume that the earnings delivery for 2007 would reach about 16% growth and based on average price earnings ratio (PER) values of about 16 times (x), the market’s fair value is around the 1,200 level.
“As we move forward in the year, investors will begin pricing in market expectations for 2008 and that could drive valuations higher again (similar to the 2006 year-end momentum) to the 1,280-1300 points mark. Also, as we have seen the market driven by liquidity factors over the past few months and the momentum that has been built-up could drive the market higher by another 5%-10%,” says Pankaj.
S&P's Tan says that although the current 17x PER is at the average since the Asian crisis, it is below the 20x-25x seen before 1997-1998. She adds that the downward re-rating is understandable given the historically lower interest rates and slower relative GDP and earnings per share growth. “As we believe the 17x PER average is the result of market capitalisation dominance by the national utility companies and banks, the broad market is actually cheaper,” she says.
UOB-OSK's Lim expects to see the broad market performing in 2007 with mid-small cap stocks outperforming big caps given the formers’ cheaper valuations and stronger earnings growth.
“From a bottom-up perspective, our 12-month CI target is between 1,150 and 1,200. However the current liquidity rally in the region could drive share prices higher than their fundamental values. Previous liquidity rallies have driven the CI to PERs of above 20x before correcting. Pegging the market at 20x PE would translate to the CI at 1,533,” says Lim.
Hwang's Ng predicts a bold target of 1300 for 2007, although he does admit that index targets are notoriously difficult to forecast.
Source : TheStar (Tee Lin Say, http://thestar.com.my/news/story.asp?file=/2007/1/6/bizweek/16471277&sec=bizweek)
Most regional bourses (with the exception of Thailand) started the New Year with a grand bang. Hong Kong's Hang Seng Index continued to challenge new highs, and yet again scaled to another new high of 20, 310 on its first day of 2007 trading. Bourses in Taiwan and Jakarta also recorded their new highs on New Year's Day.
In Malaysia, the big question was whether the stock market would continue with its stubborn laggard legacies, or would there be a change in will? The answer came out loud and clear as the composite index (CI) spurted to life upon its opening bell. The CI gained 20.85 points, surpassing the 1,100 level, thus achieving a new six year high.
This could have been aided somewhat by a shift in investor sentiments towards Thai equities after the government imposed capital controls not too long ago. The rising siren of a military coup in Thailand has also shaved off significant value in Thai equities.
Down south, Singapore, was just fresh off awarding two billion dollar bids for its integrated resorts (IR), in Marina Bay and more recently in Sentosa Island. Malaysia is expected to benefit from the economic spillover effects.
So it seems that Thailand's loss is Malaysia's gain, and Singapore's gain, well, is Malaysia's gain. With that, fund managers opine that 2007 could be the year where Malaysia finally weans off from its laggard qualities.
The macro stage is set A large part of Bursa's 20% growth was achieved in the last two months of 2006. The excitement in the local bourse was palpable, what with the re-rating by foreign investors due to renewed interest in plantation and timber sectors, positive news flow among key blue chips and the potential upside of construction stocks following announcement of projects under Ninth Malaysia Plan (9MP).
On a macro economic basis, economists feel that Malaysia still has the ammunition to support the CI's uptrend.
Domestic demand is set to gain momentum with the acceleration of the 9MP projects and private investments. CIMB Securities expects the country to sustain real gross domestic growth (GDP) growth of 5.6% in 2007 and 6% in 2008, compared with an estimated 5.9% in 2006.
On the interest rate front, the central bank is expected to keep its overnight policy rate at 3.5% in 2007 to support domestic growth amidst ebbing inflation risk. The ringgit is also expected to strengthen from RM3.55 at end 2006 to RM3.45 at end 2007.
Externally, the US economy is headed for a soft landing while crude oil prices are expected to hover at US$60-US$65. Lower crude oil prices and stabilising commodity prices will help improve profit margins.
Expectations of a US interest rate cut by the second quarter of 2007 could also lead to a rebound in growth in the second half of 2007. “While we think growth will be strong in 2007, many believe that growth will be slower than 2006's growth due to external economies, which is expected to slow down, particularly that of the US and China. Having said that, we think the two big themes for the market – 9MP rollout and Visit Malaysia Year – will be good enough reasons for the economy to expand by about 5.5% in 2007,” says Kurnia Insurans (M) Bhd chief investment officer, Pankaj Kumar.
Sharing the same view is UOB-OSK Asset Management Sdn Bhd chief executive officer Lim Suet Ling who is positive on the stock market for a few reasons.
Firstly, government-linked companies (GLCs) reforms, which have been talked about for the last 18 months have “started bearing fruit as evident in the likes of Tenaga, MAS, POS Holdings and the merger of PNB group of companies,”
“With momentum gathering, we expect to see more GLC restructurings this year. Mergers & acquisitions will likely continue to be a theme for 2007 with the possible mergers or strategic alliances of the smaller banks as well as the takeover or privatisation of undervalued companies by locals as well as foreigners,” says Lim.
Alliance Investment Bank director and head of equity capital markets Sherilyn Foong adds that GLC reforms and market liberalisation have drawn positive response from foreign investors and has been a key driver of the CI performance. “Foreign investors will continue to keep Malaysia on their radar as they look for further improvements and more positive news flow,” she says.
While Hwang-DBS Investment Management Bhd chief investment officer David Ng feels that the macro front creates a conducive environment for the stock market, he cautions investors to be mindful that growth is likely to slow down although it won't be significant enough to crunch profits (as inflationary pressures will also subside, and liquidity remains abundant).
“Specifically for Malaysia, increase in private and public investment will also be positive for the economy. Nonetheless, optimism has risen amongst investors and markets have performed well. Hence, the markets will be prone to higher volatility,” he says.
Pankaj says that although Malaysia, in the past year, was marginalised, it is now beginning becoming more appealing to foreign funds, judging by some of the following seen not only among the larger cap stocks, but also the smaller cap stocks. “This is where I think some of the foreign brokers have done an excellent job in promoting Malaysia as they have helped to get small cap stocks on the radar screen. (However) While we may see more funds coming to Malaysia, the effective weighting may still be low as issues on liquidity and corporate governance take precedence,” he notes.
Prudential Unit Trusts chief investment officer Lynn Cheah adopts a more conservative approach, saying that that the impetus for Malaysian equities currently stems largely from regional markets. She opines that Malaysian equities are a beneficiary of the rising tide.
“There is a lot of work to be done and rethinking of goals and policies before Bursa Malaysia becomes a favourite to foreigners again,” she says.
Hwang’s Ng would hesitate to use the word “favourite” as the Malaysian market now carries a very small weighting in the regional indices. “Their participation will likely be limited to large caps and liquid themes. But measures by the government to liberalise the financial services will be viewed favourably. Increase in infrastructure spending, and more M&A activities will also stimulate interest amongst investors,” he says.
Ng adds that Malaysia’s strengths lie in its natural resources especially in the oil palm and the oil and gas industries. “The former especially, has been, and continues to be a major pull for foreign investors, as Malaysia will continue to remain as the target market for such investments,” he says.
While Standard & Poor’s (S&P) vice-president of Equity Research Lorraine Tan feels that Malaysia's economic fundamentals are relatively sound as a net exporter of oil, the government's spending constraints and gradual removal of petrol subsidies have taken a toll on consumer confidence. “The planned development of the South Johor Economic Region, the Penang infrastructure improvements, and the proposed merger of government-owned plantation companies should help boost confidence, although a lack of details has led to scepticism on the success of these plans,” she says.
Areas that need to be addressed
While Malaysia appears to be on sturdier footing, entrenched GLC cultures, protectionism and the lack of transparency in corporate Malaysia continues to weigh heavily on Malaysia's competitiveness, say some observers. If Malaysia is serious on becoming an investment haven, the political will to change and improve is paramount.
Tan remains concerned that Malaysia's regional competitiveness is slipping, which could limit growth, particularly when the country becomes a net importer of oil, estimated to occur in the next 11 years. “GLCs and the government need to ensure returns on invested capital are optimised to positively position the country for continued development particularly given that it enjoys favourable demographics, with 60% of the population below the age of 35.”
Financial markets wise, Pankaj thinks that it is important for the regulators to address some of the key concerns that the foreign fund managers have with respect to Malaysia.
“Chief among them are the liquidity issue, transparency and consistency in economic and financial policies. Freeing up ownership on some of the state-owned companies via cleverly structured derivatives or outright sale is welcome as it will encourage free float as well as improve liquidity,” he says.
Ng would like to see less protectionism and more transparency. “We need to harness the advantages of the country’s peoples and resources and enhance our competitiveness. Having said that, a more efficiently run delivery system with minimal red tape will make it easier for investors to get things done at a quicker pace.” Ng adds that Bursa Malaysia's recent move to introduce the FTSE Bursa Malaysia new indices provide a better reflection of global standards as they take into consideration the liquidity and free-float of each stock.
He opines that this will help improve the attractiveness of the local investment scenario.
Foong says that while Malaysia has been able to sustain investor interest in the face of this competition, as well as with the outflow of domestic funds from the unit trust industry, more needs to be done. “Broadly speaking, the key to portfolio investors is Malaysia's weightings in the benchmark MSCI indexes. Increasing the free floats of our large companies and well as new large initial public offerings will be an important step in this direction,” she says
Lim would like to see the government implement policies that are in line with embracing globalisation with continuous improvment on efficiency and transparency.
Public Mutual Bhd’s Lam Kam Yin says that due to increasing competition from low cost ASEAN neighbours as well as China, the domestic manufacturing sector has to focus more of its resources in higher-value added products. “At the same time, Malaysian companies providing tourism, education, financial and healthcare services have to continue enhancing their services to compete globally and regionally, he says.
Earnings expectations
Pankaj says that it is rather ironic that one end, market is effectively expecting a slower economic growth than the projected 5.8%-6% for 2006 while earnings growth on the other hand for most analysts in the market is in fact higher than 2006 projected growth of about 15.4%.
“Based on data compiled by us, the market is expecting earnings to expand by about 16.1% in 2007 while the market average Kuala Lumpur CI index value is about 1,255points,” says Pankaj. He explains that if one were to assume that the earnings delivery for 2007 would reach about 16% growth and based on average price earnings ratio (PER) values of about 16 times (x), the market’s fair value is around the 1,200 level.
“As we move forward in the year, investors will begin pricing in market expectations for 2008 and that could drive valuations higher again (similar to the 2006 year-end momentum) to the 1,280-1300 points mark. Also, as we have seen the market driven by liquidity factors over the past few months and the momentum that has been built-up could drive the market higher by another 5%-10%,” says Pankaj.
S&P's Tan says that although the current 17x PER is at the average since the Asian crisis, it is below the 20x-25x seen before 1997-1998. She adds that the downward re-rating is understandable given the historically lower interest rates and slower relative GDP and earnings per share growth. “As we believe the 17x PER average is the result of market capitalisation dominance by the national utility companies and banks, the broad market is actually cheaper,” she says.
UOB-OSK's Lim expects to see the broad market performing in 2007 with mid-small cap stocks outperforming big caps given the formers’ cheaper valuations and stronger earnings growth.
“From a bottom-up perspective, our 12-month CI target is between 1,150 and 1,200. However the current liquidity rally in the region could drive share prices higher than their fundamental values. Previous liquidity rallies have driven the CI to PERs of above 20x before correcting. Pegging the market at 20x PE would translate to the CI at 1,533,” says Lim.
Hwang's Ng predicts a bold target of 1300 for 2007, although he does admit that index targets are notoriously difficult to forecast.
Source : TheStar (Tee Lin Say, http://thestar.com.my/news/story.asp?file=/2007/1/6/bizweek/16471277&sec=bizweek)
RINGGIT AT STRONGEST AGAINST US$ SINCE DEPEG
PETALING JAYA: The ringgit appreciated to its strongest level against the US dollar since the de-peg 17 months ago when it touched 3.5050 before settling at 3.5075 at 5pm Tuesday.
The currency is the second-best performer in Asia-Pacific so far in 2007, with economists attributing the good showing to a combination of domestic and regional factors.
CIMB head of economics Lee Heng Guie opined that the Bank Negara move to remove limits on banks’ investment in stocks as well as liberalisation measures in the property sector had injected “good sentiments” into the local markets.
“Such initiatives have led to more portfolio inflow of investments, both local and foreign, as well as lending fundamental support to the ringgit. Malaysia’s growth is also projected to be strong this year,” said Lee.
The “laggard” characteristic of the local unit could also mean potential for more upside this year, he said, but further strengthening would be due to Malaysia’s own fundamentals and China’s willingness to accept a more flexible approach towards its renminbi.
OSK Securities economist Sia Ket Ee felt the strengthening pace for the ringgit was fine, given Malaysia’s healthy balance of payments and trade surplus.
“That is supportive of the ringgit’s rise. Meanwhile, China has said it is all right with a more flexible renminbi if its trade surplus remains strong and we believe its trade surplus will be strong going forward,” Sia said.
He said if China allowed its currency to appreciate, there would be further scope for other regional currencies to strengthen as well, but he expected the ringgit’s 3.50 resistance to be strong.
“The risks to the upside would be good economic data from the US, meaning the greenback could stop weakening and stem the strong run in Asian currencies,” Sia added.
Meanwhile, RAM Consultancy & Services chief economist Dr Yeah Kim Leng said the strengthening could be a bit too “steep”.
“It could yet prove to be a concern for thin-margin exporters. However, the issue would be to see the extent the current appreciation rate would hold,” Yeah told StarBiz.
He concurred that local and regional factors had combined to push the ringgit up versus the dollar, together with other regional currencies.
“The recent bullish performance by the KL Composite Index and the Ninth Malaysia Plan projects are positive factors on the domestic front. Regionally, investors are also encouraged by the good economic performances of Asian countries compared with other regions,” Yeah said.
Bank of Tokyo-Mitsubishi currency analyst and economist Fukaya Koji agreed with Yeah’s assessment of the Asian economies, saying that investor sentiments had been “strong”.
He told Bloomberg: “We can expect good inflows to stocks. The ringgit will remain on the gradual appreciation path.”
Source : TheStar (by Keith Hiew, http://biz.thestar.com.my/news/story.asp?file=/2007/1/10/business/16524435&sec=business)
The currency is the second-best performer in Asia-Pacific so far in 2007, with economists attributing the good showing to a combination of domestic and regional factors.
CIMB head of economics Lee Heng Guie opined that the Bank Negara move to remove limits on banks’ investment in stocks as well as liberalisation measures in the property sector had injected “good sentiments” into the local markets.
“Such initiatives have led to more portfolio inflow of investments, both local and foreign, as well as lending fundamental support to the ringgit. Malaysia’s growth is also projected to be strong this year,” said Lee.
The “laggard” characteristic of the local unit could also mean potential for more upside this year, he said, but further strengthening would be due to Malaysia’s own fundamentals and China’s willingness to accept a more flexible approach towards its renminbi.
OSK Securities economist Sia Ket Ee felt the strengthening pace for the ringgit was fine, given Malaysia’s healthy balance of payments and trade surplus.
“That is supportive of the ringgit’s rise. Meanwhile, China has said it is all right with a more flexible renminbi if its trade surplus remains strong and we believe its trade surplus will be strong going forward,” Sia said.
He said if China allowed its currency to appreciate, there would be further scope for other regional currencies to strengthen as well, but he expected the ringgit’s 3.50 resistance to be strong.
“The risks to the upside would be good economic data from the US, meaning the greenback could stop weakening and stem the strong run in Asian currencies,” Sia added.
Meanwhile, RAM Consultancy & Services chief economist Dr Yeah Kim Leng said the strengthening could be a bit too “steep”.
“It could yet prove to be a concern for thin-margin exporters. However, the issue would be to see the extent the current appreciation rate would hold,” Yeah told StarBiz.
He concurred that local and regional factors had combined to push the ringgit up versus the dollar, together with other regional currencies.
“The recent bullish performance by the KL Composite Index and the Ninth Malaysia Plan projects are positive factors on the domestic front. Regionally, investors are also encouraged by the good economic performances of Asian countries compared with other regions,” Yeah said.
Bank of Tokyo-Mitsubishi currency analyst and economist Fukaya Koji agreed with Yeah’s assessment of the Asian economies, saying that investor sentiments had been “strong”.
He told Bloomberg: “We can expect good inflows to stocks. The ringgit will remain on the gradual appreciation path.”
Source : TheStar (by Keith Hiew, http://biz.thestar.com.my/news/story.asp?file=/2007/1/10/business/16524435&sec=business)
Sunday, January 07, 2007
LIVE STREAMING BURSA MALAYSIA (KLSE) TRADING KOPITIAM LAUNCHED
LIVE STREAMING BURSA MALAYSIA (KLSE) TRADING KOPITIAM is lanched. The website address is http ://TradingKopitiam.tz4.com (alternatively http://TradingKopitiam.tells.it)
It provides seamless real time chatting environment for fellow investors. In additon, it provides user registration facililty to avoid impersonation.
Swithch you Streamyx on, log in to Live Streaming Bursa Malaysia (KLSE) Trading Kopitiam early morning, you will see all chats by fellow investors.
Cool! Stay Tuned!
It provides seamless real time chatting environment for fellow investors. In additon, it provides user registration facililty to avoid impersonation.
Swithch you Streamyx on, log in to Live Streaming Bursa Malaysia (KLSE) Trading Kopitiam early morning, you will see all chats by fellow investors.
Cool! Stay Tuned!
Subscribe to:
Posts (Atom)
Posts
