Date: May 30, 2008
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MARKET REVIEW & GUIDANCE
(1st June 2008) SIAS Investor Education Programme By Charlie Lau Suan Liat A SIAS Investor Education Trainer |
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Market Review for May: Financial loss in all those earthquake-hit Chinese cities was estimated at US$20b as reported by China Press. Financial loss resulting in the “demise” of US venerable Bear Stearns Bank was US$30b. “Hopes of Healing” was injected into Bear Stearns by the US Federal Reserve Board via JP Morgan in the form of a US$30b grant. The China Government is now the world’s wealthiest, with an estimated US$1.44t in its Sovereign Wealth Fund [Including cash parked outside China.] as reported in December 2007 by the International Monetary Fund, [IMF]. “Hopes of Healing” in the Chinese cities like Dujiangyan, Beichuan, Chengdu, Sichuan, Wenchuan and others flattened by the earthquake are high, in the financial aspect. Amidst death and disasters in those Chinese cities grew the “Hopes of Healing” in ideas and plans for better constructed buildings and infrastructures for the future, away from the seismic region. For the moment, the Chinese People, the China government, the world, including Singapore, are shocked and saddened at the extend of damage and deaths caused by the Dujiangyan quake. Mid-May also saw President George W. Bush telling the Saudi Arabia’s King Abdullah that he, the King, should be concerned that the high energy prices are hurting some of his country’s biggest customers. The Saudi King duly obliged by releasing another 300’000 barrel of crude per day. Ironically this act was followed by another intra-day record Hi price of US$128 per barrel for June delivery of light sweet crude. Intolerable Hi crude oil prices, commodity prices and prices of food staples are the doings of the futures market. They are not due to shortages or increased consumption. It is only a matter of time when enough damage or disasters have been downed on countries & peoples through the destructive nature of futures & derivatives that governments may decide to do something. Warren Buffet’s interview with Germany’s newspaper, Der Spiegel, 24 May 2008: “It’s not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets, even though the sectors are actually in good health.” Warren buffet also complained of Regulators: “You can’t regulate it anymore.” For Singapore, “Hopes for Healing” run Hi in her Economy and Stock Market despite the consequence of the US sub-primed mortgage bonds and inflationary factors. However “Hopes of Healing” also left the island state, in a confused state. Most Singapore Investors, Research Analysts and Business Communities are still not sure if the US economy, World economy and Singapore economy would recover before year 2009. Most are still not sure if the recovery comes around, would it be in the form of a “V-shaped” recovery or a “U-shape” or even no recovery in 2009 with an “L-shaped” drag? Looking at the Straits Times Index, [ST Index] investors and readers can see the worst of the Singapore Stock Market at the 52-week Lo on 17 March 2008 touching 2746 points. The ST Index broke out of its down trend on the 22 April 2008 at 3125 points and is still maintaining its upward trend to test the 52-week Hi of 3876 points. [Old ST Index]. Many are still not sure if the Singapore Stock Market is really moving UP, as many did not take a second look at the chart of the ST Index and view it objectively. Guidance:
When critically-ill patients [US, Europe, Japan, Some Developing Countries & Australia] are wheeled into the emergency ward, the immediate action is “diagnosis” followed by treatment and a period of convalescing. The diagnosis for US, Europe, Japan, and some developing countries & Australia is that it is the consequence of the US sub-primed mortgage bond. Treatment came in the form of monetizing some big bad debts in the US by the Federal Reserve Board. Other doses came in the form of buy-outs; issuing more equities to raise funds to off-set debts and increase working capital; and accepting participation from Foreign Wealth Funds. Other “critically-ill countries” also accepted other doses of treatment except monetizing some big bad debts. This dose is too disastrous for them to take. Smaller and weaker funds or unit trusts were left to “die” or wind-up. Most Singapore banks and Investment Funds were prudent enough not to go for broke. So most were not “critically-ill”. However, the “sentiment factor” took more tolls on the Singapore Stock Market than the “logic factors”. The “logic factor” is, after the 1Q08 company reporting, 232 Public Listed Companies [72%] showed better or unchanged results, of the 322 companies’ reporting. [Business Times — 19th May 2008] The other “logic factor” is, “Seeing is Believing”. The Straits Times Index is on UP TREND since 17 March 2008. [See chart of the ST Index.] Yet most Investors & Analysts are confused and refused to believe what they saw. It is prudent for Readers to believe the worst is over. Singapore Economy and Stock Market is under medication. They are in a period of convalescing: Consolidation. The Straits Times Index is on UP TREND, albeit with Lo volume — under 1.5b shares traded daily, as compared to 2.5b shares traded daily during the hay days of mid-2007. By the time the Singapore Stock Market starts to trade over 2.5b shares daily, most boats would have left the Singapore harbor. The guidance for June is still to look out for Hi Dividend Yield Stocks [8%+] or “Bombed-out Stocks” with reasonable Dividend Yield [5%], in the Construction, Building-supply Sectors and the Marine and Marine-engineering Sectors. These need not be local stocks. Better in the China “S-stock” category. Other sectors with businesses serving the needs of current economic gloom situations can also be considered for investments. These are the water, environmental improvement sectors, healthcare sectors, etc, etc. At the moment the ST Index is on Uptrend. In investment, no single person, or single theory, or single fundamental, is 100% dependable all the time.Having said that, do note it is not 100% that the ST Index must continue its Uptrend everyday and forever. There may be days of correction or even breakdown of the ST Index Uptrend. Remember to buy only when the Stocks’ Chart Relative Strength Indicators and Stochastic Momentum are at the Lo end. To learn effectively where to look for such Indicators or where to look for Charts, even free charts, and learn to read the Price Levels of a stock before Buying or Selling, Securities Investors Association (Singapore) [SIAS] is conducting a Chart Reading Tutorial on Saturday, 14 June 2008, 2.00 pm to 5.00 pm. Details of Topics & Registration are in the SIAS’ web-site. www.sias.org.sg Warren Buffet: “If the world were falling apart, I’d still invest in companies.” Interview with Der Spiegel.
*If you wish to contact our writer, please email at sllau@uobkayhian.com |
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MARKET REVIEW & GUIDANCE
(1st June 2008) SIAS Investor Education Programme By Charlie Lau Suan Liat A SIAS Investor Education Trainer |
||
|
|||
|
Market Review for May: Financial loss in all those earthquake-hit Chinese cities was estimated at US$20b as reported by China Press. Financial loss resulting in the “demise” of US venerable Bear Stearns Bank was US$30b. “Hopes of Healing” was injected into Bear Stearns by the US Federal Reserve Board via JP Morgan in the form of a US$30b grant. The China Government is now the world’s wealthiest, with an estimated US$1.44t in its Sovereign Wealth Fund [Including cash parked outside China.] as reported in December 2007 by the International Monetary Fund, [IMF]. “Hopes of Healing” in the Chinese cities like Dujiangyan, Beichuan, Chengdu, Sichuan, Wenchuan and others flattened by the earthquake are high, in the financial aspect. Amidst death and disasters in those Chinese cities grew the “Hopes of Healing” in ideas and plans for better constructed buildings and infrastructures for the future, away from the seismic region. For the moment, the Chinese People, the China government, the world, including Singapore, are shocked and saddened at the extend of damage and deaths caused by the Dujiangyan quake. Mid-May also saw President George W. Bush telling the Saudi Arabia’s King Abdullah that he, the King, should be concerned that the high energy prices are hurting some of his country’s biggest customers. The Saudi King duly obliged by releasing another 300’000 barrel of crude per day. Ironically this act was followed by another intra-day record Hi price of US$128 per barrel for June delivery of light sweet crude. Intolerable Hi crude oil prices, commodity prices and prices of food staples are the doings of the futures market. They are not due to shortages or increased consumption. It is only a matter of time when enough damage or disasters have been downed on countries & peoples through the destructive nature of futures & derivatives that governments may decide to do something. Warren Buffet’s interview with Germany’s newspaper, Der Spiegel, 24 May 2008: “It’s not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets, even though the sectors are actually in good health.” Warren buffet also complained of Regulators: “You can’t regulate it anymore.” For Singapore, “Hopes for Healing” run Hi in her Economy and Stock Market despite the consequence of the US sub-primed mortgage bonds and inflationary factors. However “Hopes of Healing” also left the island state, in a confused state. Most Singapore Investors, Research Analysts and Business Communities are still not sure if the US economy, World economy and Singapore economy would recover before year 2009. Most are still not sure if the recovery comes around, would it be in the form of a “V-shaped” recovery or a “U-shape” or even no recovery in 2009 with an “L-shaped” drag? Looking at the Straits Times Index, [ST Index] investors and readers can see the worst of the Singapore Stock Market at the 52-week Lo on 17 March 2008 touching 2746 points. The ST Index broke out of its down trend on the 22 April 2008 at 3125 points and is still maintaining its upward trend to test the 52-week Hi of 3876 points. [Old ST Index]. Many are still not sure if the Singapore Stock Market is really moving UP, as many did not take a second look at the chart of the ST Index and view it objectively. Guidance:
When critically-ill patients [US, Europe, Japan, Some Developing Countries & Australia] are wheeled into the emergency ward, the immediate action is “diagnosis” followed by treatment and a period of convalescing. The diagnosis for US, Europe, Japan, and some developing countries & Australia is that it is the consequence of the US sub-primed mortgage bond. Treatment came in the form of monetizing some big bad debts in the US by the Federal Reserve Board. Other doses came in the form of buy-outs; issuing more equities to raise funds to off-set debts and increase working capital; and accepting participation from Foreign Wealth Funds. Other “critically-ill countries” also accepted other doses of treatment except monetizing some big bad debts. This dose is too disastrous for them to take. Smaller and weaker funds or unit trusts were left to “die” or wind-up. Most Singapore banks and Investment Funds were prudent enough not to go for broke. So most were not “critically-ill”. However, the “sentiment factor” took more tolls on the Singapore Stock Market than the “logic factors”. The “logic factor” is, after the 1Q08 company reporting, 232 Public Listed Companies [72%] showed better or unchanged results, of the 322 companies’ reporting. [Business Times — 19th May 2008] The other “logic factor” is, “Seeing is Believing”. The Straits Times Index is on UP TREND since 17 March 2008. [See chart of the ST Index.] Yet most Investors & Analysts are confused and refused to believe what they saw. It is prudent for Readers to believe the worst is over. Singapore Economy and Stock Market is under medication. They are in a period of convalescing: Consolidation. The Straits Times Index is on UP TREND, albeit with Lo volume — under 1.5b shares traded daily, as compared to 2.5b shares traded daily during the hay days of mid-2007. By the time the Singapore Stock Market starts to trade over 2.5b shares daily, most boats would have left the Singapore harbor. The guidance for June is still to look out for Hi Dividend Yield Stocks [8%+] or “Bombed-out Stocks” with reasonable Dividend Yield [5%], in the Construction, Building-supply Sectors and the Marine and Marine-engineering Sectors. These need not be local stocks. Better in the China “S-stock” category. Other sectors with businesses serving the needs of current economic gloom situations can also be considered for investments. These are the water, environmental improvement sectors, healthcare sectors, etc, etc. At the moment the ST Index is on Uptrend. In investment, no single person, or single theory, or single fundamental, is 100% dependable all the time.Having said that, do note it is not 100% that the ST Index must continue its Uptrend everyday and forever. There may be days of correction or even breakdown of the ST Index Uptrend. Remember to buy only when the Stocks’ Chart Relative Strength Indicators and Stochastic Momentum are at the Lo end. To learn effectively where to look for such Indicators or where to look for Charts, even free charts, and learn to read the Price Levels of a stock before Buying or Selling, Securities Investors Association (Singapore) [SIAS] is conducting a Chart Reading Tutorial on Saturday, 14 June 2008, 2.00 pm to 5.00 pm. Details of Topics & Registration are in the SIAS’ web-site. www.sias.org.sg Warren Buffet: “If the world were falling apart, I’d still invest in companies.” Interview with Der Spiegel.
*If you wish to contact our writer, please email at sllau@uobkayhian.com |
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