Monday, January 31, 2011

Investors Worry That Mideast Will Be Market's Next Crisis

Investors Worry That Mideast Will Be Market's Next Crisis

Posted By: Jeff Cox | CNBC.com Staff Writer
CNBC.com
| 28 Jan 2011 | 03:33 PM ET

Like the European debt crisis in 2010, the uprising in Egypt and other Middle East nations in recent weeks has raised the fear among investors that the markets could be in big danger if the crisis spreads.

After being generally immune to the uprisings in Tunisia, Lebanon and elsewhere, markets sold off aggressively Friday, with investors looking for safety in gold, oil and US government bonds.

It was part of what one strategist called "a typical flight-to-quality market" in which investor fear is rekindled over geopolitical risks—seemingly the only major obstacle for red-hot stocks these days.

"What the markets are fearful of is further spillover into other authoritarian nations," said Christian Hviid, chief market strategist at Genworth Financial Management in Pleasant Hill, Calif. "Syria, Saudi Arabia and Yemen ought to be very concerned about this considering their government structure and potential for similar flare-ups."

Investors in US markets also felt the need for concern in light of the strategic importance the area holds.

While Egypt itself is not a major oil producer—its primary export is cotton, also an important good—the Suez Canal is used to transport much of the world's petroleum and other materials. In addition, President Hosni Mubarak, whom protesters want to see ousted, has long been a US ally.

"There is the importance of Egypt in it being a very close ally to the Western world and an anchor of stability for the region," Hviid said. "The importance of Egypt has to do with the Suez Canal. That's the major link between Europe and Asia trade flows. It's real critical that the canal remains open, that the tension doesn't escalate to the point where trade may be impaired."

As for the nearer-term threat to the 21-month stock market rally in the US, how well Middle Eastern governments manage the uprisings could be key to whether Friday's sell-off is an isolated event. Markets went through the same hand-wringing last April, when Greece appeared to be in danger of being the first domino in a series of European debt defaults, leading to a steep selloff over the summer.

"It will be a one-off only if it's a one-off in Egypt," said Andre Julian, market strategist at OpVest Wealth Management in Irvine, Calif. "If the uncertainty doesn't go away you're going to see continued correction in the market...There is going to be some sensitivity in the market if this problem in Egypt spills into some other regions."

Both Julian and Hviid advise investors to examine the situation and consider sector rotation into areas that didn't participate fully in the market rally. Julian mentioned pharmaceutical and defense specifically.

In addition, Hviid said investors may want to start hedging against higher oil prices and expect some increase in the US dollar as investors look for safety.

A weak dollar, in fact, has been key to the Middle Eastern unrest.

The cheaper greenback, which has been held lower as the Federal Reserve continues its easing programs, has resulted in higher commodity prices, which are priced in dollars and thus cheaper to buy with foreign currencies. The cheap dollar also has boosted spending in the US.

"While the FOMC noted 'measures of underlying inflation have been trending downward' in the US on Wednesday, persistent financial stimulus can lead to increased consumer spending in the US, which can spill over and drive up prices in other less stable markets," analysts at Boston-based Canaccord Adams said in a note to clients. "Uncertainty in the region creates concern surrounding the price of oil."

While conventional wisdom has it that global central banks are unlikely to ease in efforts to keep rates low, the Mideast unrest could push policy to a more hawkish stance.

"Inflation has accelerated to a degree in raw materials much swifter than in consumer prices," said Jessica Hoversen, fixed income and foreign currency analyst for MF Global in New York. "Central banks are going to be forced to hike interest rates in order to fight pressure in commodity markets."

Hoversen said the process toward raising rates likely would be a slow one but it could nevertheless signal some easing for price inflation that is squeezing the large poverty-level population in Egypt and throughout the region.

Inflation in the US, in fact, is likely to double this year, Deutsche Bank chief economist Joe LaVorgna said in a note to clients Friday.

That trend is likely to keep the unrest fires alive in the Middle East and create at least a volatile environment for US stocks.

"We started to witness even before today somewhat of a slowing down of price appreciation" in stocks, Hviid said. "The argument there was the market was getting a little bit tired and needed a little bit of a pause if not a slight correction just to absorb a lot of the news and earnings that have come out. This might have accelerated some of that."

Source: CNBC

My Comments: It seems likely markets will "gap-down" tomorrow... however, there may be good buying opportunities lurking after this crisis resolves. Investors are often wary of uncertainties (including me) and I would likely close my positions before CNY to "enjoy" my CNY without having to "worry incessantly" about my investments over the CNY holiday period. =)

Sunday, January 30, 2011

NOL - Jan 30



NOL looks like a good buying opportunity to me... immediate support at 2.22 (50dma) is seen with an even stronger support at 2.16 (100dma)...

MacD is en route to making a nice golden cross and stochastic has just recently rebounded from oversold condition. There was huge buying volume on Thursday, with a small sell down on Friday... NOL is on an uptrend and there is currently no indication of any trend reversal at sight. It would perhaps be a great buying opportunity and I might place buy orders near those two moving average support on Monday.

Then again, on a more cautious note, the counter may face "irrational bearishness" on Monday due to the Egypt crisis and the support may or may not hold...lets see how things unfold on Monday. =)

Stock Portfolio Updates - Jan 30

Last week, I decided to take profit / cut loss on some of my counters after some consideration... From this episode, I realised that I still have not been able to remain completely emotionless in my trading decisions and would need to improve on it.

After spending much time reflecting on what went wrong, I have decided to invest in a stop-loss system (philips protrader) so as to protect my profits and minimise my losses and to swear to strictly follow my trading plan and not deviate from it by getting emotional when making trading decisions.

On a separate note, despite me being rather busy with work, cny preparation, driving lessons, socialising, reading etc, I still found time to try to spot some buying opportunities. I placed a buy order for NOL at 2.22 (50dma) but it was sadly not processed. Other counters on my radar include Swiber, Golden Agri, Biosensors, Ho Bee, Ezra, Ezion and many more.

Moving on to IPOS, I sadly and unfortunately was too busy to apply for any of the IPOS on offer last week. Sri Trang IPO looks rather appetizing and should yield a decent first-day gain if market sentiments are not too bad. Till then, lets see how these IPOs perform. =)

However, trading volume on STI remains low and the market is, in my opinion, still weak and rather directionless and with US markets down significantly last fri, it is still prudent to be cautious when placing that buy order.

Saturday, January 29, 2011

U.S. Economy Quickens on Gains in Spending, Exports

U.S. Economy Quickens on Gains in Spending, Exports
By Bob Willis - Jan 29, 2011 6:07 AM GMT+0800

The U.S. economy accelerated in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years.

Gross domestic product grew at a 3.2 percent annual rate, Commerce Department figures showed today in Washington, falling short of the 3.5 percent median forecast of 85 economists surveyed by Bloomberg News because of a slowdown in inventories. Excluding stockpiles, the economy rose at a 7.1 percent pace, the most since 1984.

“The consumer really drove the economy in the fourth quarter,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who accurately forecast the rate of growth. “The economy has moved beyond recovery to a stable state of growth.”

The dollar advanced on expectations the revival in demand will extend into this year, boosting sales at companies including General Electric Co. and Apple Inc. At the same time, the report showed the Federal Reserve’s preferred measure of inflation climbed at the slowest pace on record, bolstering forecasts the central bank won’t raise borrowing costs until 2012.

Stocks dropped on growing concern over the unrest in Egypt and as shares of Ford Motor Co. and Amazon.com Inc. retreated. The Standard & Poor’s 500 Index fell 1.8 percent to 1,276.34 at the 4 p.m. close in New York. The dollar advanced against the euro for the first time in nine days, strengthening to $1.3611 per euro from 1.3734 late yesterday.

New High

For all of 2010, the world’s largest economy expanded 2.9 percent, the most in five years, after shrinking 2.6 percent in 2009. The volume of all goods and services produced rose to $13.38 trillion, for the first time surpassing the pre-recession peak reached in the fourth quarter of 2007.

“The environment continues to improve,” GE Chief Executive Officer Jeffrey Immelt said on a Jan. 21 conference call. “The economy can get a little bit stronger every day.”

GE this month posted its third straight quarter of profit growth, beating analysts’ estimates, driven by a rebound in its finance unit, health-care and transportation divisions.

A separate report today showed consumer confidence fell less than expected in January, a signal the biggest part of the economy may extend the gains in spending.

The Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 74.2 from 74.5 in December. The median forecast in a Bloomberg News survey called for a reading of 73.3, up from a preliminary figure of 72.7 issued earlier this month.

Spending Outlook

A 10 percent gain in the S&P 500 in the fourth quarter boosted household wealth and confidence. The government’s extension last month of Bush-era tax cuts, renewal of emergency jobless benefits and cuts to payroll taxes prompted economists such as Bruce Kasman at JPMorgan Chase & Co. in New York to raise forecasts for 2011.

Household purchases, about 70 percent of the economy, rose at a 4.4 percent pace last quarter, the most since the first three months of 2006. The increase added 3 percentage points to growth.

Retailers’ holiday sales jumped 5.5 percent for the best performance in five years, data from MasterCard Advisors’ SpendingPulse showed last month, as customers snapped up jewelry and clothing at stores like Macy’s Inc. and Tiffany & Co.

Apple’s iPad

Apple posted record quarterly sales as customers snapped up 7.33 million iPad tablet computers in the first holiday season for the device, the company said last week.

As spending picks up, Ford is among companies planning to increase payrolls this year, pointing to gains in employment that may further underpin the recovery. The company today said fourth-quarter profit fell 79 percent as its European operations reported an unexpected loss.

The Dearborn, Michigan-based automaker plans to hire more than 7,000 workers in the next two years, including engineers with expertise in battery-powered cars, Mark Truby, a company spokesman, said in an interview in Detroit on Jan. 10.

Still, Fed policy makers indicated this week that growth isn’t strong enough to reduce the jobless rate as fast as they would like, opting to maintain plans to pump $600 billion into the financial system through June. Unemployment has been stuck at 9.4 percent or higher since the recession ended in June 2009.

CEO’s Concern

“The terrible issues of the last two years have been somewhat contained,” Indra Nooyi, chief executive officer of PepsiCo. Inc, said in an interview with Bloomberg Television today at the World Economic Forum in Davos, Switzerland. “But GDP recovery alone doesn’t mean we have started to climb out of the recession. We have to address the unemployment.”

The Fed’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, climbed at a 0.4 percent annual pace, the smallest gain in data going back to 1959.

The economy also got a lift from a narrowing trade deficit as exports climbed, which added 3.4 points to growth last quarter, the most since 1980.

The Obama administration highlighted export deals with China worth $45 billion during talks with visiting President Hu Jintao last week, including purchases of GE locomotives.

Tax measures allowing firms to depreciate 100 percent of capital expenditures over the course of 2011 will also help sustain demand for equipment, which has fueled the factory-led recovery that began in June 2009.

Inventories last quarter were stocked at a $7.2 billion pace, down from a $121.4 billion rate in the third quarter. The slowdown subtracted 3.7 points from growth, the most since 1988. Leaner stockpiles may help set the stage for faster growth in the first half of this year.

“The mix of growth in the fourth quarter was very healthy, strong consumption and not much in inventories, and that implies production will likely be stronger than expected going forward,” said Chris Low, chief economist at FTN Financial in New York.

Source : Bloomberg

My Comments : What a pity, despite a decent GDP number, DJIA fell over 166 points... Although I have not read the DJIA chart yet, but I do expect that the 12k resistance to be very strong, and would be unlikely to break in the immediate future... However, in the long run, I still am bullish and expect the 12k resistance to be taken out after being tested many times... :)

Monday, January 24, 2011

Stock Portfolio Updates - Jan 24

My thoughts about the stock market and my stock portfolio are summed up in one word.

Indecision.

After reviewing my portfolio today, I noticed that some of my counters broke their moving average support with low / high volume and I was seriously contemplating whether to cut loss / take profit on my counters.

Then again, I also note that US and European markets are up strongly (as of now) and wonder if there will be spillover effects to the Singapore market tomorrow. Coupled with the fact that the Singapore market experienced rather low trading volume today and with the earnings season in full swing in both Singapore and US markets and with companies like Keppel Land reporting great profits...

Hiaz... I am so, so undecided...lets see if I get any inspiration during sleep. :)

Saturday, January 22, 2011

STI - Jan 21



This week, STI went down considerably, especially in the last two days. Next immediate support is seen at the 100dma of 3160. Regional markets also fell considerably except the DJIA. DJIA reached new highs and this has made me optimistic that this downturn in prices is likely a temporary correction rather than a correction from a "market peak".

As for my portfolio, it has similarly went down in line with STI, albeit with small volume. As none of my stocks has reached my stop-loss limit, I am still cautiously optimistic (albeit a little worried) about my holdings especially those companies in my "growth portfolio".

However, amidst the sea of red, there remains buying opportunities. But one must always be very careful... always wait for the selling pressure to subside before entering! Among the stock that are on my radar include Golden Agri, Ezra Holdings. I am also eyeing the ipo for Sri Trang Agro-Industry Company and Malaysian Smelting Corp Berhad.

Next week shall be an interesting week. I would like to think that this week, the stock market over-reacted to news of China good GDP figures by worrying about an impending interest rate hike... and a bullish divergence is seen (good economic news yet stock prices go down). Then again, only time will tell and lets just fasten our seatbelts and see how the market unfolds next week! :)

Sunday, January 16, 2011

Buying opportunities for property counters?

Would the recent property cooling measures present some buying opportunities? Having sold some shares recently, I am sitting on some spare cash that could be used to "capitalise" on this development.

Lets see...

Allgreen



Capitaland



Ho Bee



Wing Tai



From the charts above of Allgreen, Capitaland, Ho Bee and Wing Tai, we can see that the last time (August 2010) property cooling measures were announced, most counters took only about two to five trading days to recover from the sell-down...

On further comparison, we can also see that most property counters "gap-down" this time... compared to last august, when share prices made a dark bearish marubozu candlestick.

During this round of property cooling measures, there may be good property counters to snap up. However, one must always be cautious and wait for the selling pressure to dissolve first... many of the property counters have not reached oversold condition as seen from RSI and Stochastic indicators...lets see what happens on monday. :)

Note: I have left out other property counters like City Dev, Guocoland, Kepland, SP land, UOL etc. owing to various reasons like high share price and not within my budget, low daily trading volume etc.

Saturday, January 15, 2011

More property market measures announced

SINGAPORE: The government has announced more measures to maintain a stable and sustainable property market.

From Friday, the holding period for imposition of Seller's Stamp Duty (SSD) will be raised to four years from the current three.

The SSD rates would also be raised while the Loan-To-Value (LTV) limit would be lowered to 50 per cent on housing loans for property buyers who are not individuals.

The LTV limit would also be lowered to 60 per cent for individual property buyers with one or more outstanding housing loans.

The government said its objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.

Analysts said they believe the measures could further curb speculation in the market.

Research Consultancy SLP International executive director Nicholas Mak said: "This is going to basically drive another nail into the coffin of anybody who has thoughts of short-term investments -- in other words speculation in the property market.

"This is quite a drastic measure to try to drive out short-term investors because by raising the Seller's Stamp Duty to a very punitive rate of eight per cent and above basically creams off all the profits that a short-term investor hopes to gain".

Chesterton Suntec International head of research and consultancy Colin Tan said he was surprised at the timing of the new measures.

"I think everyone recognises that the liquidity problem is a global one and that the measures are meant to inject some sanity at certain points in time," he said.

"I think everybody (had) never expected them to last very long but apparently it's so strong that they feel that maybe quite soon, after August 30, they need to act again.

"The message sent here is pretty strong. I think for a while the market should cool down."

Previous measures have, to some extent, moderated the market, but sentiments remain buoyant.

It said low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals.

Moreover, when interest rates eventually rise, it could strain purchasers who have overextended themselves financially.

Therefore, the government said it has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.

It said there's an ample supply of private residential units, and buyers need not rush to buy now.

It added it would continue to ensure an adequate supply of housing to meet demand.

The government also said it would continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.

Source: Channelnewsasia

My Comments : Would these property measures work this time? Or would they fail to cool the "irrational exuberance" like last year's measures? Only time will tell. Buying opportunities may be present for property counters, but one must be patient and wait for the selling pressure on property counters to dissipate first. Happy trading!

Singapore Press Holdings posts 29% fall in 1Q net profit to $102.3m

Singapore Press Holdings posts 29% fall in 1Q net profit to $102.3m

Singapore Press Holdings today reported net profit attributable to shareholders for the first quarter ended 30 November 2010 (1Q 2011) fell 29.3% y-o-y to $102.3 million.

Profit from the Newspaper and Magazine segment improved by 10.0%, driven by the increase in print advertisement revenue.

Group recurring earnings of $116.3 million fell by $43.0 million (27.0%) compared to the corresponding quarter last year which included $50.3 million profit from the Group’s completed property development project, Sky@eleven.

Group operating revenue at $318.7 million was 12.3% higher than that of 1Q 2010, excluding Sky@eleven revenue of $70.1 million in the comparative period last year.

The Newspaper and Magazine segment turned in a creditable performance with revenue for 1Q 2011 at $265.5 million, an increase of $9.2% against 1Q 2010. Print advertisement revenue grew 13.1% to $206.3 million driven by Display and Recruitment advertisements. Circulation revenue decreased 2.1% due to lower copies sold.

Rental income from Paragon increased 26.1% partly from rental revisions and increased floor area as a result of the façade enhancement Materials, consumables and broadcasting costs increased by 15.1%, as a result of higher newsprint and other production costs. Staff costs increased by $11.7 million 15.6% largely attributable to higher variable bonus provision and partial wage restorations.

Investment income of $6.1 million for 1Q 2011 comprised dividend and interest income and profit on sale of investments. The decrease of $4.1 million as compared to 1Q 2010 was mainly due to lower fair value gains.

On the outlook for FY 2011, Alan Chan, Chief Executive Officer of SPH, says: “The Singapore economy is expected to grow at a modest pace supported by sturdy regional demand and domestic activities. The Group’s advertisement revenue will continue to track the Singapore domestic economy. The opening of Clementi Mall marks a new milestone for the Group. Stores in the lower levels have commenced trading and full tenancy commitment is expected when the mall officially opens in April 2011.”

Barring unforeseen circumstances, the directors expect the recurring earnings of the media and property businesses for the current financial year to be satisfactory.

Source : The Edge

My Comments: I think I would hold SPH for the time being as the decline in profits is due to the fact that SPH received lower property revenue compared to last year. The drop in profits is not due poor fundamentals or any other compelling (fundamental and technical) reasons.

Stock Portfolio Updates - Jan 15

Recently, I made a few changes to my portfolio...

And after thinking for a really long time last night, I sold my shares in Ezra Holdings, for a nice gain of 7% (including brokerage costs and other misc costs) considering my short holding period of less than one month. I am still interested in the Ezra due to her strong fundamentals and good growth outlook, but would only consider re-entering Ezra when she successfully and convincingly break the strong and important resistance of 1.85 or retest the similarly strong and important support of 1.65.

Besides selling Ezra, I have also sold my shares in Ascendas Reit for a small profit. In my previous post on Ascendas Reit, I have detailed the reasons (mainly fundamental) that make the Reit unattractive to me. In my humble opinion, the share price of Ascendas Reit may go up or down (in the short term), but it would likely moderate or go down in the long run, due to the factors listed in my previous post on Ascendas Reit - like NAV, dividend yield, gearing etc.

I have also bought shares of STX OSV and GLP. I bought shares of STX OSV due to her strong outlook for both the company and the industry and it having broken the 1.2 resistance convincingly. Also, STX OSV is about to make a bullish "golden cross". For GLP, my purchase was mainly based on technical reasons. Her support at 2.1 to 2.12 is likely to be strong and there seems to be overall accumulation of her shares by the BBs given the strong buying volume and relatively weak selling volume seen in recent weeks.

Thursday, January 13, 2011

Ezra Holdings - Jan 13

Ezra Holdings reports decline in net profit

SINGAPORE: Mainboard-listed Ezra Holdings, a services and vessels provider to the offshore oil industry, reported a 28 per cent decline in its net profit for the first quarter, ended Nov 30, of the financial year 2011.

The company's income statement showed a net profit of US$13.3 million (S$17.2 million), down from US$18.5 million in the year-ago quarter.

The lower net profit was due to financial expenses which surged 180 per cent to US$5.5 million and profits from associated and joint venture companies which fell 97 per cent and 90 per cent to US$149 million and US$196 million, respectively.

However, group revenue rose 25 per cent to about US$76 million and operating profit increased by 40 per cent to US$18.2 million.

Ezra said revenues were mainly driven by its deepwater subsea services arm.

Ezra also announced winning of fresh charters worth a total of about US$73 million for three of its offshore support vessels, including two of its recently added multi-purpose platform supply vessels.

Its managing director Lionel Lee said the fixtures reflect the strong and growing demand for offshore support vessels as development and production activities pick up.

Source: Channelnewsasia



Looking at Ezra Holdings, I must admit I was sorely disappointed at her results, although still quietly upbeat/optimistic about her future prospects (especially since it won some contracts recently).

Looking at her technicals, Ezra Holdings, the stock price has moved out the overbought region. Furthermore, Ezra Holdings closed at 1.79 today and a large bearish black candlestick was seen, accompanied by high selling volume. MacD has crossed below the signal line. Nonetheless, we can see support at 200dma at 1.79 and support at 20dma at 1.78, and I expect them to be tested tomorrow. Besides those two support, a stronger support is seen at 50dma and 100dma at 1.74. I am still undecided on whether to keep or sell as I dont think the super strong resistance of 1.85 would likely be broken in the near future.

However, I would like to state that despite my short-term bearish view on Ezra Holdings, I am still long-term bullish on this counter and other companies involved in the offshore and marine industry. The fundamentals of Ezra Holdings is sound and strong.

Quote from previous post on STX OSV: "Finally, I am still long-term bullish on this counter. STX OSV is involved in the oil and gas industry and in particular the building of drillships to extract oil from deepwater. I believe that much growth could be seen in this sector as oil prices would likely rise in the future, due to strong demand from BRIC and other developing countries. And as the industrial saying "the easy oil has been extracted" goes...it is likely that the oil we drill in the future would come from deepwaters... and firms like STX OSV would likely benefit heavily from this future development. "

Lastly, I am also haunted of the painful lesson learnt of not taking profit/cut loss fast as exemplified by Wilmar after she announced her terrible results in November last year. I guess I will be contemplating deeply in bed tonight whether to take profit or not tomorrow.

P.S. Update on STX OSV: STX OSV rose strongly recently after my profit-taking...perhaps I have taken profit too early? I guess so. Another lesson learnt on volume analysis: what constitute strong selling volume? apparently the selling pressure experience by STX OSV was not strong enough to warrant a profit taking...

Sunday, January 9, 2011

Ascendas Reit - Jan 8

Background: Ascendas Reit closed on 2.16 on friday...

I was thinking of selling off Ascendas Reit (for a long time already) after having made a poor decision to buy Ascendas Reit a few months ago. Ascendas Reit, compared to her peers, doesnt look like a winner to me.

For reits I normally look out for these factors (in no order of importance): High Dividend Yield, Low Gearing, Strong Sponsor, Price over NAV, payout ratio.

From data compiled by other blogs with special interest in reits, i noticed that Ascendas Reit has a gearing of 34.3%, dividend yield of around 6%, NAV of only $1.57, sponsored primarily by Ascendas, payout ratio of 62%...

Among Industrial reits, it currently has the lowest dividend yield and it is trading at a price to book value of 1.38 (also the highest among industrial reits), a gearing that is rather high (although lower than other other industrial reit like MIT, MLT and Cambridge)



Looking at her technicals, it is currently at the upper bolinger band, far away from her 200dma of 2.11, suggesting that a correction may be imminent. Stochastic is in overbought region and rsi is near overbought, it might be a good time to sell ascendas reit.

I know that Ascendas Reit is going to announce her results and give dividend soon, but since price is quite good now and I would be able to avoid selling at a loss, why not sell now?

Then comes the question of what i would do after selling Ascendas Reit? Perhaps, get another reit? I am currently looking at First Reit, which has caught the eyes of many of my fellow investment bloggers, or Sabana Reit (which i think is quite attractive), or wait till maple commercial trust ipo? or perhaps expand my growth stocks investments.

Saturday, January 8, 2011

U.S. Adds Fewer-Than-Estimated 103,000 Jobs; Unemployment Declines to 9.4%

U.S. Adds Fewer-Than-Estimated 103,000 Jobs; Unemployment Declines to 9.4%
By Bob Willis - Jan 8, 2011 5:49 AM GMT+0800

Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it will take years for the labor market to heal.

Payrolls increased 103,000, compared with the median forecast of 150,000 in a Bloomberg News survey, Labor Department figures showed today in Washington. Employment the prior two months rose more than initially estimated. The jobless rate fell to 9.4 percent, partly reflecting a shrinking workforce.

Faster job growth is needed to keep consumers spending and ensure a self-sustaining recovery in the world’s largest economy. Bernanke, in Senate testimony an hour after the report, said it may take four or five years for the labor market to “normalize fully,” indicating no change in the Fed’s plans to pump $600 billion into the financial system.

“We’re moving in the right direction, but we won’t get out of the hole anytime soon,” said Jay Feldman, an economist at Credit Suisse in New York. “For the Fed, it means steady as she goes.”

Stocks fell, trimming the market’s sixth weekly gain. The Standard & Poor’s 500 Index dropped 0.2 percent to 1,271.5 at the 4 p.m. close in New York. The yield on the 10-year Treasury note declined to 3.32 percent from 3.40 percent late yesterday.

Estimates for the change in payrolls among 78 economists surveyed by Bloomberg ranged from 98,000 to 240,000. The median climbed from 140,000 at the start of the week after projections from ADP Employer Services showed companies boosted employment by 297,000 workers last month.

Unemployment Forecasts

The unemployment rate was forecast to fall to 9.7 percent from 9.8 percent, according to the median prediction of 73 economists. Estimates ranged from 9.5 percent to 9.9 percent.

“It’s about what we expected,” Bernanke said of today’s Labor Department data in response to questions from the Senate Budget Committee. “If we continue at this pace we’re not going to see sustained declines in the unemployment rate.”

For all of 2010, about 1.1 million jobs were created, the most since 2006. The jobless rate averaged 9.6 percent, the highest since 1983 and up from 9.3 percent a year earlier. With today’s report, the Labor Department revised figures from its household survey used in calculating the unemployment rate going back five years. Benchmark revisions to the payroll data will be announced in February.

‘Positive News’

“The decline in the unemployment rate is positive news but it only underscores the importance of us not letting up on our efforts,” President Barack Obama said in Landover, Maryland during a visit to Thompson Creek Manufacturing, a maker of windows and doors that has added workers partly because of administration tax incentives.

Unemployment stuck above 9 percent is one reason why Obama last month signed an $858 billion bill extending all Bush-era income-tax cuts for two years. The bill also continues expanded unemployment insurance benefits through 2011 and cuts payrolls taxes by 2 percentage points.

Retailers and automakers are among industries hiring.

Dollar General Corp., the biggest of the U.S. dollar discount stores, plans to add 6,000 jobs as it opens 625 more stores in fiscal 2011. By the end of 2011, the Goodlettsville, Tennessee-based discounter said last month it will have created 15,000 jobs since 2009.

Ford Motor Co., the world’s most profitable automaker, is hiring 1,800 workers and spending $600 million to overhaul a factory in Louisville, Kentucky, to build small sport-utility vehicles, Marcey Evans, a Ford spokeswoman, said in an interview last month.

Factory Payrolls

Manufacturing payrolls rose by 10,000 in December, today’s report showed. Economists had projected an increase of 5,000.

Consumer spending, which accounts for about 70 percent of the economy, has picked up. Holiday purchases rose 5.5 percent, the best performance since 2005, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include Internet sales and exclude automobile purchases.

“While it appears that the economic environment has stabilized and is perhaps improving, persistent high unemployment and uncertainty in the economy could continue to pressure consumers and affect their spending,” Steven Temares, chief executive officer at Union, New Jersey-based Bed Bath & Beyond Inc., said on a teleconference with analysts Dec. 22. Still, “we remain cautiously optimistic,” he said.

Service Providers

Employment at service providers increased 105,000 in December. The number of temporary workers rose 16,000, the smallest gain since October 2009. Construction companies reduced payrolls by 16,000, the most since May, and retailers added 12,000 workers.

Government payrolls decreased by 10,000. State and local governments reduced employment by 20,000, while the federal government added 10,000 jobs.

States and municipalities with growing budget gaps are cutting spending and reducing headcount. Florida may cut 5 percent of its state workforce to save costs, Governor-elect Rick Scott said in an interview Dec. 3 on Bloomberg Television’s “InBusiness With Margaret Brennan.”

November employment rose 71,000, more than an initially reported gain of 39,000. Payrolls in November and October combined were 70,000 more than previously estimated.

The workforce shrank by 260,000 workers last month, sending down the share of the population in the labor force to a 26-year low of 64.3 percent. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, rose to 44.3 percent.

Source: Bloomberg

Thursday, January 6, 2011

Maybank to purchase Kim Eng Securities

Maybank to purchase Kim Eng Securities

SINGAPORE : Malaysia's leading banking group Maybank is poised to emerge as one of top five brokerages in Southeast Asia after making a move to acquire Singapore broker Kim Eng Holdings.

It is launching a general offer for Kim Eng, offering $3.10 per share for the shares of the brokerage after buying over a substantial stake from key shareholders.

The acquisition also marks Maybank's foray into the Thai market.

In making the announcement at Maybank headquarters on Thursday, CEO of Maybank Group, Abdul Wahid Omar, said he plans to take Kim Eng private after completing the takeover.

He added : "We expect..exciting times ahead, Kim Eng will extend investment banking scope and reach very much in line with regional aspiration. They are complementary business and geographic footprint."

The acquisition will complete Maybank's footprint in Southeast Asia.

While the Malaysian lender has a commercial-banking presence in the region, up to now its stock broking and investment banking business has been limited to the home market.

Tying up with Kim Eng will give it stockbroking operations across the region in markets like Singapore, Thailand and the Philippines.

Under the deal, Maybank is acquiring a 44.6 per cent stake in Kim Eng Holdings at S$3.10 a share - it is buying a 15.44 per cent stake from Mr Ronald Anthony Ooi and a further 29.19 per cent stake from Yuanta Securities Asia Financial Services.

The two transactions are worth a combined S$798.5 million.

It has made an offer for all remaining shares at the same price, resulting in a total consideration of almost S$1.8 billion, or about US$1.4 billion, for the acquisition.

That works out to a multiple of 1.91 times of Kim Eng's book value and a price to earnings ratio of 20 times.

And the purchase price represents a premium of 15 percent to the counter's last closing price of S$2.70.

Maybank has described the valuation as fair.

It noted that Kim Eng's significant presence in Southeast Asia, as well as Hong Kong, New York and London would provide many cross-selling opportunities and enhance Maybank's distribution capabilities.

The acquisition is also in line with the bank's vision to be a regional financial leader by 2015.

Apart from tapping into Kim Eng's 200.000 client base, the current management team led by Chairman and CEO Ronald Ooi will remain for a minimum period of three years to oversee the integration which is expected to be completed by April this year.

Kim Eng is expected to boost Maybank's income from investment banking from the current 2 per cent to 8 per cent in the next financial year and further boost its overseas earnings from the current 29 percent to 34 per cent by 2012.

Japan's Nomura Holdings and Maybank's investment banking arm are advising Maybank on the sale.

Source: Channelnewsasia

My Comments: Congratulations to all those who have Kim Eng shares, especially those who bought Kim Eng below 2 dollars and those Kim Eng shareholders who had collected good
dividends from Kim Eng over these years. :)

On another note, congrats to shareholders of other brokerage firms like UOB Kay-Hian and G.K.Goh, who have reaped a paper gain of over 10% today.

Wednesday, January 5, 2011

STX OSV - Jan 5



Today, I sold STX OSV today. Just for the record, I bought STX OSV at 1.01 and sold at 1.16 today... a nice profit of 14.85% (before broker fees) considering my short holding period of less than a month.

So why did I put a sell order yesterday night? Mainly based on technicals... on monday, STX OSV rose strongly. However, on tuesday, STX OSV fell on higher volume with a large dark bearish candlestick... furthermore, with stochastic and RSI overbought...I reckon I would be better sell off now, and buy back later...

As for the technicals seen today, I see an "indecision doji" which likely showed that investors are undecided on whether to push STX OSV higher or lower... till the counter direction is clear, I would stay away from it..

Finally, I am still long-term bullish on this counter. STX OSV is involved in the oil and gas industry and in particular the building of drillships to extract oil from deepwater. I believe that much growth could be seen in this sector as oil prices would likely rise in the future, due to strong demand from BRIC and other developing countries. And as the industrial saying "the easy oil has been extracted" goes...it is likely that the oil we drill in the future would come from deepwaters... and firms like STX OSV would likely benefit heavily from this future development.

Tuesday, January 4, 2011

10 Secrets of the Most Successful Amateur Investors

10 Secrets of the Most Successful Amateur Investors
By CHARLES WALLACE

An oft-quoted statistic holds that 80% of professional fund managers underperform the market. That's one of the reasons many financial advisers counsel investing novices to park their money in index funds -- because if the pros can't beat the market, how can a small investor have any hope?

Matthew Schifrin, the investing editor of Forbes magazine, had a different idea. He hunted down 10 of the best-performing amateur investors over the past 10 years and asked them how they managed to beat the market when so few others were able to. He has compiled their investing secrets in a new book, The Warren Buffetts Next Door: The World's Greatest Investors You've Never Heard of and What You Can Learn from Them.

Schifrin is the first to acknowledge that these aren't average investors, but they are average guys (they're all men) who have shown extraordinary talents for picking winning stocks. Schifrin believes that while ordinary investors may not succeed as well as his mini-Warrens, they can still improve their stock market performance by following some of the tactics used by these top performers.

"You may never be able to get 30%-plus per year, but if you pay attention to your investments and take the time to research stocks and the market, I do believe you can wring a few extra percentage points out of your portfolio," Schifrin says. "So instead of the 8% everyone says you can expect, you can get three extra percentage points. I do feel that's attainable for the average investor."

Here are 10 investing ideas that proved profitable to some of Schifrin's fortunate investors. But, he notes, not all of them shared the same techniques, and some espoused contradictory views from each other.

1. A concentrated portfolio can succeed. Diversification is the mantra of many investment advisers, but many successful investors concentrate on a small number of stocks. "If you've done your homework and you really understand the stocks that you own, then diversification really isn't that important," Schifrin says. "People diversify so much they diversify their returns away."

2. Buy low debt-to-equity stocks. The percentage should be below 50%, according to Schifrin's stars. These successful investors don't like seeing a lot of leverage on company balance sheets. "We came through the meltdown and saw that companies that were dependent on commercial paper or leverage to survive really dropped fast when the banks stopped lending," he notes.

3. Don't be lulled by dividend payments. A high dividend can often lead you to believe a stock is a good buy when it really isn't, a problem known as a value trap. For example, the bank once known as Washington Mutual paid a high dividend right up until it crashed. "Make sure some catalyst in the future isn't going to make that dividend go away," Schifrin warns.

4. Don't accept company's figures unquestioningly. One of these dedicated investors carefully analyzes all of a company's financial statements, including cash flow, tax credits and operating loss carry-forwards, and tosses out fictitious "assets" like goodwill and brand value. "Be careful to strip out a lot of things that aren't significant earnings-producing assets," Schifrin says.

5. Avoid story stocks. This was one piece of advice about which there was strong disagreement among Schifrin's group, but he recommends it. The idea: Stick to statistical analysis and don't be moved by the hottest chat room gossip. "Don't be swayed because a company has an awesome electronic gadget or device," Schifrin says.

6. Have some kind of sell discipline. The investors described in the book take different approaches to this, but all have a system for determining when to sell. One uses a ratio of intrinsic value -- an adjusted forward earnings estimate multiplied by a conservative market multiple -- relative to price. When a stock's price rises to the point where its intrinsic value to price ratio is below 1.25, he sells. Another simply sells when stocks fall 20% from their high.

7. Seek out promising companies that are undervalued because of temporary setbacks. These investors look for stocks that are mispriced because of irrational selling or buying. A bad news story about a drug trial might slam a company's stock, for example, but not be significant in the long run.

8. Don't get too greedy. While some investors wait until their stocks rise 10-fold before selling, others are content to sell after a few-point gain. The lesson: Take profits. Too many investors ride a stock up, only to ride it back down again. If a stock goes against you, don't hold on: Sell.

9. Seek out companies with monopolies and duopolies. These are companies that have what Warren Buffett calls a moat -- a high cost of entry for competitors trying to muscle their way into the business. Example: Mastercard (MA), Visa (V) and American Express (AXP) own the credit card business, and it's very difficult for new rivals to get a toehold. In the food business, Swiss giant Nestle is hard to beat.

10. Avoid companies with high short interest. When hedge funds are piling into the market betting against a company, there may be a lot of negative information about to become more widely known that could damage the stock. Why tempt fate?

Source: http://www.dailyfinance.com/story/investing-basics/secrets-most-successful-amateur-investors/19775673/

Monday, January 3, 2011

Off my radar - 2011

Below are stocks that I am not intending to purchase for 2011

SGX-listed companies

a) Hyflux
b) OSIM
c) SGX
d) SIA
e) Wilmar

Commodities

a) Gold
b) Silver

(In no order of distaste)

Sunday, January 2, 2011

Bull vs. Bear: How high will oil go in 2011?

Bull vs. Bear: How high will oil go in 2011?
Posted by Nin-Hai Tseng, writer-reporter
December 28, 2010 5:00 am

The already fragile economic recovery would be vulnerable to rising oil prices. Where will the price of a barrel go in 2011? Analysts argue both sides.

For most of December, prices for crude oil traded at two-year highs on improving equities markets, a weakening US

Dollar and record demand from China. Prices pushed above $90 per barrel on December 7 and reached $91.51 on December 22 – a marked jump from their levels near $70 a barrel in September.

The development is significant. Some economists believe that if prices rise much more, especially past $100, it will likely dampen America's already slow economic recovery. As the price of crude rises, so does the price of gasoline, and a higher price at the pump will hurt consumer spending overall.

So where will oil go in 2011? Will it surpass the psychologically significant $100 mark at a time when demand for oil from most emerging economies is expected to rise? Or will it retreat as China tries to rein in growth amid worries over inflation?

Here's a look at the bull and bear arguments for the black gold next year.

Bull: The other side of $100

A growing number of traders and analysts think prices for crude oil will stay relatively high – with some predicting it could top $100 a barrel sometime next year.

A few factors will probably support prices in 2011, according to analysts at JPMorgan Chase (JPM) and Bank of America Merrill Lynch (BAC). The banks forecast that prices could climb past $100 a barrel next year as central bankers pump cash to help accelerate economic growth.

The U.S. Federal Reserve's recent decision to inject up to $600 billion into the economy through a bond-purchasing program is expected to weaken the U.S. Dollar. The greenback has historically influenced the price of oil and other commodities, including gold and base metals that are mostly priced in the currency. So when the value of the dollar falls typically in tandem with interest rates, that tends to push up the price of commodities, including oil, as investor search for higher returns.

Indeed, the dollar has generally been weakening for some time. It's anyone's guess how the value of the greenback might fair next year, especially as the ongoing debt crisis in parts of Europe has put the value of the euro relative to the dollar on a very volatile ride.

Needless to say, growth in emerging markets might also help prices next year -- helping reduce stockpiles of crude oil.

Though forecasts at UBS do not predict prices surging anywhere past $100 a barrel, the bank nevertheless characterizes its prediction as "bullish," forecasting that prices could hover around $80 a barrel next year.

Analysts there say non-OPEC countries and Russia have for years slowed production of crude and supply appears "anemic." With limited supply and stronger demand coming mostly from emerging economies, prices are poised to stay relatively strong. UBS forecasts demand growing at 1.7% in 2011 as the outlook for the global economy improves.

With the Fed showing no signs of slowing its bond-purchasing program -- at least not yet -- and growing demand from emerging economies, it seems plausible that oil prices will climb higher.

Bear: A brief jump explained

But not everyone is so bullish. Despite talk that crude could shoot as high as $100 a barrel, Phillip Verleger of PKVerleger LLC, a Colorado-based economic consulting firm on energy and commodities, doesn't buy the hype.

Verleger forecasts that prices could fall as low as around $75 a barrel in 2011 and says the recent spike in crude above $90 can be explained more by isolated and unforeseen factors than pure laws of consumer demand and supply.

For one, the East Coast in particular felt prices surge after a refinery in Canada's Nova Scotia area, which produces much of the region's supply, was shut down this fall, which helped reduce supply at a time when demand for heating oil rose.

What's more, demand for oil surged in China as authorities shut down power generation to reach 2010 emissions targets and consumers were forced to rely more on diesel generators.

"It's hard to see how the market could sustain $100 a barrel," says Verleger, adding that China's demand for oil could be curtailed in 2011 as government officials continue to control growth amid concerns over rapidly rising prices.

Source: http://finance.fortune.cnn.com/2010/12/28/bull-vs-bear-how-high-will-oil-go-in-2011/

By the way, I am bullish on oil. :)

Saturday, January 1, 2011

On my radar - 2011

Here are the stocks that I am looking to purchase / purchase more for 2011.

SGX-listed companies

a) Armstrong
b) Biosensors
c) Cambridge
d) Comfortdelgro
e) Ezion Holdings
f) Ezra Holdings
g) First Reit
h) Fragrance Group
i) Genting SP
j) Genting HK
k) GLP
l) Golden Agri
m) Ho Bee
n) Noble Group
o) Neptune Orient Lines
p) Sabana Reit
q) SBS Transit
r) Singtel
s) STX OSV
t) Swiber
u) UOB Kay-Hian

IPOs

a) Maple Commercial Trust
b) Malaysia Smelting Corporation Berhad
c) Hospitality Reit of Park Hotel Group
d) DLF Reit
e) Unitech Reit
f) New Century Shipbuilding?
g) Retail Reit of SPH?

Commodities

a) Crude Oil
b) Rare Earths?

(In no order of preference)