Sunday, October 9, 2016

Seeking a suitable investment strategy in 4Q16

Below is the article from the Egde. We may want to be applying more cautious strategy  on the final quarter of 2016 as the early of November of the year the market may become more volatile as the US Presidential election is nearing. Mean while this month we may see some political links company may see some upside due to the anticipate 2017 Budget allocation.   

This article first appeared in The Edge Financial Daily, on October 10, 2016.

KUALA LUMPUR: What investment strategy is best in a listless market? As the benchmark FBM KLCI seesawed its way through the first nine months of this year, some analysts believe market timing and trading could be key as market volatility is expected to heighten in the run-up to Budget 2017, the US presidential election and a possible US Federal Reserve rate hike.
The FBM KLCI has been trading in a 52-week range of 1,600.92 points to 1,729.13 points. But year to date, it has remained relatively flat, falling 1.6% to close at 1,665.38 last Friday.
According to Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew, investment success requires speedy shifts in the current market conditions.
“It’s been a very tiring year. The FBM KLCI has not been doing very well. Even the ACE Market [of Bursa Malaysia] is not showing very good returns. Stock picks and ideas for 2016 only work for a relatively short period of three to six months. The ideas won’t work throughout the year. I think trading is the name of the game for 2016,” he told The Edge Financial Daily in a telephone interview.
Pong believes a bottom-up strategy, in which the emphasis is on a given company’s performance, is a suitable investment approach in the current environment as it is difficult to predict the overall trend of the market.
He also noted that equity investing in 2016 is all about timing.
“Investors who entered the market in January would have seen significant gains, but those who had invested since end-2016 and held on to the stocks would have seen a slight loss,” he said.
Recall that 2016 was a discouraging start for the local bourse, dragged down by the massive sell-off in Chinese stocks. The FBM KLCI fell by 5.4% to 1,600.92 points in just 21 days into the new year.
The market staged a rally on April 15 when it breached the 1,700-point psychological level to 1,727.99. However, the rally was short-lived as the index plummeted to 1,614.90 on June 16. Those who had invested at its high could have lost as much as 3.6%, while those who had invested at its low at the beginning of the year could have gained as much as 4%.
“Take profit if you make some gains. I think this should be the strategy in a flat market,” Pong added.
Pong is also of the view that the oil and gas (O&G) sector remains a wild card for investors at this stage despite the Opec agreeing to cut production, adding that the US is now the largest oil exporter in the world. Should the global supply of oil be successfully reduced, there will be more interest in the FBM KLCI as a whole, especially in the O&G sector, he added.
Etiqa Insurance & Takaful head of research Chris Eng shares the same sentiment as Pong, expecting some excitement to return to the O&G sector if production cuts by Opec members manage to sustain oil prices. Brent crude oil prices were down 1.2% to US$51.86 (RM215.22) per barrel last Friday, while US West Texas Intermediate futures settled down 1.3% at US$49.81 per barrel.
Chris also noted that stock picking is best in the current market conditions, adding that liquidity is key when picking companies as the outlook remains uncertain.
“I am quite positive [on outlook for the stock market] for this month but I am a bit cautious about next month, which is when we will see the US election and a potential US interest rate hike. We continue to focus on stocks with high amount of liquidity,” he said.
Still, Chris believes the current market conditions provide a good entry point for investors with an investment horizon of three years or more.
UOB Asset Management (Malaysia) Bhd chief investment officer Francis Eng Tuck Meng, meanwhile, advocates a buy-and-hold strategy, suggesting that investors buy into companies with strong fundamentals, cash flow and value for investment and hold them regardless of market volatility.
“Do your homework and find a good company to invest in, and then ride on its growth,” he said.
Francis is of the view that Malaysia is in a sweet spot, particularly in the construction, palm oil and consumer sectors.
“The Consumer Sentiment Index has started to adjust to the goods and services tax (GST), the weak ringgit and other negative sentiments. Consumer sentiment is looking up.
“There has also been a rebound in crude palm oil prices recently and it looks like good news for the palm oil sector,” he said, adding that the construction sector will benefit from ongoing mega projects such as the mass rapid transit Line 2, the Pan-Borneo Highway project and the light rail transit Line 3.
Yvonne Tan, general manager of investment services at Eastspring Investment Bhd, said it continues to adopt the bottom-up approach.
“We have always looked at the market from a bottom-up approach. Some of the things that we look for are stocks offering high dividend yields,” she said.
According to a report dated Sept 29, Nomura Global Markets Research believes that trading is the name of the game as the FBM KLCI enters into a period of increased volatility.
It attributes the unexciting market performance year to date to the lack of recovery in corporate earnings despite their valuations not being cheap at 15.8 times its forward price-earnings ratio.
However, Nomura sees limited downside from foreign selling in the FBM KLCI as foreign positioning is quite light at the moment. It expects the FBM KLCI to end 2016 around 1,680 points and inch modestly up to 1,725 by end-2017.
The foreign research house said in an environment of flattish trend returns, low differentiation and low visibility, capturing cyclical ups and downs in the market is an effective way to enhance returns. It said one local catalyst to keep in mind is the timing of elections, expecting gains around the event, usually starting 60 days before the event, to be the best period of upside for the FBM KLCI.
Its top stock picks are Public Bank Bhd, RHB Bank Bhd, Tenaga Nasional Bhd, IJM Corp Bhd, Genting Malaysia Bhd, Malaysia Airports Holdings Bhd, AirAsia Bhd, AirAsia X Bhd, Pavilion Real Estate Investment Trust (REIT), Bison Consolidated Bhd and Karex Bhd.
However, Nomura advised that Malayan Banking Bhd, Maxis Bhd, Gamuda Bhd and IOI Corp Bhd are among the large-cap “reduce”-rated stocks that are best avoided for now.
Meanwhile, it has an “overweight” call on the transports and logistics, REITs, consumer, healthcare and pharmaceuticals, gaming, hotels and leisure, and telecommunications sectors but is “underweight” on the O&G and financial sectors.
According to Maybank Investment Bank Research (Maybank IB Research), defensive equity positioning is recommended such as investing in high yielding stocks and to position for the 14th general election (GE14) in the country during broad market weakness.
The local research firm is of the view that the FBM KLCI will end the year on a positive note, taking it up to beyond the 1,700-mark with valuations lifted higher on any signs of an early GE14. The FBM KLCI saw a pretty good start to the October month with a gain of 12.83 points or 0.78% in just the first week.
Maybank IB Research also said encouraging observations are made at the consumer sector.
“At staples or retail or F&B (food & beverages), most have seen gradual recovery in sales since the second quarter of 2015’s GST implementation. Also, while softer raw material prices helped, most multinational companies have sharpened their cost efficiencies to drive bottom line growth,” it said in a Sept 2 report.
The research firm added that sectors such as utilities, REIT and construction continue to be favoured, while cement and property are negatively viewed.

China's yuan sinks to six-year low after drops midpoint

SHANGHAI (Oct 10): China's yuan dipped to a six-year low against the dollar on Monday, breaching a key psychological threshold after a week-long national holiday that saw offshore-traded yuan slump to nine-month lows.
The fall in the value of the Chinese currency comes after the central bank announced late last week that its foreign exchange reserves dropped for a third month in September, by more than expected, suggesting fresh capital outflows from the world's second-largest economy.
Pressure has also risen on the yuan as the US dollar has strengthened in global markets, most recently on the back of strong labour market data that supports a possible US interest rate hike later this year.
One trader at a European bank in Shanghai said he thought the yuan could potentially continue to depreciate against the dollar unless the central bank took steps to stop the slide.
"It's hard to predict how the yuan will move today, and so far we haven't seen any central bank actions. The yuan could soon breach the 6.75 level if the central bank does not show up at all," said the trader, who declined to be identified because he was not authorised to speak publicly.
A trader at a Chinese bank said the central bank may have loosened its grip at the 6.7 per dollar level after the yuan's official inclusion into the International Monetary Fund's reserve basket, known as Special Drawing Rights (SDR), on Oct.1.
"We will have to see what the next threshold is," the trader added.
On Friday, the offshore yuan slumped to its lowest rate against the dollar since Jan. 7. Offshore yuan mostly trades in Hong Kong and is not bound by the Chinese central bank's tight trading restrictions.
Hong Kong markets are closed Monday for a holiday.
In the weeks before onshore markets closed for China's long holiday, the spot rate flirted with 6.7. The last close was at 6.6745.
The yuan is expected to fall another 3% by next September, according to a Reuters poll of more than 70 foreign exchange strategists issued on Thursday.

Sunday, August 7, 2016

Sarawak Report:Laura Justo

This real story look  more scary and dramatic then movie... Hope Laura can be strong to endure this challenging times with his husband and her baby..

May justice be prevail and all the criminal that betrayed country and the Malaysian people will be bought to justice. 

I think 1MDB more dramatic then the Wolf of Wall Street.

Wednesday, July 20, 2016

1MDB Attorney General US Press Release: 21 July 2016

The 1MDB tsunami wave is coming....Good job from US Attorney General.
May the truth be prevail...and justice install for people of Malaysia..

Wednesday, June 22, 2016

The Edge Report:Prices in Penang move sideways in the first quarter

THE Penang housing market moved sideways on both the primary and secondary markets in the first quarter of the year, says Michael Geh (pictured), director at Raine & Horne International Zaki + Partners.
“I noted active transactions on the secondary market with prices staying flat,” he says in presenting the 1Q2016 Penang Housing Property Monitor.
Banks, he adds, only provide loans of up to 70% to 80% of a property’s value and serious first-time homebuyers have to make up the difference in order to sign the sales and purchase agreement.
Michael Geh“A few primary market projects have obtained the Advertising Permit and Developer Licence (APDL) and moved into the stage of processing loans from commercial banks and signing the S&P.” These projects include I-Santorini, SummerSkye and ForestVille, all under Ideal Group.
Will the prices of Penang houses, considered expensive, drop because of the soft market conditions? Geh says prices have come down to more realistic levels, especially with the government pushing the developers to build properties priced from RM300,000 to RM400,000 in the last two years, specifically for owner-occupiers.
Some of these properties, in areas such as Sungai Ara, Patani Road and Relau, have been taken up and are currently under construction, he adds.
Elsewhere in the country, some developers are pushing sales by providing financial assistance to the purchasers. Will those in Penang follow suit?
Geh says such a practice is not widespread for now. “Besides Sunway Bhd and S P Setia Bhd, I don’t see any other developer providing financial packages at the moment. I believe there are plans for such assistance but so far, nothing has been announced.”
He believes a catalyst for the state’s housing market would be the much-talked-about
RM27 billion Penang Transport Master Plan (TMP). The ambitious plan will not only benefit the people but also bring about a more equitable housing situation and help retain local talent.
The TMP, he feels, will lead to equitable home property prices as areas that are not in prime locations will become more accessible, boosting demand for homes and resulting in higher prices. Properties in prime areas, which normally fetch higher prices, should see some price correction as demand is more evenly distributed across the state.
Apart from that, Geh opines that the TMP will help retain talent, which will subsequently impact the property market as the pool of workers seek to rent or own residential properties.
“Penang needs the TMP to grow in the next 10 years. We need to stem the migration of youths to the Klang Valley, Iskandar Malaysia and Singapore in search of better job opportunities. We need to create jobs and make conditions more liveable for our youth to prosper,” he says.
At present, two light rail transit lines have been approved under the TMP — one from Prangin Canal to Penang International Airport inBayan Lepas and the other from Prangin Canal to Straits Quay.
As for creating jobs, the state government is making a concerted effort to develop new business sectors so that Penang can stay relevant to the global economy.
“An industry that has been highlighted by the state is the knowledge economy, such as apps and animation,” Geh says. This has been identified as a key economic sector for the next decade.
There is a proposal for three reclaimed islands in the southern part of Penang island to locate businesses for this sector, he says, and for the islands to be connected by an LRT line that extends from Penang International Airport.
However, it has not been plain sailing for  the TMP because one of its components — the Sky Cab or cable car system — has been rejected by the federal government. The 4.8km cable car system, according to the Penang government’s TMP website, was to have connected Butterworth on the mainland to Jelutong on the island. While this is a blow to the state government’s plans, Geh does not believe it will affect property prices.
“Cable car systems are generally more for tourists and not meant to move high volumes of people. I don’t think there will be a large negative impact on the property market. High-volume, high-frequency vessels that travel on water may be a better solution,” he says.
Another component of the TMP is an undersea tunnel linking the island with the mainland. However, further details are not forthcoming at present.
A development that will have an indirect impact on the Penang housing market is the much-debated Gurney Wharf. This 3km-long reclamation project lies just off the shores of popular tourist spot, Gurney Drive.
Geh believes this project has great potential to benefit the island. “I believe Gurney Wharf is an exciting development because it creates recreational activities for Gurney Drive. I think it is a boost to the area.”
Terraced houses
The prices of landed properties did not rise much compared with those of high rises, the data compiled for the monitor reveals. This is due to “stagnation” as there were very few transactions during the quarter under review, compared with the high-rise sector where there was much more activity, Geh explains.
Nevertheless, property values have increased compared with a year ago.
For 1-storey terraced houses, some areas surveyed showed activity year on year but little movement quarter on quarter.
On the island, properties in Jelutong showed the highest price growth, rising 5.88% to RM900,000 from a year ago, followed by houses in Tanjung Bungah (up 5.26% to RM800,000). Houses in Sungai Dua, Sungai Ara and Bandar Bayan Baru saw slight price increases of 2.56%, 2.04% and 1.96% respectively while those in Green Lane and on the mainland saw no changes.
For 2-storey terraced houses, there was no activity q-o-q but prices rose y-o-y in some of the areas surveyed.
The prices of houses in Pulau Tikus rose 6.67% to RM1.6 million, followed by those in Sungai Ara (5.26% to RM1 million) and Sungai Nibong (4.55% to RM1.15 million). Prices remained unchanged in Green Lane and the mainland.
Semi-detached and detached houses
The 2-storey semidees in some areas saw more activity in 1Q2016 than in the previous quarter and last year. Prices in Sungai Dua and Minden Heights rose 6.67% to
RM1.6 million q-o-q, followed by those in Sungai Nibong (up 5.71% to RM1.85 million) and Island Park (up 2.27% to RM2.25 million). Prices in Sungai Ara remained unchanged.
There was no q-o-q increase for 2-storey detached houses but 50% of the units surveyed in the monitor saw y-o-y activity.
Island Glades bungalows saw a 3.57% increase to RM2.9 million y-o-y , the prices of Green Lane houses rose 2.86% to RM3.6 million and Pulai Tikus houses were up 2% to RM5.1 million. House prices in Tanjung Tokong, Tanjung Bungah and Minden Heights remained unchanged.
Flats and condominiums
Three-bedroom flats in Green Lane and Bandar Baru Air Itam showed price increases q-o-q as well as y-o-y .
In Green Lane, prices rose 5.26% to RM400,000 q-o-q and 17.65% y-o-y. Units in Bandar Baru Air Itam rose 4.35% to RM240,000 q-o-q and 20% y-o-y.
Compared with a year ago, the prices of flats in Paya Terubong were up 12.5% to RM180,000, followed by Sungai Dua and Lip Sin Garden (6.06% to RM350,000) and Relau (3.45% to RM300,000).
Among the 3-bedroom condos, the biggest gainers were properties in Pulau Tikus, which rose 4.62% q-o-q and 9.68% y-o-y to RM680,000.
In Island Park and Island Glades, prices rose 4.17% q-o-q and 6.38% y-o-y to RM500,000 while condos in Batu Ferringhi rose 2.22% to RM460,000 q-o-q and y-o-y.
Batu Uban condos rose 5% to RM420,000 from the previous year but there was no activity q-o-q. The prices of Tanjung Bungah units remained unchanged.