Friday, April 16, 2010
Tips From Gurus Of Stock Market
Here is some useful tips to be share among us as a guidance in trading on the share market. I felt it is something what we forgot or ignored. As market is now so challanging, we need more initiative to educate ourself about market outlooks and prospects. So share this with me. This too. Also this one.
Wednesday, November 18, 2009
Can A New Relisting Maxis Be Like An Old Delisted Maxis....Tomorrow (19 Nov 2009) Is The Day...
After disappear from Bursa for an about nearly 2 years, Maxis is comeback again. Many investors are eager to possess at least a lot of Maxis share in their portfolios. What are people saying about this on the market? Here is a comment. Many fund and individual are also showing great interest on it as per this report. While one of a research house has pegged a fair value of RM for Maxis . Before this many disappointed about the allocation of the Maxis IPO as reported here. One is saying that the existing rival is worth to buy. So tomorrow (19 Nov 2009) will answer it. Check the Best Buy/Sell column on the Bursa Malaysia from 8.30am till trading start at 9.00am.They will reflect the opening price of Maxis Berhad and The Stock Short Name, Stock Code and ISIN Code of MAXIS is "MAXIS", "6012" and "MYL6012OO008" respectively. The listing of and quotation for these shares on the Main Market under the "Trading Services" sector will be granted with effect from 9.00 a.m., Thursday, 19 November 2009, on a "Ready" basis pursuant to the Rules of Bursa Malaysia Securities Berhad. So Good Luck to those succesfully subscribe the Maxis IPO recently.
Thursday, November 12, 2009
Dismay over small share allocation
PETALING JAYA: Maxis Bhd’s huge shares offering was lapped up by investors hungry for quality local stock, but some investment funds and their clients were dismayed by the “small” portion of initial public offering (IPO) shares allocated to them.
Industry sources said some local funds received less than 5% of the amount they had bid for, despite many putting in bids at strike prices (meaning that they were willing to take the shares at any given price) or at the top end of the indicative price range.
Maxis on Tuesday said the institutional offering – excluding shares reserved for cornerstone investors and bumiputera investors approved by the International Trade and Industries Ministry (Miti) – was 3.7 times oversubscribed.
That translated to a demand worth RM19.3bil from local and foreign fund managers for shares valued at RM5.3bil offered by Maxis at RM5 each. The 1.06 billion shares allocated under the institutional portion was distributed almost in equal part between local and foreign fund managers.
Meanwhile, the retail portion of 212.3 million IPO shares was oversubscribed by 1.8 times.
In total, Maxis attracted bids worth RM26.5bil for its IPO of 2.25 billion shares.
Maxis’ share sale raised RM11.2bil, which makes it the biggest IPO in South-East Asia to date.
James Lau, senior director-equities of Kenanga Investment Bank Bhd, shares his clients’ disappointment at receiving only a small allocation of Maxis stock.
“Even though the small allocation to funds bodes well for the post-listing market of Maxis shares, we had hoped for more shares,” he said, adding that in the bigger picture, with Maxis shares being offered as an “entree” to attract first-time foreign investors here, the small allocation to local funds may be a justified trade-off.
Lau said, however, that he hoped for more transparency in the allocation process “so that investors can better understand the situation and don’t feel overly disappointed by the small allocation.”
Maxis said the book-building exercise attracted “significant” foreign interest, including from 10 new institutional funds, as well as sovereign wealth funds.
“They (the promoters) could have done more roadshows to explain the whole deal to a wider group of investors,” said Rusli Abu Yamin, chief investment officer (CIO) at ASM Investment Services.
“That would have reduced a lot of confusion on how the IPO was structured and priced,” he added.
ASM Investment Services is a wholly-owned unit of Amanah Saham Mara Bhd, which gets its portion of Maxis shares via reserved units for Miti-approved bumiputra investors.
ASM put in a bid of RM5.50, but as the final price was reduced to RM5 a piece for institutional investors, the difference would be refunded to ASM within 10 days.
Rusli said the excess fund could be parked in money markets, and the issuing house should consider sharing part of the interest earned during that 10-day period with investors.
“Some funds get less than what they had applied for and given the size of the bids, the amount could be substantial,” he said.
OSK-UOB Investment Unit Trust Management Bhd CIO Jason Chong said he was “happy” with the amount of Maxis shares allocated to the fund.
“The IPO was priced at the lower end, which is good for us as this translates to higher upside potential,” he said.
Industry sources said some local funds received less than 5% of the amount they had bid for, despite many putting in bids at strike prices (meaning that they were willing to take the shares at any given price) or at the top end of the indicative price range.
Maxis on Tuesday said the institutional offering – excluding shares reserved for cornerstone investors and bumiputera investors approved by the International Trade and Industries Ministry (Miti) – was 3.7 times oversubscribed.
That translated to a demand worth RM19.3bil from local and foreign fund managers for shares valued at RM5.3bil offered by Maxis at RM5 each. The 1.06 billion shares allocated under the institutional portion was distributed almost in equal part between local and foreign fund managers.
Meanwhile, the retail portion of 212.3 million IPO shares was oversubscribed by 1.8 times.
In total, Maxis attracted bids worth RM26.5bil for its IPO of 2.25 billion shares.
Maxis’ share sale raised RM11.2bil, which makes it the biggest IPO in South-East Asia to date.
James Lau, senior director-equities of Kenanga Investment Bank Bhd, shares his clients’ disappointment at receiving only a small allocation of Maxis stock.
“Even though the small allocation to funds bodes well for the post-listing market of Maxis shares, we had hoped for more shares,” he said, adding that in the bigger picture, with Maxis shares being offered as an “entree” to attract first-time foreign investors here, the small allocation to local funds may be a justified trade-off.
Lau said, however, that he hoped for more transparency in the allocation process “so that investors can better understand the situation and don’t feel overly disappointed by the small allocation.”
Maxis said the book-building exercise attracted “significant” foreign interest, including from 10 new institutional funds, as well as sovereign wealth funds.
“They (the promoters) could have done more roadshows to explain the whole deal to a wider group of investors,” said Rusli Abu Yamin, chief investment officer (CIO) at ASM Investment Services.
“That would have reduced a lot of confusion on how the IPO was structured and priced,” he added.
ASM Investment Services is a wholly-owned unit of Amanah Saham Mara Bhd, which gets its portion of Maxis shares via reserved units for Miti-approved bumiputra investors.
ASM put in a bid of RM5.50, but as the final price was reduced to RM5 a piece for institutional investors, the difference would be refunded to ASM within 10 days.
Rusli said the excess fund could be parked in money markets, and the issuing house should consider sharing part of the interest earned during that 10-day period with investors.
“Some funds get less than what they had applied for and given the size of the bids, the amount could be substantial,” he said.
OSK-UOB Investment Unit Trust Management Bhd CIO Jason Chong said he was “happy” with the amount of Maxis shares allocated to the fund.
“The IPO was priced at the lower end, which is good for us as this translates to higher upside potential,” he said.
xtracted from : The Star By RISEN JAYASEELAN and IZWAN IDRIS
Wednesday, October 21, 2009
How to detect some early financial warnings in companies Or how to smell a rat
TRADING volume on the stock market has recently been getting higher again. Some retail investors, who were absent from the recent rally, have started to get excited.
Over the past few months, investors were mainly focusing on good quality stocks, selling at a cheap level. However, attention has started to switch to poor quality stocks lately. Even though sometimes investors may be able to make money by betting on those stocks, we still need to be careful about the fundamentals of the companies. In this article, we will look at how to detect some early financial warnings.
A lot of companies like to make corporate announcements during the bull market. We agree that some of the announcements were genuine, but many corporate proposals were simply too good to be true.
If we analyse further, we will notice that the proposals might be way beyond the capabilities of the companies. Sometimes, the management’s projections of sales and profits were far beyond the past history. The capital expenditure requirements were well above the companies’ borrowing capacities.
Besides, the time required to turn the projects into profits might be too long. Nevertheless, as a result of the announcements, the stock prices would surge and normally, the main sellers behind might be the key owners.
We have also seen some proposals that turned out to be profitable. The companies did make profits in the first few years. However, the high growth in expansion stretched the capabilities of the top management, who might not have the experience and ability to run big businesses. They might have the experience to manage RM100mil turnover businesses. However, when the turnover surged beyond RM1bil per year, they might have problems. In fact, the main concerns to the companies were the top management team which lacked skills and experience to run big businesses.
We need to be careful if there are any changes to the key managers of the companies, auditors or accounting firms. The key managers are referred to the positions like chief executive officers and financial controllers. Besides, frequent changes in auditors provide serious financial warnings, especially the change from a reputable audit firm to an unknown one.
How to smell a rat or how to detect some early financial warnings in companiesCompanies will soon start to report their financial results for the period ended Sept 30. In Malaysia, often good companies will try to announce their results before the deadline of Nov 30. However, if they are having difficulties in providing their financial statements, normally, we will expect some bad news to be announced. One of the possible explanations behind the delay is that the companies need more time to rectify certain financial problems.
Another potential sign of financial warning is when the companies venture into unrelated businesses. Previously, we saw many Bursa Malaysia second board companies going into financial distress in 1997/98 when they departed from their core businesses in manufacturing and ventured into property development activities.
We need to understand that when the company owners enter into areas that are not their core competencies, they might not be able to apply the knowledge and experiences accumulated previously. Instead, they would have to go through the entire learning curve again, which would result in the management taking a lot of time in managing those unrelated businesses.
In such situations, investors will need to pay attention and analyse whether those new ventures will be able to add value to the shareholders’ wealth. Some companies like to change their names after venturing into new businesses. Too frequent name changes may also imply that the companies have been shifting their core business focus and directions, which may not be good news to the shareholders.
Litigation is also another warning sign. We need to pay attention to companies that are involved in litigations, which may be either attributed to the companies being sued or they are suing someone else. These litigations may divert the management’s attention from day-to-day business operations. As a result, they may affect the companies’ performance as well.
One of the common questions asked by shareholders during any AGM is the directors’ fees. We need to analyse whether the fees paid are in proportion to the companies’ profitability. Sometimes, certain companies make excessive perks for owners as well as their employees or the lifestyle of the key owners is simply not consistent with the companies’ profitability.
The above are a few of the more common financial warnings that potential or existing shareholders must pay attention to when analysing the companies for investment. More importantly, we need to remain vigilant at all times and pay attention to the latest development of the companies.
by Ooi Kok Wah
Wednesday, August 26, 2009
Should I go against the market?
AS the stock market continues to move higher, a lot of investors are wondering when it will come down again. Those who have been involved in futures trading may be tempted to short the KL Composite Index (KLCI) futures contracts.
Unfortunately, each time they start shorting the index, the market surges even higher and touches a new high. As a result, they are forced to cover their short positions as the market turns against them. In this article, we will look at how to apply contrarian strategies in the present market conditions.
Contrarian strategy 1: only correct when the market turns around
Investors need to be careful when using contrarian strategies. These strategies are only effective when the market starts to turn around, otherwise, investors will end up being wrong.
Contrarian investors feel that most people in the market tend to get carried away by the market sentiment, so if they keep calm, they will have a better position by taking actions that are the opposite of what others are doing. They believe that they can make big money by betting against popular investment trends.
In the current stock market situation, even though the average daily-trading volume is about one billion shares, we notice that there are not many retail investors. The market is mainly filled with some big fund managers or day traders. Some investors who managed to catch stocks at cheaper prices may have been selling most of their holdings lately.
Unfortunately, the market continues to trade higher than previous selling prices. In such situation, the worst mistake for some retail investors is to abandon their contrarian strategies and start buying back the shares that they disposed off earlier at even higher prices.
Normally, when everyone starts to think that the stock market will continue to go up, that is the signal of an impending market crash. Hence, investors need to be patient to wait for the right prices before buying back those stocks.
There is also the danger that some investors may start accumulating their stocks too early. We believe that “the panic may be over, but not the crisis”. Even though there are signs that the overall economy may be on its way to recovery, we think it will take some time before we can see the real recovery of the stock market.
We need to understand that once the fund managers feel that the stock prices are far above the fundamental of the stocks, they may stop accumulating stocks.
As a result, due to a lack of demand, the market may start dipping lower again with dwindling trading volumes. It may take a long time before the market turns higher again.
We saw this phenomenon in 2000-2001 when the market dipped slowly with very thin volume for a 15-month period, with the KLCI tumbling from about 1,000-level in February 2000 to 550-level in May 2001, a total decline of about 45%.
Investors need to take note that unless they have deep pockets to average down their purchase prices over a long period, they may run out of funds before the market reaches the bottom.
One way to avoid accumulating stocks too early is by adopting the filter rule strategy proposed by Alexander (1961). He proposed that we should only buy stocks when the market touches the lowest point and starts recovering for k% from its low and sell stocks when the market discovers the peak and starts falling for k% from its high.
This strategy may reduce the feeling of regret from selling stocks too early. Given that we may never know when the market touches its peak, it may be a good strategy to let the market find the top and only start selling when the market confirms the declining trends.
Contrarian Strategy 2: Buying neglected firms
Recently, as the result of the merger between main and second board companies into the Main Market, we notice that some second board companies, which have good fundamentals but previously lacked analysts’ coverage, are starting to get the attention of investors.
We believe these companies may provide good buying opportunities for investors who have missed out on the opportunities of accumulating blue chip stocks at cheap prices. Some academic studies have shown that the returns from buying neglected firms, over a long-term period, may be better than investing in “popular” companies.
Unfortunately, each time they start shorting the index, the market surges even higher and touches a new high. As a result, they are forced to cover their short positions as the market turns against them. In this article, we will look at how to apply contrarian strategies in the present market conditions.
Contrarian strategy 1: only correct when the market turns around
Investors need to be careful when using contrarian strategies. These strategies are only effective when the market starts to turn around, otherwise, investors will end up being wrong.
Contrarian investors feel that most people in the market tend to get carried away by the market sentiment, so if they keep calm, they will have a better position by taking actions that are the opposite of what others are doing. They believe that they can make big money by betting against popular investment trends.
In the current stock market situation, even though the average daily-trading volume is about one billion shares, we notice that there are not many retail investors. The market is mainly filled with some big fund managers or day traders. Some investors who managed to catch stocks at cheaper prices may have been selling most of their holdings lately.
Unfortunately, the market continues to trade higher than previous selling prices. In such situation, the worst mistake for some retail investors is to abandon their contrarian strategies and start buying back the shares that they disposed off earlier at even higher prices.
Normally, when everyone starts to think that the stock market will continue to go up, that is the signal of an impending market crash. Hence, investors need to be patient to wait for the right prices before buying back those stocks.
There is also the danger that some investors may start accumulating their stocks too early. We believe that “the panic may be over, but not the crisis”. Even though there are signs that the overall economy may be on its way to recovery, we think it will take some time before we can see the real recovery of the stock market.
We need to understand that once the fund managers feel that the stock prices are far above the fundamental of the stocks, they may stop accumulating stocks.
As a result, due to a lack of demand, the market may start dipping lower again with dwindling trading volumes. It may take a long time before the market turns higher again.
We saw this phenomenon in 2000-2001 when the market dipped slowly with very thin volume for a 15-month period, with the KLCI tumbling from about 1,000-level in February 2000 to 550-level in May 2001, a total decline of about 45%.
Investors need to take note that unless they have deep pockets to average down their purchase prices over a long period, they may run out of funds before the market reaches the bottom.
One way to avoid accumulating stocks too early is by adopting the filter rule strategy proposed by Alexander (1961). He proposed that we should only buy stocks when the market touches the lowest point and starts recovering for k% from its low and sell stocks when the market discovers the peak and starts falling for k% from its high.
This strategy may reduce the feeling of regret from selling stocks too early. Given that we may never know when the market touches its peak, it may be a good strategy to let the market find the top and only start selling when the market confirms the declining trends.
Contrarian Strategy 2: Buying neglected firms
Recently, as the result of the merger between main and second board companies into the Main Market, we notice that some second board companies, which have good fundamentals but previously lacked analysts’ coverage, are starting to get the attention of investors.
We believe these companies may provide good buying opportunities for investors who have missed out on the opportunities of accumulating blue chip stocks at cheap prices. Some academic studies have shown that the returns from buying neglected firms, over a long-term period, may be better than investing in “popular” companies.
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