Friday, October 31, 2014

JAPAN UNEXPECTED BOOST STIMULUS AGAIN

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The Japanese central bank announced fresh measures on Tuesday to ease monetary policy, stepping up its bid to fend off recession in the world’s third-largest economy after the United States and China.
The Bank of Japan, under pressure from the government to act more decisively to halt the economy’s slide, said in a statement that it would add ¥11 trillion, or $138.5 billion, to an asset-buying program that has become its main monetary policy tool.
The bank will also set up a new loan program to supply banks with cheap long-term funds, a bid to pump more money into the Japanese economy to encourage growth. As expected, the bank decided to keep its benchmark interest rate at a range of 0 percent to 0.1 percent.
The Bank of Japan’s governor, Masaaki Shirakawa, said that the easing measures would stay in place until Japan achieved an inflation level of at least 1 percent.
The measures come as Japan confronts economic data that suggest its fragile recovery is threatened. The economy grew at a healthy clip earlier this year, helped by the huge reconstruction effort that followed the 2011 earthquake and tsunami. But a slowdown in exports and industrial output, brought about by the global slowdown and a continued territorial spat with China, a major trading partner, is threatening to hobble that growth.
The dispute, which intensified in September, has led to boycotts of Japanese brands among Chinese consumers, forcing Japanese exporters to scale back their sales forecasts in an important market.
Meanwhile, Japanese industrial output fell by 4.1 percent in September from August, and by 8.1 percent from a year earlier, data released Tuesday showed. Exports have also shown signs of a slowdown, and price data show the economy remains mired in deflation, a damaging drop in prices, wages and profit that hampers economic activity.
Reflecting those risks, the central bank cut its own economic and price forecasts, saying it was unlikely to meet a goal of reaching 1 percent inflation by the fiscal year ending March 2014. That probably will not happen until the following year, the bank said.
“Japan’s economy is expected to level off more or less for the time being. Thereafter, however, as domestic demand remains resilient on the whole and overseas economies gradually emerge from the deceleration phase, the economy is expected to return to a moderate recovery path,” the bank said in its semiannual economic outlook, also released Tuesday.
And in a rare joint statement, the government and the Bank of Japan said they shared the goal of beating deflation. The central bank will “regularly” report its outlook on prices to the cabinet, while the government will introduce its own measures to fight deflation, the statement said.
Mr. Shirakawa said that for now, he saw increased risks for a marked slowdown in the global economy. The biggest change since the bank’s policy meeting in September, he said, was that “overseas economies seemed to be slowing down further.” That was “a big starting point” of the bank’s policy discussions, he said.
It is still unclear how far the bank will go to reverse Japan’s decade-long deflationary malaise, made worse by the country’s shrinking population. Central bankers have said that monetary policy is not enough to ease the economic problems and that the government needs to do more to facilitate growth.
Even as the central bank has flooded the economy with money, bank lending has hardly risen because companies do not feel confident enough in the weak economy to fund big investments.
The government has also thrown money at the economy, approving ¥422.6 billion in emergency spending just last week. But its ability to spend its way to economic growth is limited by a public debt burden already twice the size of its economy. Gridlock in Parliament is also blocking a bill that would allow the government to fund an almost ¥40 trillion deficit, threatening public services.
Markets were unimpressed with the central bank’s moves Tuesday, with the Nikkei 225-share index in Tokyo closing down nearly 1 percent shortly after the bank’s announcement, and the Hang Seng index in Hong Kong off 0.4 percent. The yen strengthened, hitting a one-week high of 79.25 to the dollar, bringing more pain to Japanese exporters.
“Monetary fireworks displays are not in Bank of Japan governor Shirakawa’s nature,” Nicholas Smith, Japan strategist at CLSA Asia-Pacific Markets, said in a note to clients after the bank’s decision. The bank will continue to face pressure from the government to step up its actions, and Mr. Shirakawa may be replaced when his current term ends in April, Mr. Smith said. “And if there is one thing that all major political parties can agree on, it is that the monetary future must be expansionary,” he said.

sources from : http://www.nytimes.com/2012/10/31/business/global/bank-of-japan-announces-fresh-economic-stimulus.html?_r=0

Thursday, October 30, 2014

STEPS TO ENHANCE LIFE INSURANCE

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Bank Negara Malaysia’s (BNM) release of its life insurance concept paper to promote a diversified delivery channel, such as online and walk-in has been seen as something new, but it has to be pointed out that two local insurance firms already offer life insurance products online. Hong Leong Assurance (HLA) launched hlatouch.my, an online insurance platform to buy life insurance. This was the first online life insurance portal in Malaysia allowing customers to read and understand the benefits of the plan. Besides, AXA Affin Life Insurance launched the AXA 100 Cancer Care project, in collaboration with the National Cancer Society Malaysia. This marks the first and only online portal in Malaysia that allows people to sign up for a plan aiming to provide support and care for critical illness patients, especially patients diagnosed with cancer.
Aimed at giving insurance and takaful operators greater operational flexibility, the concept paper proposes the removal of limits on agents’ commissions, which are currently regulated by Bank Negara. Industry experts commend this, saying that the move would propel the industry forward, as sophisticated products should come with higher commissions instead of standardised rates. While it is just a concept paper that hasn’t been finalised, Bank Negara aims to promote greater development and innovation in the industry by allowing players to have more flexibility in structuring and marketing their products. This will stir up competition, as each operator will be able to determine its own commission structure, depending on its business strategy and cost overheads.” The concept paper also suggests a change in the minimum allocation rate, whereby a percentage of the policyholder’s or takaful participant’s contribution is apportioned to his or her unit fund before charges are deducted for operating expenses.
According to the concept note, this is “for the benefit of empowering consumers who prefer to manage their insurance needs on their own, life insurers and family takaful operators must make available similar pure protection products via direct channel and are commission-free, before the limits on commission for these products can be removed”. So, is whether insurance or takaful operators will charge lower or higher agent commission rates if the limits are removed and a minimum allocation rate is implemented? This will depend on the insurance operators, as they will have the flexibility to structure the pricing in whatever way they want. “This means that if you pay [the operator] a premium of RM1,000 in your first year, they must give you back RM700 for your investment account. How they split the remaining RM300, between paying their agents and covering management expenses, is up to them. If they want to pay [agents] more, it will be at their expense, but at least the consumer’s portion is protected.

BNM had laid out several initiatives with the aim of achieving a higher insurance and takaful penetration rate of 75%, against 54% in 2012, based on the target set under the Economic Transformation Programme while also ensuring consumers continue to receive proper advice. In one of its initiatives for diversified distribution channels to widen outreach, BNM stated that this will enhance options available to consumers to access their life insurance and family takaful needs in a way most convenient to them and promote healthy competition in the market. An online product aggregator can serve as a convenient reference point for consumers. It would be run by a third party with a financial adviser’s licence, so consumers can compare and buy products online. This will help consumers make comparisons and a more informed decision. Buying from a bancassurance channel is also different, as they are a bank-backed panel that gets paid for distribution rights. Financial advisers aren’t tied to anyone. This will be a win-win situation for insurance or takaful operators and financial advisers, because operators won’t have to spend as much on their agency force any more. If the adviser doesn’t do a good job, consumers can complain and the financial adviser can have his licence suspended. Bank Negara has wanted to professionalise the agency channel for many years now, but that has been tough. At least with financial advisers, they are regulated by the central bank

Wednesday, October 29, 2014

Tax Planing and Retirement Funds

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Most people do not have sufficient funds at retirement but they should enjoy their golden years, spend quality time with their loved ones and live their dreams after working hard for all their life. Retirement ranks last when Malaysians are asked about investment, their savings of choice or purpose for saving. According to a survey conducted by TNS for Manulife Malaysia, bank savings rank the highest as the investment of choice among Malaysians (98%) followed closely by fixed deposits (10%) while the penetration for retirement investment or savings rank the lowest at 4%. This shows the inadequacy of the financial literacy among Malaysians. At the core of this is the Private Retirement Schemes (PRS) initiative, a range of investment funds intended to offer Malaysians the option of building up a private pension as a supplement to a state pension and the existing mandatory private pension scheme administered by the Employees Provident Fund (EPF).

Contributors to the Employees Provident Fund (EPF) earning a monthly wage of not exceeding RM5,000 will enjoy a boost in their retirement savings when the revised employers’ statutory contribution rate of 13 per cent takes effect from January 2012. The one per cent increase from the current 12 per cent benefits 5.3 million working Malaysians, comprising 92 per cent of EPF’s active members. However the employees’ contribution rate remains at 11 per cent. As for employees who are 55 years and above and earning wages not exceeding RM5,000, they will also benefit from the revised rate as their employers are now required to contribute at 6.5 per cent which is an additional 0.5 per cent from the current 6.0 per cent, while the employees continue to contribute at 5.5 per cent. While the EPF, being a public provident fund, is approved, not every private provident fund is approved. To gain approval, a scheme must comply with the rules set out by Inland Revenue Board (IRB), one of which relates to investment policy. Another rule stipulates that upon dissolution, the fund monies must be paid into the individual employee’s EPF account.  An added benefit of EPF contribution is that it qualifies for tax deduction by way of personal relief.  Dividends generated from EPF are also exempted from tax.
Establishing a pension source is one additional stream. How do you do this? Join an establishment organisation that provides a pension after retirement. In Malaysia, the government does not set aside a part of its tax revenue to pay its senior citizens a pension. Instead, each individual is expected to look after himself in retirement, either with his savings in the EPF, or on his own. PRS was brought to order upon recognising the need for a better pension system to address the EPF’s shortcomings, a government joint-agency task force comprising the Ministry of Finance, Bank Negara Malaysia, Securities Commission Malaysia and the Economic Planning Unit has been established to review the country’s pension system. According to the Economic Transformation Programme (ETP), Malaysia envisions having a model pension system and vibrant private pension industry. By 2020, we expect the private pension industry to grow to RM73 billion, with more than 2.7 million participants. Specific exemption is given to pensions as follows:
1.      Pensions payable under a written law or an approved scheme to a widow, widower or orphan;
2.      Pensions derived from Malaysia from a former employment in Malaysia. Conditions that must apply are:
·         Pension is payable under a written law (as in public service), or under an approved scheme; and
·         Pension is payable for ill health, or upon reaching the age of 55, or the compulsory age of retirement.

In the case of a foreigner who decides to take up residence in Malaysia, such as under the Malaysia, such as under the Malaysia My Second Home programme, any pension he receives from his home country is, prima facle, subject to tax in Malaysia. However, the foreign pension is not derived from Malaysia as it is not in respect of an employment exercised in Malaysia. As receiving a pension is often not a viable option, one has to “create” one’s own pension source. This takes us to deferred annuity.

A deferred annuity, is one in which the first payment is due only after a period longer than one payment interval. In fact, there is normally a spread of a few (or a lot) of years between the date of purchase and the time when the payment begins. The PRS is offered by Unit Trust Companies and governed by the Securities Commission of Malaysia, while the deferred annuity scheme is offered by Insurance Companies and governed by Bank Negara Malaysia. The unique feature of deferred annuity will provide a regular income after retirement as well as death benefits. Unlike in the UK, deferred annuities are not a common pension source in Malaysia. Going forward, we are likely to see more of these now that the authorities have been encouraging this approach. One such measure is a provision where premiums for deferred annuity are eligible for tax relief. The premium paid for a deferred annuity (issued by an insurer registered under the Financial Service Act) and for approved PRS are jointly allowed a maximum deduction of RM3,000 per year for resident individuals. This is separate and distinct from the RM6,000 for EPF and life insurance premium. One interesting point to note is that an individual may purchase a deferred annuity for his spouse, oarent or children (that is, he is the policyholder who pays the premiums, owns the policy and has the legal rights to the policy, while the annuitant is another individual), and he will still qualify for personal relief of up RM3,000 per year. For more details, refer to Example 9 of the Public Ruling 4 of 2014.

As for PRS, any withdrawal on or after age 55 will be tax-exemp, while any withdrawals from PRS account can be made before retirement age of 55 at 8% tax penalty to be paid to Inland Revenue Board of Malaysia. With the PRS, you are not committed to contribute a fixed sum of money to the fund annually, ie. which means that  you have greater flexibility in determining how much you want to contribute to the fund, if you are the type who are not overly concerned about the personal relief for tax purposes. However, if the early withdrawal is by reason of permanent total disablement, serious disease (such as AIDS, Parkinson’s, cancer or renal failure), mental disability, death or leaving the country permanently, the 8% withholding tax is not applied, that is, the amount withdrawn is tax-exempt. Upon a person’s death, monies in the PRS account will be subject to the usual estate distribution conditions, ie. the immediate family member will need to apply for a Grant of Probate of Letter of Administration to unlock the deceased’s estate for distribution to the beneficiaries, which will take some time to do so. In the case of the deferred annuity, as this is an insurance product, passing on the benefits of the policy to the next of kin is easily effected through a proper nomination and the proceeds are released with relative ease.


MMODE FUNDAMENTAL WRITE-UP

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MMODE BHD




BUSINESS BACKGROUND – SOURCE - http://klse.i3investor.com/

M-Mode Berhad (M-Mode) is a Malaysia-based investment holding company. Through its subsidiaries, M-Mode is engaged in the provision of mobile contents and data application services with platform connected to mobile network operators in Malaysia and China. As of December 31, 2009, M-Mode's subsidiaries were M-Mode Mobile Sdn. Bhd., Mobile Multimedia Sdn. Bhd., Dalian M-Mode Dreamfun Technology Ltd., Cede Communications Sdn. Bhd., M-Mode Media Sdn. Bhd., M-Mode Systems Sdn. Bhd. and Beijing M-Mode Digital Technology Co., Ltd. On June 4, 2009 and August 14, 2009, M-Mode acquired the remaining issued and paid-up capital of M-Mode Media Sdn. Bhd. and disposed its 50% equity interest in PT M-Mode Indo, respectively.

SUMMARY

MMODE share price taken a plunge since July 2014 and in my opinion it is a good time to go long on this counter.

Why do I think MMODE is a good time to buy now? Here are why.

MMODE has 2 primary driver in my opinion which are

1.      Transfer from ACE MARKET to MAIN MARKET
2.      Share buy back up to 10% of paid up capital i.e. 16m shares.

TRANSFER TO MAIN MARKET

MMODE had submitted the proposal to SC on 29th May 2014 and it is expected to be completed by 3rd quarter.

Normally listed companies are expected to report their quarter result within 2 months after their quarter ends. For e.g. if the quarter is 30th Sep 2014, most companies will report their quarter result in second half of Nov 2014.

MMODE reported their Quarter 3 result on 17th October 2014, which is more than 1 month earlier than previous years’ quarter 3 result reporting as well as prior quarters. This strongly suggest that the approval from SC to transfer to Main Market is imminent.

Since their Quarter 3 result came on17th October 2014, MMODE share price rebounded from its low 48 sen to current as high as 58.5 sen on 28th October 2014.
SHARE BUYBACK UP TO 10% OF PAID UP CAPITAL

Since 2012, MMODE had secure the mandate for share buyback.

This is not catalyst to share price appreciation, however it can at least give comfort and security that if the share price drops too low MMODE may execute share buyback to support the share price or to buy their share price at cheap price.

Do remember that MMODE is holding on to MYR41m in cash. What are they going to do with the cash? Share buyback or M&A?


INCOME STATEMENT ANALYSIS
·        MMODE revenue recorded a tremendous growth in FYE2011 from FYE2010 from below MYR30m to MYR60m-MYR75m, while its annual net profits hover around MYR11.7m –MYR13m since 2011.
·        MMODE’s FY2014 Q1 and Q2 results were within expectation chalking up MYR43m in revenue and MYR6.2m PAT.
·        However its Q3 result reported a dropped in revenue as well as PAT declined by nearly 50% compared to previous quarter. This had dragged down MMODE’s performance in FY2014.
ESTIMATED FYE 31st December 2014 NET INCOME

·        In FYE2014 MMODE is expected to record an increase in revenue by an estimated 12%, however MMODE PAT is likely decline to MYR10.6m (vs FY2013 PAT @ 11.7m).
·        To continue to grow modestly MMODE needs to maintain a gross profit margin above 30% and quarterly revenue above MYR20m.

BALANCE SHEET

ASSET STUCTURE ANALYSIS
·        Balance sheet as of 30th Sep 2014, grew modestly by 4% to MYR72.3m from MYR68.9m.
·        Key MMODE asset component are
o   Notably MMODE has a high cash reserves of MYR41.m which accounts for 57% of the total assets.
o   MYR10m in trade receivables, nearly MYR1.4m increase from 31st December 2013
o   MYR8.3m in PPE, with relatively small increase from 31st December 2013
o   Goodwill and development cost account for MYR9.9m

LIABILITIES STRUCTURE ANALYSIS
·        MMODE is light on liabilities with mere MYR5.9m total liabilities.
·        Majority of MMODE assets were funded by its shareholders funds.      
       
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Stock analysis and comments presented on klseelwavetrading.blogspot.com are solely for education purpose only. They do not represent the opinions of klseelwavetrading.blogspot.com on whether to buy, sell or hold shares of a particular stock.
Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert's stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation






Tuesday, October 28, 2014

MMODE(0059): Monthly, Weekly and Daily Trend are pointing to the North !!!

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I am Forex, future and commodity  trader and it is a must for me to look at the Monthly, Weekly, Daily, 4hrs and down to 5 min chart to look for the entry !!! It may not suitable for all the traders here, but it for me and I am in serious business.

Let we look at the big trend, which is monthly trend and we can see it is a triple ZigZagC ( WXYXZ), this pattern been defined as a sharp correction, in which 3 ZZ are connected by x wave, all the ZZ wave retrace not more than 61.8% of Wave A,B and C combined, It is an Uncommon corrective action pattern, it look very much like an impulse wave. Wave WXYX completed and Wave Z up is under development.


let we unfold another level of the time frame, which is weekly trend, that is couple of important point I would like to highlight it, which is support the trend going to up. there are
1.) Hammer decouple with long white solder to formed morning star, it indication of reversal up.
2.) Weekly support line been rejected on March 2014 and this two week reject as well, it showed strong support at RM 0.470.
3.) Weekly Stochastic cross over to indicate reversal up.
4.) Head and shoulder neck line support validate by recent bounce back up.
5.) Aggregate bullish divergent on MACD( don't worry and I don't expect many ppls know this), to indicate bull trend is ON


Daily Trend now ... don't worry and I promised will not get in to hourly chart. I look at it and feel even more excited. which Technical justify the price moving to north.
1.) 2 weeks consolidation done while DJI or KLSE correction up, it does not up, now it weak up like dragon to hunt for the food... ROAR ,,,,,
2.) Significant volume and price momentum was build.
3.)  White solder form and formed break away from 2 weeks consolation and resistance lines.
4.) MACD signal line cross over and Pareto turn from negative to position which is pointing to up.


My Trade Plan
Early SL : Close below RM 0.525
Late SL : Close below RM 0.470
Very Conservative TP :RM 0.650
1st TP : RM 0.70
2nd TP: 0.76
Med term : RM 1:00
Long Term : RM 1.12-2.00

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DISCLAIMER:


Stock analysis and comments presented on klseelwavetrading.blogspot.com are solely for education purpose only. They do not represent the opinions of klseelwavetrading.blogspot.com on whether to buy, sell or hold shares of a particular stock.
Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert's stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation


Monday, October 27, 2014

IJACOBS (0162): Correction completed and now reversal up was confirm !


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Weekly trend was very clear and we can see this counter is in extension wave 3, what is extension wave 3 ? This pattern has been define as a TREND pattern in which wave 3 is extended, it is most probable trend pattern to occur as of now.
We can see very often wave 1 length in prices and time is equal to wave 5 if 3rd wave was extended( you can see the magenta color wave degree).
The recent downtrend most likely is ended with the abc correction, which is supported 
1.) Hidden divergent, which is indicated the wave 4 up and uptrend continuous will happen.
2.) Candle stick show hammer and doji+ green candle( last 4 candle), which is morning star, it is a strong indication to tell reversal signature.
3.) Wave 3 volume higher than wave 1, most likely wave 5 is under development right after correction wave ended


Let we zoom down to daily chart, we can see another 3 key points to support this counter will go up .
1.) Bullish divergent was form which is indicate RM 0.38 is bottom.
2) Consolidate 2 weeks and today form a white solder candler and break away from the resistance line 0.415.
3.) MACD signal line cross over and Pareto change form negative to positive, which is indicate the bull trend was just started.

My trade plan
I will buy on open market
Early  SL: 0.415
Late SL : 0.380
Conservative Target 0.520
1st Target : 0.640
2nd Target 0.920

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DISCLAIMER:


Stock analysis and comments presented on klseelwavetrading.blogspot.com are solely for education purpose only. They do not represent the opinions of klseelwavetrading.blogspot.com on whether to buy, sell or hold shares of a particular stock.
Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert's stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation

PENNY STOCK VS BLUE CHIPS

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Penny stocks have come under the spotlight again. Active trading, especially among the penny stocks, saw the 10 most-active stocks on Bursa accounting for about half the traded volume of shares. The selldown in selected penny stocks spooked sentiment, as the number of losers outpaced gainers at a ratio of three-to-one, but that did not deter the buying of blue chips. The FTSE Bursa Malaysia KL Composite Index closed up 6.73 points to 1,878.89 20 August 2014. Week-on-week, the blue-chip benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) added 6.68 points, or 0.36 per cent, to 1,870.99, with gains on CIMB Bhd (+20 sen), Tenaga Nasional Bhd (+18 sen), Public Bank (+18 sen), Sapura-Kencana Petroleum (+12 sen) and UMW Holdings (+58 sen) representing most of the index’s rise.
Penny stocks and blue chips are basically opposites, but there is no guarantee that either one is a great investment at a given time. Investors must always be careful when buying any kind of stock. Investors sometimes have the misconception that penny stocks are cheap and therefore will eventually have upside potential. A low share price does not actually mean that a stock is cheap. Only by researching a company's earnings reports is it possible to determine whether a stock's current price over- or under-valued.
Penny stocks usually refers to shares that cost less than RM1 apiece. Penny stocks often belong to newer companies with little operating history and tend to be small-cap or even mini-cap stocks. They are usually indicated with an .OB or OTC (over-the-counter) after the stock symbol, which means that their shares are not traded on the major exchanges. The price movements of penny stocks are usually driven by news of corporate action, contract wins, new business ventures or entry of prominent shareholders or management. To attract investors, they need to spin a credible story of impending corporate action which is done through all known of media (newspaper, word of mouth, social media, etc.). Penny stocks can be difficult to trade because of low liquidity and volume issues, but they can still attract investment capital from certain types of investors. Penny stocks are a very risky investment and there is no guarantee against bankruptcy, but they represent an interesting opportunity to speculators who benefit from the incredibly low share price and the potential for enormous upside. If the penny stock rises to 20 sen from 10 sen, traders make a 50% gain. The prospect of putting a small amount down for large upside potential tends to make people miscalculate or even ignore the risks involved. On the other hand, there are penny stocks that have extremely low trading volume, or are highly illiquid. Existing investors will find it difficult to sell their shares, especially when the price is on a downtrend.
Blue chips, like in poker and other card games, are the most expensive chips. Blue chip stocks are the most valuable stocks on KLSE and are usually from companies that are household names, such as and tend to be large or mid-cap stocks. Blue chips have a long operating history, steady earnings, and a good reputation. They also have high liquidity, or the ability to trade large amounts of a stock without any problems. Blue chips are considered safe bets, especially if the market is falling. However, some blue chips do not always perform well. Blue chips are able to attract institutional funds, thus most are covered by research houses and are often reported in the media. The trading price of blue chips seldom surges, unless there are corporate developments. Blue chips are less attractive to retail investors since the trading prices may reflect the value of the companies. Although blue chips are less risky than penny stocks, their trading prices will also be negatively affected during a financial crisis. However, blue chips stocks are the fastest to recover after the crisis. As for penny stocks, it will take longer for the prices to rebound.
The strategy of picking penny stocks is completely different from choosing blue chips. Buying penny stocks can be a form of diversification for investing portfolios, due to their relative affordability. Investors can own a portfolio comprising penny stocks from different sectors. Retailers usually have a smaller amount of funds to invest. With the same amount of money, they can buy more units of penny stocks than blue chips. For a retail investor or trader, finding the right penny stocks means they have to do their homework, since it is hard to find analytical data and research on these stocks, as they are widely covered by research houses. The lack of interest from institutional investors and foreign funds is the reason why penny stocks are not well covered or not covered at all by analysts. Penny stocks seldom pay regularly. Some penny stocks may not have the attention at the early stage, which enable its share price to rise. Meanwhile, avoid “hot stocks” with large trading volumes and no fundamentals to justify their trading price. It can be risky to invest in these stocks as they usually do not stay hot. Investors who can stomach the risk should still limit this to a small amount in their portfolio. For those inclined and are fully aware of the risks, they should set aside no more than 10% to 15% of their portfolio for such a venture.
The same practice is needed when investing in blue chips. A five-year horizon as investors cannot expect quick gains from blue chips. Blue chips are generally less risky than penny stocks as the share price is supported by fundamentals. Investors have to keep abreast of what is happening in the company and conduct research on the company, and look into its shareholders’ funds, debts, net tangible assets, cash flow and other financial information. A stock can be trading at 90 sen a share and be considered cheap. This is because for that one share, the shareholder is entitled to a fraction of the building, a portion of the cash in the company’s bank account and some of the inventories in storage, which are worth. It is important to make sure the company has a legitimate, viable and sustainable business. The longer its track record in running its business, the better it is for the investors. One should make sure one is not overpaying for the company’s business. The cheaper the investors can get these companies relative to the assets they own of the fair value of their business, which also means the greater value of the shares held.  People should be wary of companies with a lot of debt. When the share price is trading at a significant premium to its net assets, and to what the business should be fairly valued at, then it is high time to get out.


Reach energy breakout from 2 weeks consolidation

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It form a correction wave ABC right after the IPO released, the bottom of the price was formed and  demonstrated 2 weeks long consolidation( 2 days public holiday), finally it was break away on last Friday with a long white candle.
This trading set up is very difference compare to the past I did, which is Breakout trade vs Retracement. As you can see the rectangle box I drew out is representing a consolidation, the big white candle is break away from 0.615-0.620 resistance, which is confirm reversal up.


Now the resistance become support and I will buy when it close to the new support which is 0.625-0.630
My trade plan
I buy now 0.625- 0.630
1st TP : 0.695 - 0.715
2nd TP: 0.755 - 0.765
SL candles close below 0.595


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Sunday, October 26, 2014

SLOW TAKE-OFF FOR RETAIL BONDS

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The maiden RM300 million sukuk from DanaInfra Nasional Bhd to partially fund the Klang Valley’s mass rapid transit (MRT) kicked-start retail trading of bonds on Bursa Malaysia and would also likely attract the issuance of private debt securities like conventional bonds and Malaysian Government Securities (MGS) made available to the public. The expected issuance is necessary to promote Bursa Malaysia as a market for retail sukuk, he said. DanaInfra is so far the only institution to have issued sukuk on the bourse's Exchange Traded Bonds and Sukuk (ETBS) platform. ETBS offers an opportunity for retail investors to diversify, although its new nature means it is often evaluated in the same way a stock would be, said Jamaluddin. "They are going back to typical equity-type thinking, chasing yields." The government, in the budget last year, announced incentives for companies issuing bonds and sukuk. These include offering companies a double tax deduction for a period of four years for additional expenses incurred in such issuances.
However, there is a "negative perception" that ETBS bonds are more costly than raising funds on the OTC bond market and equity market. There was speculation that the first issue was undersubscribed because the offer period was extended by a week. The announcement that the indicative profit rate would be at 3.7% has seemingly left investor cold. Retail bonds, unlike shares, have a shelf life indicated in their tenure. For the RM300 million sukuk, it is 10 years. The problem with this type of investors’ trading inclination is that it would run contrary to bond’s long-term investment horizon. Moreover, such trading patterns could also likely cause some price distortion between the retail bond market and the over the counter (OTC) market, where investments are done solely by institutional and some high net worth individuals that starts with a minimum investment of RM5 million while retail bonds are at RM1,000. As for transaction cost, an industry participant said that the cost for the OTC market is way lower compared to the retail bonds, likely due to the large transaction amount in the over the counter (OTC) market. The OTC market per transaction cost could be as low at 0.01% compared to a cost of 0.33% in retail bonds. Another concern is investors’ awareness on retail bonds and whether they are comfortable with such asset class. The likelihood of investors who are not knowledgeable on retail bonds would be on the downside. They would likely be ill-prepared for such investments.
Retail bonds are debt instruments while equities are businesses that can make or lose money. Sukuk pay a fixed profit rate and in the case of conventional bonds pay coupon rates. In short, bonds and shares are two totally different asset classes. As such, they have different investments horizon and objectives. It needs to be understood that the positive correlation of risk and reward is clearly reflected in the pricing of these instruments, as the yields are established during the book-building of the over-the-counter (OTC) market. The existing ETBS listings of DanaInfra offer returns superior to fixed deposits with financial institutions, higher than sovereign yields but very low credit default risk as they are guaranteed by the government. DanaInfra's second sukuk, priced based on OTC rates, was oversubscribed 2.19 times. Bursa Malaysia is now courting several financial institutions and government-related agencies to be issuers on ETBS.
DanaInfra is in the process of issuing its third sukuk. The seven-year RM100 million sukuk will carry a coupon rate of 4.23%. The offering, which opened on July 21, was due to close on Aug 15 and be listed on Aug 27. The investment offers pre-determined returns in the form of coupons that are paid out twice a year. Investors need a minimum of RM1,000, which is equivalent to 10 units, to start investing at the initial public offering stage. While there is no fee at point of subscription, the transaction cost on the secondary market is 0.33% of the trade value. According to DanaInfra’s prospectus, the ETBS offered to retail investors have the same characteristics as the bonds/ sukuk distributed to institutional investors. The difference lies in the distribution platform for primary issuance as well as the secondary trading. The ETBS is exchange-based while traditional bonds/ sukuk have to be traded OTC among institutional investors. The other difference is the lot size per transaction. The ETBS is transacted in lots of RM1,000, while the institutional investors transact in lots of RM5 million. The institutional investors might offer their holdings to retail investors via exchange while banks act as intermediaries by breaking the lots and distributed in retail lots.


Saturday, October 25, 2014

HIGHER INTEREST RATE IN ASIA

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Bank Negara, the central bank, is likely to take similar, though less drastic, action by raising interest rates on July 10 for the first time in more than three years, to curb strong domestic demand that has ratcheted up debt levels and inflation. The global economy continues to expand at a moderate pace. In the advanced economies, while growth performance has been uneven, a number of key economies have continued to show broader signs of improvement. In Asia, growth is supported by the continued expansion in domestic demand and the improved external environment. In this environment, the international financial markets have remained relatively stable.

Malaysia, Singapore and Thailand all have debt-to-GDP ratios above 70%. Malaysia's ratio stands at 86.8%, up from 60.4% in 2008, and the second highest in Asia after South Korea's 91.1%. Malaysia’s $303 billion (RM964 billion) economy grew at an average 6% in recent years due in large part to a growing government and household credit bubble and its public debt-to-Gross Domestic Product (GDP) ratio has been hovering at all-time highs of over 50% since 2010, thanks to large fiscal deficits incurred when an aggressive stimulus package was launched to bolster the country’s economy during the Global Financial Crisis. After Sri Lanka, Malaysia now has the second highest public debt-to-GDP ratio among 13 emerging Asian countries according to a Bloomberg study. Rising interest rates typically incur an inflow of foreign funds and currency strengthening. Short-term fund flows in Malaysia though, according to AllianceDBS Research chief economist Manokaran Mottain, are negative.

A number of banks raise their base lending rates (BLR) and base financing rates (BFR) in tandem with Bank Negara’s announcement to raise the overnight policy rate (OPR) by 25 basis points (bps) from 3% to 3.25% effective from 16 July 2014 to 18 July 2014. JP Morgan Research noted that it was cautious on banks, as the combination of rate hikes and subsidy rationalisation would test the credit risk management of Malaysia’s consumer-led loan growth in the past five years. For now, the ringgit will remain volatile, or rally to higher levels. The trading range could be moving [to between] 3.18 and 3.22 [against the US dollar]. If there will be an easing, it may stabilize around 3.20 to 3.25. Strengthening US dollar could weaken the ringgit, due to the rapid improvements in the US’ macro picture. The rate hike may be delayed as the authorities may wish to assess the impact of several measures and developments in the economy [such as stricter lending standards, higher inflation and pre-GST consumer reaction] on consumer spending.


What’s interesting is US rate hike cycles don’t normally lead to equity market weakness in equity markets, but it really takes US interest rates to go above a neutral rate, meaning more focused on inflation than growth [before it shows weakness]. From that perspective, the US stock market should continue to do well. We still believe in a global bull market, although we may see a hiccup within a three-to-sic-month window. For Malaysia market, consumer stocks is underweighted due to the impending GST. The first quarter of 2015 should be fantastic for the consumer sector next year, while the second quarter is expected to be weak. Overall though, Malaysian market is affirmative for the next 12 months. A barbell approach is being taken to the market. Interest rates are still low globally and also in Malaysia, although it is starting to go up a little higher. Utilities and telcos wouldn’t be badly hit by any reduction in consumer spending. Sectors that are leveraged to the capital investment side, like the Economic Transformation Programme (ETP) and infrastructure [-related stocks] is preferred.  For banks, people should sit on the sidelines first to see how that works out because of the uncertainty due to the [CIMB-RHB-MBSB] merger talks. As for bonds, Standard Chartered Bank is overweight on emerging market, high-yield government bonds due to their attractive absolute yields of just under 7% and attractive values relative to developing market, high-yield bonds.

Friday, October 24, 2014

PROTECTING YOUR PERSONAL DATA


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Over the past decade, with the rapid development of technological advances and in the area of Information and Communication Technology, vast amounts of personal information are being transmitted, collected, stored and used daily. This in turn opens up an opportunity for processing and also mis-processing of personal data resulting in mounting pressure for data protection law to be enacted around the world. Recently, there has been considerable hype in the Asia-Pacific region in relation to privacy regulations. Malaysia has quietly gazetted its Personal Data Protection Act 2010 (PDPA), effective immediately, and given businesses three months to ensure compliance. Even though the Personal Data Protection Act 2010 has come into force, but the public will have to do their part to make it effective. The rising menace of debt collectors is caused by the lackadaisical attitude of Bank Negara, which show that the creditors could reveal private data of a customer to a third party despite Malaysia having enacted the Personal Data Protection Act 2010.
Data has become an integral part of life in today's world, and thanks to the advent of digital technology, collecting, editing, sharing and transferring data have never been easier. Personal data, which includes identity card numbers, addresses and bank account details, is now the most valuable commodity as well as the most dangerous weapon. The enforcement of the personal data protection law is thus not only timely, but also necessary, to protect the safety and privacy of consumers who have been left too long at the scruples of companies and organisations when it comes to their personal data. After all, can you remember the last time your day has not been interrupted by unsolicited phone calls, text or e-mail messages offering a product or service that you must have or event that you cannot miss?
Data users don’t need consent from subjects for the performance of a contract, such as the details you provide a bank when opening an account, as most of them will be used to perform the contract with the consumer. But if the bank uses the personal data for marketing or other ancillary things, they have to specify in the notice to give consumer transparency. Another circumstance in which data users are allowed to bypass the Act’s general principle is if they have an obligation under another law. This means that the PDPA becomes secondary when there is another Act that overrides it. However, the Act entrusts a degree of responsibility on the data user, as seen in its Security Principle and Data Integrity Principle. The former requires a data user to protect the personal data from any loss, misuse, or unauthorised access or disclosure, while the latter states that it is the responsibility of the data user to ensure the personal data they have is accurate, complete and up to date.
it is important for consumers to know their rights as stipulated in the Act: “right to access, right to correct data, right to prevent damage or distress, right to withdraw from data processing, right to prevent direct marketing, and very critically right to bring complaint on data abuses to PDP Commissioners. The right of access to personal data and right to correct their personal data allows data subjects to make a request to check and verify their information. Any personal data deemed inaccurate can be corrected or struck off the record. To exercise both rights, the consumer will need to make a request in writing to the data user, to which the company or organisation will have to comply within 21 days.
Another important data-subject right provided by the Act is the right to withdraw consent. This provision drives in the message that when a consumer gives consent for their personal data to be processed, it is not forever. When consent is withdrawn, the data user will have to stop processing the personal data. Failure to do so is an offence that carries a fine of up to RM100,000 or a maximum one-year jail, or both.
Taking heed of the public's distress over the rampant unsolicited telemarketing messages, the enforcement of the PDPA will give them the right to ask telemarketers to stop their communications (SMS, e-mail, calls, etc), even if prior consent has been obtained. Failure to comply will cost the direct marketing companies a maximum of RM200,000 fine or jail term up to two years, or both.

Consumers should quickly identify people or companies who have been using their personal data without their knowledge, their consent or otherwise in contrary with the original purpose that they consented to initially. But no worries, we will not risk our members’ personal details by disclosing the data to anyone, it is safe to register as our member!