JP Morgan – Dimon Shared our same view. Market is adjusting itself.

Dimon shared his view that the market merely adjusting itself. There are more good news in US than bad news. Oil price down trend overdone and may adjust itself in months to come. I think both Jim Roger and Dimon believe the oil is now too low. But the downward momentum pushing oil price further. No one knows what is the floor price. Until then we are not changing our view perhaps need another 6 months for a recovery.

We believe Oil price is oversold and RM is also underestimated against an usual strong dollar. The world crisis may come with either debt level burst or natural disaster. But there are still tools in the market to point for a better sentiment. But we believe the momentum now will need more time. February OPEC urgent meeting on oil can be a strong pointer.

We revised our Call warrant strategy

We started to cut losses on certain call warranty as we think the recovery time will be later of the year.  Most of the call warranty we are holding was funded by our early December 15 profit also on call warrant.

To protect our capital we are selectively selling off.  Probably the only call warrant that we are facing issue is CIMB-C7.  As one of its major share holder continuous reduce its holding.  We may need to wait for Feb 16 OPEC urgent meeting for an opportunity to cut loss.

We sold FBM-KLCI C4 and Maybank-C11 today at both 0.05 and 0.035. We used the fund from selling switched to OSK-WC at 0.285.

Oil lowered largely speculative activities

Like we mentioned before that a large sum of speculative funds are always dictating a trend of movement in the financial market.  Gold was the highlight years back where speculators driven the price to irrational records high.  Probably 20 to 30% higher than its reasonable price.

When oil is pressured and professional speculators are in the market to increase the momentum.  The power of these speculators are enormous that overwhelm OPEC.

Oil and China triggered bear momentum

We are not sure it is the right time to short now.  But oil below USD 30 per barrel and China stock market plunged created huge momentum. 

Together with political uncertainties arises. A storm already in shape.  The next catalyst will be OPEC meeting in February.  If still fail to agree on production control. We will revise our target of 6 to 12 months recovery.

We like CIMB, RHBCAP and Affin

All three banks stock price plunged due to bad sentiment and lower profit in 2015.  However, this is a good starting point to invest downward to get a good average.  All three banks do have good fundamental and reasonable dividend yield.  If you are a lower risk appetite investor. This is probably one of the brilliant chance in recent years.  We issue a persistent buy Call.

World economy to reshape

We will see a lot of closure of businesses. However there may be new entities arises in the market.  After the commodities boom ended.  We think the world economy is going to reshape.

Oil – when will be the bottom?

My forecast of the floor is USD 35. But it is going to test USD 30. Even though USD 30 is even not able to justify the investment.  USD 70 is the cost of a new production.

Anything goes up too high will come down. Anything plunged too low will rebound.  On the other hand, low energy price also spur growth.  High energy price will lead to industry growth that spur grow as well.  Energy is definitely an element of growth.

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