KLCI Post budget week overview – Range bound to lower

After our own studies on the budget 2013, we think it is a pretty much election budget. We would say it is not a bad budget but neither it is a good one. Most measures for businesses are pro longed release pill except MRT project.

For Oil & Gas and Financial sectors incentives. We believe we can get a bit of return but the whole world not Malaysia alone is doing it. I do believe Oil & Gas we do have some strength.

Overall, i would suggest a KLCI range bound bias to lower to Friday close in the coming week. Again, we continue our defensive strategy in investing asset oriented businesses or agriculture or Oil & Gas as mentioned before.

We tip KLCI at 1625-1650 range bound but bias to lower challenging 1600.

Budget 2013 – Where is the Vitamins B+ for technology?

In fact, after many years. We may not still have a lot of good technology companies both in IT and bio technology. But we should continue together with improving system to monitor the money spend. So it goes to the right target. How about environment? Again cleaning the river what about enforcement rules that punish those not responsible in our rivers? Otherwise you got to clean it again and again.

First impression of Budget 2013 of Malaysia – I will give 5/10

Helping the poors, doing more on education and most important healthcare is always i believe is the no 1 thing to be solved in Malaysia. But if i were to suggest. I believe most important is always to create a system that responsible before pouring money into it. So far, we have been always using money to hope for solving problem but always forgot that you need a good culture and system for a complete revamp.

Another example is like building mid cost house from RM 100,000 to RM 400,000. In fact, if we look at Singapore, Hong Kong and Shanghai. All these systems does not work and Hong Kong property prices are back to or above pre 1997 crisis level.

My example will be –

1st A cheaper interest rate for housing between RM 100,000 to RM 500,00. (1st home only at may be even 1%)
2nd Increase property gain tax for people who own more then 3 properties to 20% within 5 years.
3rd Increase stamp duty on property value above RM 1 Mil to subsidies to lower interest rate of point 1.
4th Financing for 4th property purchase only have max 50% margin financing.
5th Extra 1% stamp duty more for property value above RM 1 Mil if purchase with cash

Reasons are simple, may be i am wrong of above but main objective is how to assist in affordability at the same time do not hurt property developer that bring GDP contribution, government incomes and even a little from the rich that sure will profit due to their wealthy position.

Lets not worry about the bank as they will always trying every angle to achieve a min 10% loan grow. Dont believe me? Just ask yourself how many calls you got last 6 months that bank wants to offer you cash as personal loan? A situation long never seen since 1997 but back recent years.

Overall, i give it a pass but not outstanding.  Retail will gain some strength due to the government bonuses. Personal income tax of savings up to RM 400 plus is nothing for today increasing cost of living.

We sold Scomi again at RM 0.350

Price reverted to upward against overall market and i believe a restructuring announcement is on its way. We will keep the last 20% holding upon any announcement. If no news in short term we will dispose all.

We continue to view KLCI trending down below 1,600 at near term

From company results to macro economy plus local politics. We are suggesting a downward bias trading of KLCI. Of course, compare to years back. Our market now is a little more mature that some good stocks are KLCI downward prove. But we still think if you were to enter and buy into the market. Always give a lower tick as we think you can get a little bargain in coming weeks.

Until budget time!!! But if our bullets are tight now as we need to balance our book also. I dont see any too good news even if there are good news, many will think the budget spending again harmful for long term. Now is how creative is the new budget that can create spark again.

Mean time until budget announcement, we continue suggest defensive investment strategy towards asset oriented companies.

Is Asto IPO worth to apply? Even it is a joke but need not think twice

Why i will say it is a joke. Because years back when a GO offered to entity that own Astro. It was highly undervalued before the GO announcement. After the restructuring, now Astro purely Astro with a smaller entity. Relisting easily command a PE of more than 10 times. So if you ask me, does it worth well to apply. My answer is “Need not think twice”. Because people behind it are so good in turning more money to even more. I bet they are many people benefit in this kind of exercise. But who care, thats Capitalism world even i dont really agree. Another typical example of the rich get richer. Just think of the so called institutional investors. Look at IHH that some even exist in the first few days of trading. It is a joke, but need not think twice.

IBL Fund Update – Teledata.SG

Closing to 11 Months since inception. Our price of first purchased and after right issues are averaged around SGD 0.007. With the price of SGD 0.011, we have an estimated of 57% for 11 months. We missed an opportunity to sell off and buy back before right issues. However, we are still confident that we should leave only if we have more than comfortable return. Since the company is continue recovering and one of the largest share holder is also DBS Group. (How they got it we dont know)

We bought some IGBREITs at RM 1.370 but we are reluctant

Many analyst covered the stock and recommended it worths RM 1.450. To us, we believe the future value should not be factored in so soon. We also do not think it is fair to compare the value of SunREIT and Pavillion REIT. As we believe it is all over price with a yield below 5%. May be interest really too low everywhere that 5% becomes attractive to someone. But for REITs, if you look into choices that you can have from Malaysia to Singapore and Hong Kong. I will like it in my portfolio but immediate target of RM 1.45 is a bit expensive. We will only buy a little more if it is between RM 1.30 – RM 1.35.

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