The correction we are expecting, i.e. 528 - 601 (28/5/2007 to 1/6/2007) is near.
On 515 (15/5/2007), our market did provide a buy low opportunity, unfortunately, broad market was so weak to spring up except KLCI, which shot up 20.34 on 522 (22/5/2007). Today the bad days are near, the market is expected to be cloudy and windy throughout next week.
As the traders, we are now ready with cash cow on hand to aim for buy low next week. Our broad market shows the downward move rather than upward move. No doubt there are some selected stock play such as WELLI, KENCANA and so on. Did you able to catch them at low? If you did, you are practising the right trading method, congratulations.
If you didn't, you may consider to try buy on weakness method which we believe, next week will be the opportunity. This is what our strategy for recent trade.
Wednesday, May 23, 2007
Tuesday, May 15, 2007
515, CHANCE TO COLLECT LOW AGAIN
OUR STRATEGY : BUY ON DIP TODAY, 15 MAY, THE BROAD MARKET IS FORECASTED TO SRPING UP A BIT WITHIN THESE 2 WEEKS. NO DOUBT KLCI IS THE BENCHMARK, BUT WE ARE IGNORING THE IMPACT OF KLCI THIS ROUND.
Monday, May 14, 2007
HUBLINE (7013)
Have been wathcing this counter lately. RM 2.80 is the most important resistance to break, watch out.
Friday, May 11, 2007
BUY OPPORTUNITY FOR SHORT TERM PLAYER
Dow Jones lost 146 points overnight, KLCI today once lossed 19 points in the morning, KLCI lossed 8.88 for midday closing.
Technically, today market provides buying opportunity for short term player. Opportunity for broad market to rebound is high next week. Our strategy is collecting today, and aiming for taking profit for 10% capital gain within next 2 weeks.
The last week of May/Early week of June is the awaited entry point, we are waiting for mid-term investment positioning. Ensuring ample cash cow before hand, grab the buy low opportunity for 2nd liner stocks.
Technically, today market provides buying opportunity for short term player. Opportunity for broad market to rebound is high next week. Our strategy is collecting today, and aiming for taking profit for 10% capital gain within next 2 weeks.
The last week of May/Early week of June is the awaited entry point, we are waiting for mid-term investment positioning. Ensuring ample cash cow before hand, grab the buy low opportunity for 2nd liner stocks.
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.)
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