Buying in dips - AirAsia Genting Singapore Kossan Scomi KNM

Today's dips could be a chance to buy-and-accumulate before more funds are released and the imminent QE2 money coming into Malaysia and Singapore markets. Both these markets attained 20% gains this year compared to over 40% for Thailand and Indonesia. Therefore it is safe to suggest foreign funds will have a higher likelihood to invest in equities in Malaysia and Singapore.

Some choice picks:
Singapore - Genting Singapore (casino and integrated resort), China Oilfield, China Aviation Oil, (start to accumulate oil and gas related stocks), Golden Agri (palm oil), Ezra (oil and gas), SATS, SMRT (just given out dividend and prices pressed down).
Malaysia - AirAsia (low cost carrier), Kossan, Hartalega, Supermax (rubber industry, rubber gloves), Scomi, KNM (industrial engineering) both below 50 sens.

What does breaking all time high suggests in SGX and Bursa?

Is breaking all time high in the index of Singapore and Malaysia a positive or a negative? A braking sign?

When does breaking constitutes and overly bought situation signalling a wrong valuation or wrong exuberance?

Mostly, whatever prices were before the 2008 GFC (Global Financial Crisis) has been attained. "Back to normal". So what is normal, and what does the future hold? The uncertainly of currencies especially USD may bring in more funds, meaning a bigger flow of money into equities and thus stock prices will generally increase. And those with strong fundamentals, will benefit.

US QE2 will not actually help their own economy simply because of that reason. The money released will flow out to better paying investments abroad. The investment could be merely currency. For instance, exchanging USD into Australian or New Zealand Dollars, and then parking there seeking term interests of over 5-6% minimum. And investing in commodities that are in demand - rubber, Malaysia or rubber equities will benefit. Palm oil. Minerals - Gold, Iron Ore, Australia will benefit.

The money released will not go much into the US economy. Simply because it is not consumption and what US is seeking is consumption by local (domestic) and thus trying to boost Gross Domestic Product value will not be achieved. These funds are managed and channelled in unit trust, trust funds, private banking investments - which are all based on very technical risk calculation models, by highly paid and highly intelligent financial analysts that have graduated from Harvard Business School and other top institutions - meaning they will seek out the best chance and best possible return. And not for the best of the nation as one might hope for. Eventually a higher return for the investor (US investor) is doing something best for the nation ironically - it is not going to be giving back or creating jobs in the US economy.

The natural or obvious solution thus is not shown from where the money is heading. Remember how the US dollar went up when the economy was choked by the housing foreclosure crisis? Which was caused by greed in "investing" in property priced out of one's means of paying. If you are not supposed to be eating dinner at a 5 star restaurant, then you are not supposed to because it cost you a week's salary. Yes, you may have that week's salary in your hands. And yes logically you can pay for a $300 dinner meal in the 5 star restaurant. But you should realise you cannot "afford" it. The end.

US system of trying to create jobs this way is actually going against what they have been trying to achieve for the last 50 years. Trying to go back into heavy industry, or making thousands of menial low paying jobs will not materialise. You cannot copy a cheap economy after you have attained a high paying economy. And because of rights and democracy and liberty, the working class unions will not be wanting to see a lower paying situation. That's also the problem with the media. Creating jobs is not just - here you have a task to perform in this car factory. Done. It is more than that.

The disparity between the illusion of attaining wealth and having a job is quite a dangerous way that the media has cooked up in mostly free-open market economy citizen's mind.

These two questions to connect the dots:
1) Have you travelled to a country (or if you never travelled abroad to another province or town) that will give you twice or even 5 times the value of your current cash? Meaning where $10 dollar can buy you a meal. Now $10 dollar can buy you 4 meals?

2) When you read jobs are being created in Asia, China, India, will you willingly swap your current job with a same folk there? Example you are a post-office clerk in Sweden. And many times I have met from travelling, the First World person will comment that it is so cheap in Asia. But you know it is expensive in Europe. So I suggested, ok why not you swap jobs and life with a similar person with similar job. Swap a post office job in Sweden with a post office job in Thailand.

That person will not be willing to accept this after considering many other things. Like health benefits. School. Medical. The power of the Swedish krone. At best, working in Thailand in the post office, he could perhaps have a holiday twice a year in the nearby beach or waterfall. While he knows the same Swedish job he has, can afford him a 5000 mile holiday at a 4 star resort in THAILANDE every year!

Australian Stocks Listed in SGX

Seeing the ASX-SGX merger being the talk of the two cities, here are some interesting facts. Currently, there are only 7 Australian companies listed in SGX:



1) AUSTRALAND PROPERTY GROUP
- Australand is one of Australia’s major diversified property groups, with activities across Australia covering development of residential land, housing and apartments, development of and investment in income producing commercial and industrial properties, and property management.
Australand was listed on Australian and Singapore Stock Exchanges in June 1997 and was formed into a stapled group in November 2003 with the stapling of units in Australand Property Trust to the ordinary shares in Australand Holdings Limited. In October 2005, Australand Property Trust No.4 and Australand Property Trust No.5 were merged with Australand. As a result of this merger, Australand has four listed entities (namely Australand Holdings Limited, Australand Property Trust, Australand Property Trust No.4 and Australand Property Trust No.5) whose securities are stapled together and trade on the Australian Stock Exchange and Singapore Stock Exchange as the one stapled security.

Australand has been involved in property development for approximately 80 years and Australand has progressively widened the scope of its activities to satisfy the needs of an ever changing and more sophisticated client base.

Australand has three operating divisions being Residential, Commercial and Industrial and Investment Property. It employs approximately 640 people with operations in Sydney, Melbourne, South East Queensland and Perth and a sales office in Hong Kong servicing the Asian market. Australand now has development assets of $1.7 billion and owns 49 income producing properties with an aggregate value of approximately $1.3 billion.

As at February 2006, Australand has approximately 12,700 security holders and a market capitalisation of approximately $1.8 billion. Its major security holder is the Singapore based property group, CapitaLand Limited, which owns approximately 53 percent of the issued capital.

2) AUTRON CORPORATION LIMITED

The Company is a listed public company limited by shares, which was incorporated under the Corporations Law of the Commonwealth of Australia on 10 January 1985 as Pacific Communications Holdings Limited. On 11 June 1998, the Company changed its name to Australasian Technology Corporation Limited and to its present name on 5 July 2000. The Company’s shares were listed on the ASX on 30 January 1986 and subsequently dual listed and traded on the SGX-ST on 3 May 2001.

The principal activities of the consolidated entity are as follows:-
- Assembly and manufacturing of printed circuit boards and electronics accessories;
- Design and manufacturing of industrial machinery and robotic and automated systems; and
- Investment in the potential of good commercially viable assets.


3) AVJENNINGS LIMITED
-In 1995, the Long Homes Ltd acquired AVJennings Hldgs Ltd and changed to its present name. It is a low-rise residential developer targeting second and subsequent home purchasers. The company is listed on the Melbourne and Singapore stock exchanges.

4) GLOBAL MASTERS FUND
-EBB-AFG Global Masters Fund is an Australian domiciled unit Trust. Its issued by EBB-AFG Capital Management Limited, a company registered in Hong Kong on 9 January 2007 as trustee of the Fund is a joint venture company between EBB and AFG and. The Units will not be tradable on the SGX-ST upon the listing of the Units on the SGX-ST.

The investment objective of the Fund is the generation of strong, risk-adjusted, absolute investment returns over the medium to long term and in all market conditions.
The investment strategy of the Fund is to initially obtain exposure to a Portfolio of international Absolute Return Funds managed by some of the world’s leading absolute return investment managers. This fund of funds approach enables the construction of a portfolio diversified by investment strategy, investment manager and geography.

5) MACARTHURCOOK PROP SEC FUND
- MacarthurCook Property Securities Fund is a diversified, listed property fund that invests in a range of listed property trusts, unlisted property trusts and listed property-related companies registered in Australia. It was listed on the Australian Stock Exchange since 17 December 2004, established with the aim of providing investors with a diversified property-based investment offering a stable level of income with the opportunity for long term capital growth.

The Fund is managed by MacarthurCook Fund Management Limited, a subsidiary of MacarthurCook Limited, a specialist international real estate investment manager.

As at 30 June 2006, the Fund had investments in over 46 funds managed by more than 27 specialist real estate investment managers with more than 1,200 underlying properties under management across office, retail and industrial sectors as well as “non-traditional” sectors like healthcare and childcare. Properties owned by the funds in which the Fund invests are located in Australia, the United States, Europe and New Zealand.

6) SP AUSNET
-SP AusNet is a stapled group comprising SP Australia Networks (Transmission) Ltd, SP Australia Networks (Distribution) Ltd and SP Australia Networks (Finance) Trust or SP Australia Networks (RE) Ltd (the Responsible Entity).

SP AusNet's business consists of an electricity transmission business and electricity and gas distribution businesses. These networks are all located in the state of Victoria where they provide for the supply of energy from producers to consumers. SP AusNet is 1 of 5 providers of electricity distribution services and 1 of 3 providers of gas distribution services.

7) UNITED OVERSEAS AUSTRALIA LTD
- The Company was incorporated in Australia on 17 June 1987 a public company under the name of United Overseas Securities Ltd. Listed on the “Second Board” of the Australian Securities Exchange Limited (ASX) since February 1988. The name of the Company was subsequently changed to United Overseas Australia Ltd on 12 December 1990. It successfully transferred its listing from the “Second Board” to the Main Board of the ASX in 1992.

United Overseas Australia Limited is a property developer and property investment company based predominantly in Kuala Lumpur and focuses on middle to high-end residential and commercial property development and investments in Kuala Lumpur.

The Group believes that its established track record in developing high quality residential and commercial property developments in prime locations within Kuala Lumpur have helped the Group builds brand loyalty in the “UOA” name. Its residential property developments are typically highvalue, multi-phased projects with a focus on the quality of workmanship, interior design and integrated landscaping to create an upmarket, desirable living environment aimed at attracting middle to high
income purchasers. Its residential property projects include fully-fitted villas and apartments. Its commercial property developments comprise mainly office buildings with retail space, for sale and lease. The Group is also co-operate and collaborate closely with Dats Management, which provides building management services for the projects its developed.

The Company’s business can be categorised into four principal activities:
(a) Property Development;
(b) Construction;
(c) Property Investments; and
(d) Building Management (carried out in close co-operation and collaboration with a company known as “Dats Management Sdn. Bhd.”).

Significance of ASX and SGX merger better faster investment options

The buzz surrounding the merger of ASX with SGX is on the news daily in Australia. Every TV news update will have touch-base with this scenario. And about the sovereignty of Australia, a sensitive issue in this patriotic nation. Seeing foreigners buying properties and buying stocks and now buying up their stock exchange. But is it that bad or merely a notion of ill informed citizens?

The case in point is a merger. Not a buyout. The case is a cooperation of resources and size. Not one swallowing up the other. Therefore the outcry is not suppose to resonate much in the longer run.

Now let us look at the significance of this deal. Possibly Singapore investors or those using SGX will be able to access Australian stocks in real time. Currently if your stock brokerage firm is allowing DMA (Direct Market Access) there is a delay time of 15 minutes on stock prices. Not real time. And thus vital changes and price sensitivity advantage is clouded in that delayed relay of pricing. 

Lower fees. Perhaps a lower fees to buy and no more custodian fees on the foreign Australian stock.

I find the whole deal a positive move for investors and for market liquidity as a whole. There is better access to the precious metal and mining companies based in Australia. Remember one of my articles highlighted there are over 200 Mining and Oil stocks in the ASX. And picking up these gems will be easier. Those who are unfamiliar with commodities trading can now buy into the shares of these commodities producers and miners. A better direct investment rather than by proxy. BHP Billiton, Rio Tinto, Orocobre will be easily accessible to investors. There are over 20 Gold companies in ASX alone. Investors have the option now to invest in gold mining companies rather than just Gold.

Comments and suggestions welcome. 

SGX and ASX merger

In Australia, there is a big buzz surrounding a possible merger between SGX and ASX (Australia Stock Exchange). Trading was halted. It is a friendly deal and would create the world's 5th largest exchange. Local investors welcome the offer and ASX price closed 18% higher.

But some events never get halted in Australia, horse racing event Cox Plate still went on. And So You Think has won again. This top winning runner is owned by Dato Tan Chin Nam.

Being the Middleman Bursa and SGX wins at every roll of the dice

That friendly property agent who sold you your dream house last year is again smiling today after selling a strategic condominium to your brother. Your house was transacted at $250 000, and the condominium at $250 000 too. The agent's so-called industry-accepted fee: a cool 2% of those transactions. Today you sold your house for $400 000, and our friendly agent is here to pocket another 2%.

The more you sell or buy, the more the middleman will profit. If you are inactive, and have not sold nor bought any properties, then our middleman gets zilch.

Now back to trading and making in the stock market and looking at Malaysia. Bursa Malaysia is the middleman. If you buy shares, you have to pay them a Clearing Fee of 0.03% on the total value transacted. Two lots of AirAsia at $2.00 will be $2.00 x 2000 x 0.03% = $1.20. Doesn't seem too much?! It is a numbers game just like how a profit of 5 sen for a kilogram of flour is to the trader.

Take a quick reminder peek at FTSE Bursa Malaysia KL Composite Index for the past 5 years. During the economic crisis, the volume of shares transacted traded increased, due to panic, due to greed, due to interest, due to expectations, due to many more factors that ultimately means Bursa Malaysia profits. The more transactions are made, the more of that $1.20 is being made. The red bars on the bottom are the volume traded. And obviously the more panic or euphoria, the higher the bar goes. Looking slightly back from December of 2006 until January 2008, the market was picking up exponential momentum. Oil prices were sky rocketing.

The stocks that will not close-shop (See my Trading Rules Number 1), are the ones you can rest in peace knowing you can buy them they will never fail you. And middleman stocks like SGX and BURSA, are gems that have keep going upwards, be in the rolling good times, or the terrible downturns. They make, and they MAKE - money!