Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Wednesday, July 21, 2010

STOCK CALL: Maybank IB Research rates Eastern & Oriental (3417.KU) at Short-Term Buy based on charts with upside targets at MYR1.05, then MYR1.12. Technical analyst Lee Cheng Hooi says stock of property developer could be rebounding after making a daily minor Wave 2 low of MYR0.91 earlier this month, with grossly oversold and bullish divergent signals. "We believe the stock is in a strong Wave 3 uptrend... with the positive crossovers from the CCI, DMI, MACD, Stochastic and Oscillator indicators, we feel that E&O may rise and test the resistance levels (of MYR1.04, then MYR1.21)," says Lee. Stock +1.5% at MYR1.01. On downside, support eyed at MYR0.995, then MYR0.91; stop-loss at MYR0.89.

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Tuesday, July 20, 2010

Commentary: The economic recovery is just an illusion

By Robert P. Murphy

NASHVILLE, Tenn. (MarketWatch) -- Economists and financial analysts are currently arguing whether the economy will experience a "double dip," a recession followed by a short recovery, followed by another recession.

Some think the worst is behind us, and that output and employment will slowly but steadily increase during the next few years. Others believe we are headed for another crash. The lessons from the last business cycle favor the case for pessimism.
Stock Charts Vs. Spreadsheets

Market chart readers view stocks as being vulnerable to further declines, while fundamental analysts see stocks as a bargain given strong corporate profits, reports Barron's Michael Santoli.

It has been said that if one laid all the world's economists end to end, they wouldn't reach a conclusion. Even so, a surprisingly large number of economists now agree that then-Federal Reserve Chairman Alan Greenspan made a tragic mistake. After the dot-com bubble burst in 2000, Greenspan opened the monetary floodgates.

Specifically, Greenspan allowed the "monetary base" to increase 22% from June 2000 through June 2003. The monetary base, also called "high-powered money," is the base upon which bank loans are pyramided, expanding the total amount of money held by the public.

During the same three-year period, Greenspan cut the federal funds rate -- the interest rate commercial banks charge each other for overnight loans -- from 6.5% down to 1%, the lowest federal funds rate in more than 40 years.

The rationale for Greenspan's easy-credit policy was to provide a "soft landing" for the economy in the wake of the dot-com crash and Sept. 11 attacks. And for a while, it seemed he had succeeded. People marveled that housing prices continued to rise, even amidst the recession of 2001. Indeed, people referred to Greenspan as "the Maestro."

In retrospect, economists across the political spectrum recognize the role Greenspan's Fed played in fueling the housing bubble. The more cynical analysts argue that Greenspan's policies weren't "easy" at all and merely postponed the inevitable day of reckoning for the economy. Rather than gritting its teeth and suffering through the necessary adjustments in the early 2000s, the nation got an injection of artificial credit that masked the underlying problems with a euphoric boom.

The housing market eventually collapsed, as all bubbles do. At this point, Ben Bernanke was at the helm of the Fed. Unfortunately, he got his policies out of Greenspan's playbook, except Bernanke doubled down.

Rather than pushing short-term interest rates down to 1% as Greenspan did, Bernanke has pushed them down to almost zero percent. And in contrast to Greenspan's 22% increase in the monetary base during a three-year period, Bernanke increased it by 94% in one year.

The unprecedented monetary stimulus from the Fed, in conjunction with the massive deficits of the federal government, did succeed in partially re-flating the stock market and stabilizing home prices. Time magazine named Bernanke its 2009 Person of the Year, and Obama administration officials are taking credit for nipping the Great Recession in the bud. Yet the parallels with the Greenspan episode are clear.

It makes no sense to "rescue" the economy by having politicians borrow and spend trillions of dollars. It also makes no sense to fix the horrible mistakes of the housing-bubble years by having the Fed create electronic money out of thin air to buy "toxic assets" from investment banks that would otherwise be insolvent.

The alleged economic recovery is unfortunately just as illusory as the prosperity of the housing-bubble years. It is disturbing to consider that if this is the calm before the storm, then the pending crash will be painful indeed. In the current debate on the direction of the economy, those predicting a "double dip" have the stronger -- if more depressing -- case.

Robert P. Murphy is a senior fellow in Business and Economic Studies at the California-based Pacific Research Institute.


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Thursday, July 15, 2010

STOCK CALL: Maybank IB Research rates Scomi Marine (7045.KU) at Short-Term Buy based on charts with upside targets at MYR0.54, then MYR0.60. Technical analyst Lee Cheng Hooi says shares of marine vessel firm that earlier this week announced sale of key units made daily minor Wave 2 low of MYR0.40 this month with grossly oversold signals, but has since rebounded strongly. "The recent steady price action above the 19- and 50-day moving averages and a firm golden cross buy signal indicate firm upside bias movement," says Lee. Adds, positive crossovers from daily signals also indicate upside potential, with resistance at MYR0.56, then MYR0.70. Stock down 2.9% at MYR0.505, having breached immediate support at MYR0.52. Next support eyed at MYR0.40; stop-loss at MYR0.38

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Wednesday, July 14, 2010

LATELY, a few companies defaulted in loan repayments and are now classified as PN17 companies. PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia.
In general, PN17 companies normally have some financial difficulties. As such, investors get quite worried when some of the shares they hold are for PN17 companies. They usually face a dilemma of whether to cut losses or hope for a rebound for such shares.
Here are some reasons for companies to be classified under PN17: companies’ shareholders’ funds are less than 25% of their total paid-up capital; receivers have been appointed to take control of the companies’ assets; the winding-up of some of their subsidiaries and associated companies; the auditors have expressed adverse opinions on the companies; default in loan interest and principal repayments; the companies have suspended or ceased their operations; and companies do not have any significant businesses or operations.
A rational investor will look for companies with good business fundamentals to invest in and we believe that most investors know which companies have good fundamentals.
Unfortunately, investors sometimes do not buy into these companies because they want to make quick money from the stock market.
As a result, they tend to listen to market rumours and buy into companies with poor fundamentals or are speculative in nature.
We may wonder why some companies turn into PN17 companies. However, if we scrutinise them carefully, we will see that these companies are usually poorly managed or do not have good track records.
There are a few reasons why investors continue to hold on to these PN17 companies. One main reason is that they seldom keep track of the companies’ financial performance.
Based on our observations, some investors are not aware that they are holding on to stock of companies that have been classified under PN17. In some cases, the investors do not even notice that these companies have been delisted.
We need to understand that a key difference between intelligent investors and normal investors is that intelligent investors always remember that there are chances they may make mistakes in their stock selections. Therefore, they are careful to monitor the performance of their stock.
Once they discover that the companies they have invested in are experiencing declining performance or showing early signs of financial difficulties, they will make quick decision to cut their losses.
Unfortunately, not all investors have the courage to admit their mistakes.
Even worse, some of them even believe they will never make mistakes in their stock selections and the poor performance is just a temporary sitution. This type of investors usually end up getting stuck with poor performing stocks.
It is said of the stock market that “what goes up will come down, but what goes down may not go up”.
The earlier investors admit their mistakes, the lower the losses they have to bear.
Unfortunately, most investors believe that the stock prices will recover one day. They will only cut losses when the companies are about to be delisted!
During an economic crisis, companies with good planning manage to avoid the adverse impact from the crisis whereas some companies just cannot escape from the financial difficulties.
Lately, we notice that the owners of some companies are getting less committed to their businesses.
They give up their businesses quite easily after encountering some financial distress. If they discover that the loans amount is higher than the value of their assets and they do not foresee any prospects in their current businesses, they give up the businesses and let the companies fall into PN17 and later go bankrupt.
According to the Cockroach Theory, whenever a company announces some bad news to the public, like default in loans repayments, some accounting issues or delay in releasing their financial results, there may be more bad news that have yet to be revealed.
This is because whenever we see one cockroach in our cabinet, there tends to be many more cockroaches hiding at the back of that cabinet.
Even though some companies will try their best to regularise their businesses, unfortunately, not all their owners have the commitment to pull these companies out from PN17.
Hence, we should cut our losses and never average down our purchase prices on these companies!
Even if we are very excited about these companies, we should wait until they successfully revive their businesses and are no longer considered PN17 companies.
We need to remember that it is always safer to buy stocks at higher prices than average down on our losses.
Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
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Tuesday, July 13, 2010

STOCK CALL: TimedotCom (5031.KU) down 1.0% at 50.5 sen but RHB Research says stock's momentum indicators still upbeat, near-term retreat considered "healthy" as long as key support at MYR0.47 remains intact. "When buying momentum resumes after the pullback, the stock may resume its rally and re-challenge the MYR0.54 technical hurdle again," RHB says. Reckons successful breach of MYR0.54 would spur further gains in stock, targeting MYR0.60, then MYR0.705.

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Monday, July 12, 2010


STOCK CALL: Maybank Research tips Titan Chemicals Corp (5103.KU) as Accumulate based on charts. "Titan ended a minor weekly Wave 4 low at MYR1.10 in May 2009," says chartist Lee Cheng Hooi. Adds, positive weekly crossovers from the CCI, DMI, MACD, Stochastic and Oscillator indicators support house view of a very firm potential uptrend for Titan. "With its price bars firmly above the 18- and 40-day moving average, we are positive that Titan will trend towards the target areas of MYR1.89 and MYR2.80," says Lee; tips support at MYR1.70, then MYR1.43. Stock last +3.5% at MYR1.76.

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Friday, July 9, 2010

[Dow Jones] STOCK CALL: OSK Research says KLCC Property Holdings' (5089.KU) short-term technical outlook remains bearish unless stock can breach key resistance at MYR3.20. Chartist Shin Kao Jack says outlook for stock turned negative after major breakdown of MYR3.20 support in May. Stock has since been on a short-term uptrend from May low of MYR2.74 but failure to breach MYR3.20 level, followed by violation of short-term uptrend may signal end of rebound, says Shin. Stock last +1.0% at MYR3.12; if MYR3.20 breached, next resistance eyed at MYR3.36. On downside, support at MYR2.98, then MYR2.86.

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Thursday, July 8, 2010

[Dow Jones] STOCK CALL: Maybank IB Research rates HELP International (7236.KU) at Short-Term Buy based on charts with upside targets at MYR3.66, then MYR4.30. Technical analyst Lee Cheng Hooi says stock of Malaysia private college, university operator made a daily minor Wave 4 low of MYR2.10 in May, but recent steady gains above the 19-day, then 50-day moving averages "and a firm golden cross buy signal indicates firm upside bias movement," says Lee. Adds, positive crossovers from its daily signals also indicate further upside potential, with immediate resistance eyed at MYR3.51. On downside, support at MYR3.13, stop-loss at MYR3.11. Stock flat at MYR3.50.

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Wednesday, July 7, 2010

SINGAPORE (Dow Jones)--Asian stocks largely declined Wednesday after weak U.S. data refueled worries about the strength of the global economic recovery while technology shares across the region fell, unimpressed by Samsung Electronics' forecast of a record operating profit.

"Equity markets are pricing in a very pessimistic or 'worst case' view of global economic growth, more so than the bond markets," said IG Markets institutional dealer Chris Weston.

Japan's Nikkei Stock Average fell 0.6%, Australia's S&P/ASX 200 gave up 0.5%, South Korea's Kospi lost 0.6%, Taiwan's Taiex slipped 0.2% and India's Sensex gave up 0.8% in afternoon trade.

China's Shanghai Composite Index ended 0.5% higher after enduring a choppy trading session, as gains in consumer and cement stocks offset broad declines in banks. Hong Kong's Hang Seng Index dropped 1.1%.

Dow Jones Industrial Average futures were down 55 points in screen trade. Tuesday, the benchmark DJIA ended higher but after losing most of its large initial gains in the wake of weak U.S. service-sector data.

"It's the same story from before; the market can't free itself from recent worries about slowing growth in the U.S. and China," said Samsung Securities analyst Oh Hyun-seok in Seoul.

Chinese banks declined in Hong Kong and underperformed in Shanghai on concerns about market liquidity ahead of Agricultural Bank of China's listing and after Bank of China's recently announced plans for a rights issue. Furthermore, the Chinese-language newspaper Ming Pao reported that Industrial & Commercial Bank of China -- the mainland's biggest lender by assets -- might raise up to CNY45 billion in a rights issue.

ICBC dropped 0.5% and Bank of China ended flat in Shanghai. In Hong Kong, they dropped 1.4% and 1.0%, respectively.

Shanghai-traded shares ended higher, despite the weakness in banks, as investors snapped up stocks after the state-run Securities Times reported that the National Social Security Fund appointed six fund managers to oversee new A-share investments totaling more than CNY2 billion, including China Asset Management Co., which it said received CNY500 million from the pension fund Tuesday.

Auto makers and airlines led gains with Air China up 2.3%, China Eastern Airlines rising 2.4%, SAIC Motor was up 1.1% and Beiqi Foton Motor was 1.4% higher.

"The index is consolidating after enormous falls in recent weeks. The market should be starting to reverse its risk-averse trading approach," said Wang Junqing, an analyst from Guosen Securities.

In Seoul, heavyweight and technology-sector bellwether Samsung Electronics was in the limelight and dragged on the overall market as its stock dropped 0.8%. Samsung projected a record quarterly operating profit of KRW5 trillion for the second quarter, but concerns over a possible oversupply in the memory chip market in coming quarters pressured the company's own, as well as other Asian chipmakers' shares. Hynix Semiconductor dropped 2.7% in Seoul and Elpida Memory gave up 3.3% in Tokyo, while Nanya Technology Corp. shed 0.6% in Taipei.

"Investors look concerned that Samsung's capital expenditure investments may lead to an oversupply starting from the fourth quarter, coupled with the possibly diminished demand in Europe and the U.S.," said Lee Kyung-soo, an analyst at Taurus Investment & Securities.

Hyundai Merchant Marine fell 3.6% on profit-taking after recent gains, even as the company swung to a second-quarter operating profit, on revived demand and higher freight charges.

Japanese shares declined after rising the previous three days, as investors turned cautious on exporters, which are to a large extent held hostage to the whims of the foreign-exchange market. Honda Motor gave up 1.6%, Nissan Motor gave up 2.5% and Sony Corp dropped 1.7%.

The Sydney market reversed course after opening higher, as weakness in financial issues overpowered modest gains in some mining stocks during a choppy trading session. National Australia Bank dropped 1.3% and Australia & New Zealand Banking Group gave up 1.3%, while Westpac Banking Corp. declined 0.7%. However, the resources sector extended Tuesday's gains, aided by news of Chinese plans to front-load spending in the infrastructure sector.

BHP Billiton gained 0.8% and Rio Tinto advanced 1.1%. Shares of Sigma Pharmaceuticals jumped 13.9% to A$0.45 after it received a formal takeover offer from Aspen Pharmacare at A$0.55-a-share, valuing Sigma at A$648 million. But the close was off the day's high of A$0.47 as Aspen's latest bid was lower than its previously indicated A$0.60-a-share offer.

Elsewhere in the region, New Zealand's NZX-50 gained 0.3% and Philippine stocks finished 0.4% higher. In late afternoon, Singapore's Straits Times Index had slipped 0.2%, Indonesian shares gave up 0.3% and Thailand's SET Index was off 0.1%.

In foreign-exchange markets, risk aversion pulled the euro lower against the yen to Y109.52 from Y110.42 late Tuesday in New York, and against the U.S. dollar, it was fetching only $1.2564 compared with $1.2619. The dollar was down at Y87.19 from Y87.48.

Lead September Japanese government bond futures rose 0.08 at 141.52 points as weak Tokyo stocks prompted investors to buy into safe-haven government-backed securities. The yield on the 10-year cash bond was up one basis point at 1.145%, with investors selling JGBs to lighten positions ahead of an auction of 30-year bonds Thursday.

Spot gold was at $1,187.50 per troy ounce, down $6.60 from its New York close on Tuesday. Nymex August crude-oil futures were 2 cents higher at $72 per barrel on Globex.
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Tuesday, July 6, 2010

0710 GMT [Dow Jones] Bina Puri (5932.KU) flat at MYR1.14 in thin volume; off intraday low of MYR1.11, dealer says stock may rise to test MYR1.20 (yesterday's high) after firm says it expects letter of award to build new low-cost carrier terminal (LCCT) at Kuala Lumpur International Airport. Bina Puri says this in response to stock exchange query after the Edge Weekly reported the company is part of JV that clinched a MYR1 billion construction contract. Firm says hasn't received award, but "liaising" with Malaysia Airports (5014.KU), expects to get letter "soon." Didn't provide details or contract value. Malaysia Airports not available for comment. Dealer says awaiting further details, but job if awarded, will likely be sizable, providing "nice boost to bottom line."
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