Saturday, January 01, 2005

Positive market outlook for 2005

Positive market outlook for 2005

based on the article above, i dont really understand where they are coming from, even though ever sentences make sense. But the thing I notice about these interviewee were:
1. They are knowlegable enough.
2. Everything is based on researched facts and assumed experience.
3. There is no conclusion. Everything questions are answered with information which close no door. In one instance, star panel commented on CIMB representative for being imbalanced in terms of its prediction for KLCI and its suggestion for a bullish market. He reiterated by saying:

"Okay, that is a pure, fundamental target based on EPS (earnings per share) growth and on PE valuation. As we know, the market can over-shoot the valuations. The momentum can drive it higher." This is just an opened answer.

1. Weakening US Dollar - many financial system cannot withstand sudden drop in US Dollar. (I think becoz calculations are based on USD)
2.Terrorist attack.
3. China - its economy is slowing down.

One thing that i learned is that the big players are expected to be foreign fund managers. The fund managers rely on investment banker for money is thus is affected by high interest rate.

The one conclusion they gave was that KLCI will hit 1000 benchmark for the first quarter of 2005. and drop again in the second quarter because of rising interest rate.

One thing about these people (fund managers), they seem to have a lot of information.. and i hate reading it because no conclusion one.. unless they tell you buy this one sell that one.. wait ... they are great lecturers and story tellers. Maybe they know too much and just don't know where to start. For this kind of people, we need to give them specific questions, not "what do you think of the outlook of 2005?"

Bullish + china + interest rates + liquidity + US dollar + GDP + momentum + risks = answer.

if there is any stock that has the word "china"; chinadoll, chinalens,chinaTat, the demand will increase.


Brandon Teoh said...


in the sun Financial daily (4 Jan 2004).
Jimmy Yeow says that:
KLCI will hit 1010 by mid year due to:

1. Interest in buying banking, utilities and GLC(government-linked company) stocks. Mean demand increases. He think so because of sustainable GDP of 6% in 2005, which is slightly lower than the 7% GDP forecast for 2004. This simply implies that it is due psychology factor; the government say GDP for 2005 is 7% and then in mid year they announced to be 6%, so people feel good and celebrate by buying stock.

Another reason for them to come to this conclusion is that because "the government's focus on boosting market liquidity by reducing its stakes in GLCs and also possibility of revaluation of ringgit."
2. Ringgit Peg will go in 2005 (first half) and thus encourages capital inflows. The stronger the currency the better, because expected more inflow of portfolio investment.
3. on going GLC reforms.
4. Chinese new year rally. --> When people feel like spending money. Expected to push KLCI to 950-960 market development fund-bursa research scheme whihc would cover small-capitalized stock company (200 of them)
6. REITs, Second tier banks and listing of Bursa Malaysia (increasing liquidity).
7. Poultry farmers - lower soy meal prices, rising demand (due to tsunami) and improvement on margin.

In other words, they are predicting from liquidity prospect.

Brandon Teoh said...

KLCI hits 4-half year high with closing of 930.63 on Wednesday (12-Jan-05).. according to analyst, it is due to active trading on banking and telecommunications stocks from foreign investor. KLCI was the top performer of the region.

The biggest gainer were about the top who would have tremendous impact on the KLCI.
1. Malayan Banking
2. Maxis
3. Genting
4. Public bank.

Maxis which has over 5.44 millino subscribers, closed at a record high of RM9.95. According to analyst, it was driven by the fact that Maxis is bidding its tender amongst 13 other parties, for 55% stake in Turkish's Turk Telecom.

Secondary reason was due to stock-played catch-up with Telekom Malaysia and Digi by foreign investor, with both the later has risen sharply last month. This is like what the chinese said; 抄股票 by the stake owner (stock owner).

Brandon Teoh said...

I actually am a dummy here... thus consulted my friend Rick Teoh who is expert in this field. According to him, the theory of P/E is that :

1. Based on yearly.
2. if the counter has P/E of 10 times. It means 10 years. The application is that if the price is RM2.00, then with P/E of 10 times, it has 2.00/10 growth per year. In other words, you need 10 years to earn back the capital.