Despite a strong overnight rally on Wall Street, shares on Bursa declined marginally on May 2, as profit-taking activities continued and palm oil prices slid. Investors were also hesitant ahead of the all-important April employment numbers due out later on May 2.
The inability of the KLCI to cross the psychologically important 1,300-mark -– where it had been before the elections -– and concerns over the sustainability of Wall Street's gains and future direction are also leading investors to exercise more caution.
On April 30, the Federal Reserve had cut key US interest rates by 25 basis points to 2%, as expected, but many are of the view that further aggressive cuts are now unlikely. US interest rates have been cut by 350 bp since last September. Those expectations in turn helped lift the US dollar to a five-week high, and lowered commodity prices -– which move in tandem with the dollar.
Reflecting Wall Street's uneasiness, the Dow Jones Industrials gave back about 200 points in intra-day trading on April 30, after the Federal Reserve's interest rate cut decision -– only to regain all those on May 1 as investors focused on the positive aspects of the firming US dollar and falling crude oil and commodity prices.
The KLCI declined by 8.4 points to 1,271.5 on May 2. Market breadth was negative for much of the day, but evened out at the close. A total of 569 million shares were traded.
Shares of Time, Time dotCom, IOI Corp, TM, Media Chinese International, MRCB and Bumiputra-Commerce led the top actives' list.
Plantation stocks like Asiatic, IOI Corp, Sime Darby and Batu Kawan were among the big losers. This came as palm oil prices continued to slide due to slumping soyoil prices and the firming greenback. Crude palm oil futures fell by nearly RM90 per tonne at its lowest during intra-day trading on May 2. Major gainers include DiGi, WCT and Parkson.
Friday, May 2, 2008
03-05-2008: KLCI falls on continued profit-taking
Thursday, May 1, 2008
Wednesday, April 30, 2008
29-04-2008: AmResearch: MRCB shares unfairly sold down
MALAYSIAN Resources Corporation Berhad (MRCB) shares have been unfairly sold down due to investors’ perception that this counter is heavily linked to the government, with the Employees Provident Fund (EPF) having a 30% stake since 2005, said AmResearch.
The total foreign shareholdings in the company had also declined form the peak of 40% before the March 8 general election to 29% as of April 2008, it said.
The research house cited a news report that the Penang government might carry out its own monorail project and was considering a proposal submitted by the Melewar Group.
“With the new state government said to be seriously considering the proposal for the monorail system in Georgetown from their rival bidder’s RM2.2 billion ultra-light loop monorail system, there is a high chance that the project could be further delayed,” it said.
AmResearch has recommended a buy call on MRCB at RM1.51 with a target price of RM2.80.
Commenting on the bid submitted by the Melewar Group, the research house said the proposed ultra-light loop monorail system covering a 52km track was set to operate on a single line and run on three different loops from locations like Gelugor, Farlim in Air Itam and Gurney Drive into the city.
“In January this year, Syarikat Prasarana awarded a letter of intent (LOI) for the project to MRCB, which had formed a consortium with Penang Port Sdn Bhd and Scomi Engineering Bhd.
“MRCB had said earlier that the Penang monorail project would take at least six months to be finalised, as talks between Syarikat Prasarana and Penang state have yet to commence.”
AmResearch said it had already factored in a conservative assumption in its earnings forecast, taking into account that MRCB’s Penang projects could be delayed or even cancelled.
“The absence of the Penang monorail has already been taken into account in our earnings forecast. We have also deferred Phase 2 of the proposed integrated Penang Sentral project, which has an estimated gross development value of RM2 billion,” it said.
These two projects and the reappraisal of the company’s construction business value were the key factors that contributed to a 8% downgrade in their net asset value (NAV) per share to RM3.80, said the research house.
The research house forecast earnings per share and price earnings ratio of 9.1 sen and 16.6 times respectively for FY08, and 15.2 sen and 10 times respectively for FY09.
MRCB ended three sen higher to close at RM1.47 last Friday with about 9.48 million shares done.
Tuesday, April 29, 2008
29-04-2008 - KLSE market outlook
Expect whipsaw choppy action next week in the KLSE. Political bikkering and uncertainty, Penang bridge delay, and other bad news will keep the retailers out.
It is surprising the Star is reporting so much bad news. Perhaps they are running cover for the smart money who wish to accumulate.
This is an opportunity to pick up quality Blue chip, dividend shares before the uncertainty is removed. These are the shares that foreign funds will buy.
Remember that smart money buys weakness, bad news and fear. Smart money will never willingly put up the price against their own buying. This is bad for business.
KLSE weekly chart ....
Massive support at 1200 as evidenced by the blue trend cluster indicator. Next target 1350. Locked in buyers will take profit at 1350 where they bought and have suffered losses for the last 10 weekss. It will take strong effort to push through this level. It may take a few attempts to absorb the selling
28-Apr-08 On the chart, the KLCI’s elevation
On the chart, the KLCI’s elevation – up 130.6-points (11.3%) in seven weeks after plummeting from 1296.33 to trough of 1,157.47 on 10 Mar – means that the benchmark index has nearly recouped all the losses suffered in the single day post-election crash, even though our feedback suggests not many investors actually rode on the recent run-up. Meanwhile, according to the latest information released by Bursa Malaysia, as a percentage of total trading value in 1Q08, foreign investors actually accounted for 43% and retail investors made up just 25%.
After breaking out from its ascending triangle pattern last week, I expect the KLCI to show a positive bias ahead, probably clearing its first resistance hurdle of 1,300 soon but likely to back off subsequently from the next resistance target of 1,335.
Monday, April 28, 2008
26-04-2008 What Is SBL, Fund Manager, Share Price Movement.
The following Q&A’s are our own views; they are focus upon SBL, Fund Manager, Share Price Movement.
Q&A 01 : What are the synonyms of Stock Borrowing-and-Lending (SBL)?
Ans : SBL = Short Selling = Off-Market Trading.
Q&A 02 : Which party is legitimated to do SBL ?
Ans : Fund Managers are the only legitimate party to do SBL. In another words, Fund Managers can do the short selling; Fund Managers are the only players for Off-Market trading.
May be you would like to argue that Bursa Malaysia does not have Off-Market. Well a very close-to Off-Market status does exist or otherwise Bursa Malaysia cannot function without Off-Market.
Q&A 03 : How many parties are there in a share market ?
Ans : Two. They are Retail Traders and Fund Managers.
This is the most important question
Q&A 04 :Where did the shares go after retail traders bought in shares from the share market ?
Ans : The shares that retail trades bought in MUST go into the custodian account of Fund Managers. Retail Traders are funding Fund Managers to short sell the shares bought by retail traders to profit Fund Managers. This is the name of the game.
We believe most retail traders never realize that they are helping Fund Managers to prey on their share prices.
Q&A 05 : How many markets are in Bursa Malaysia for trading shares ?
Ans : Three. They are the Primary Market for trading IPO, Secondary Market for trading issued shares, and Off-Market for Fund Managers.
Q&A 06 : The structure of secondary market is designed for whom ?
Ans : The structure of secondary market is designed for Retail Traders only. As you can see, whenever there is a rise in share price, it means buying; whenever there is a fall in share price, it means selling. These are all from the stand-point of Retail Traders, not the Fund Managers.
Q&A 07 : Who is legitimated to move the share price ?
Ans : Fund Managers have the license to move share prices, but they have to report the movement to Bursa Malaysia and Security Commission (SC). Share price is just like the price tag of any other ordinary goods, only that share is tradable in share market alone. Large movement of share price is prohibited and requires explanation.
You may already know the answer of the above Q&A’s. But if you don’t, you are really a retail trader !!
Here is another important hierarchy of share trading information, where retail traders are always put themselves in the unfavorable situation of this information imbalance :
The most powerful decider for share price movement : Insiders;
The second most powerful decider foe share price movement : Fund Managers in Off-Market;
The third most powerful decider for share price movement : Technical Analysis.
Technical Analysis is considered more powerful in deciding share price movement than other analysis such as Fundamental Analysis simply because Technical Analysis is much more closer to revealing share price movement.
Sunday, April 27, 2008
