October 31, 2006

Daily Commentaries 1st Nov 06

Buying into selected heavyweights helped to lift the market by 2.23 points yesterday while regional stocks ended mostly higher. Topping the corporate news today is Pos Malaysia’s plans for a cash distribution of RM1.50/share, which is higher than expectations. The new water tariff for KL, which takes effect today may spur trading interest in Puncak Niaga. Meanwhile, MISC has confirmed its order for four Aframax tankers while PLUS confirmed that it did not make any offer in relation to Silk Highway. Bursa Malaysia posted a strong set of results and announced a 28sen special dividend. We my see further efforts to break the 990 resistance level, supported by several positive newsflow. This includes (i) Perwaja Steel's debt arrears of another RM200m to TNB would be settled over the next 12 months; (ii) the government’s assurance that it has sufficient funds to finance development projects; (iii) SC’s move to allow for structured warrants on foreign shares; and (iv) North Korea’s agreement to return to nuclear-disarmament talks. On the downside, the poor performance by the Dow overnight due to worries on consumer confidence and the manufacturing sector could put a brake on the local market. Our initial support is at the 984 pts level followed by the 980 pts level and the 970 pts level.


Vitrox is valued at RM1.80.

OSK Ventures

OSK Ventures is now valued at RM4.42 by Kenanga Research.

Quote Of The Day

Opportunity is missed by most people because it is dressed in overalls and looks like work.

Thomas Edison

October 30, 2006

Daily Commentaries 31st Oct 06

As expected, profit-taking did set-in with heavyweights such as Maybank, Telekom and Tenaga fervently sold-down. Weaker GDP data from the US were partly to blame with regional markets reacting in unison. Volume hit a meteoric 1.03bn shares, above the daily average of 856m last week, reflecting the short-term sentiment risk. Sugar Bun became the latest victim of Bursa’s heightened vigilance on speculative activities despite announcing a fund raising exercise in the form of a special share issue and renounceable warrants. A Malakoff consortium secured a contract for the construction of a seawater desalination plant costing RM881m. Meanwhile, MTD Capital and IOI Properties have denied rumors of the companies being taken private by major shareholders. Results-wise, Star reported 3Q06 numbers that came in broadly in line with expectations while Redtone disappointed. Given the mixed newsflow today and the weaker close on the Dow last night, the KLCI looks more likely to rangebound within the immediate support and resistance thresholds of 980 and 990.

October 29, 2006

Daily Commentaries 30th Oct 06

Friday's torrid performance sets the stage for a stronger upside with more window- dressing activities anticipated over the next few weeks. Despite the holiday-shortened trading week, notable newsflows did hit the market on Friday with Pos Malaysia, on the request of Khazanah, suspended the trading of its shares ahead of a capital repayment exercise and internal restructuring. Sugar Bun appears to have also jumped on to the oil and gas bandwagon with the acquisition of an O&G outfit in Thailand that could result in the re-alignment of its long-term business direction although it denied rumours of a RM300m Petronas contract. Aside from that, OYL is a step closer to a de-listing with Daikin having already secured 96% of its shares under the takeover offer. Malakoff makes business headlines this morning with the intention to bid for a power project in Pakistan worth US$300m (RM1.1bn) while Bank Pertanian is getting a boost in the form of a RM1bn injection from the government to transform into a full-fledged agriculture commercial bank. In terms of results, Nexnews and Pensonic fared better in the quarter just ended. With investors returning from their long break today coupled with the spillover positive sentiment from the previous week- underscored by fresh catalysts, the market faces a real test in the interim to close the gap with the psychological 1,000 mark. We do not discount the return of profit-taking activities to digest gains made over the last 2 trading sessions although we think the impact should be well absorbed. Immediate support and resistance are seen at 980 and 990 respectively. The Dow's rally in recent sessions is expected to be sustained by the strong 3Q earnings season while oil prices should be kept firm at above the US$60 per barrel.

October 27, 2006

Carefree and Profitable

Even though there is great interest in the markets these days, and more opportunities than usual, it's vital to approach trading with the proper mindset. You can't try to do too much, too fast. Successful traders approach trading with a carefree, focused attitude and putting added stress on yourself interferes with attaining this peak performance mental edge. When you are in the proper mindset, you execute trades effortlessly. You concentrate on your ongoing experience. You don't second-guess your decisions and you are not overly influenced by their emotions. But even when things are not going well, you may find yourself thrown off base. You can no longer trade effortlessly. You feel stuck. When you feel stuck and unable to move forward, it's vital to get motivated and go forward. Here's a view key thinking strategies to help you get moving again.

It's important to always look at the big picture. Don't get stuck focusing on a single trade. It's also important to limit your risk. When you focus on one trade as if it is a major event, and if you risk too much on a single trade, you will feel overwhelmed. And when you feel overwhelmed, you are prone to experience stress and choke. It's more useful to minimize the significance of a single trade, both emotionally and financially. It helps to limit your risk by placing relatively small trades (about 2%, for example). There are financial and psychological benefits for limiting risks. A hard reality of trading is that there are few foolproof trading strategies. Even the most reliable strategy is bound to fail eventually. The trouble is that you don't know when a strategy will fail or when it will not beforehand. Your best defense against the sporadic changes in market conditions is to limit your risk on a single trade. Think in terms of the big picture. Your ultimate goal is to achieve profitability across a series of trades. The outcome of a single trade is relatively insignificant. All that matters is the overall outcome. Limiting your risk on a single trade ensures that should you encounter a string of losing trades, you can survive and avoid completely blowing out your account.

When you are feeling stuck, it's also important to think positively and take it easy on yourself. Pessimistic beliefs can be a trader's worst enemy. Many times one may think "I can't be wrong on this trade" or "I must capitalize on every opportunity to make a profit," or even worse, "I must make a ton of money to get caught up and get ahead." These expectations are so high that they can cause uneasiness. When you hold such high expectations for your performance, you place too much pressure on yourself, and cannot maintain a carefree attitude.

It's better to trade in a relaxed and carefree manner. It may be difficult to completely view a trade as a leisurely activity (unless you are so wealthy that it really is just for fun), but there is a lot that you can do to make it fun and carefree. You can limit risk so that you know that you can handle a worst-case scenario. When you know that you can't possibly lose too much, you will feel at ease. In addition, don't put your self-esteem on the line with your money. It's just a trade. Don't seek out glory. Just enjoy the intellectual challenge of trading. You win some; you lose some. Take losses in stride. If you take it easy, you will feel free and creative. That is, when you try too hard, you are bound to crack under the pressure. But when you let the markets take you where they want you to go, ironically, you'll feel carefree and trade more profitably. So don't put unnecessary pressure on yourself. Slow down, enjoy what you are doing, and when you feel carefree, the profits will come your way. Try it. It's commonsense advice but it really works.

October 26, 2006

Daily Commentaries 27th Oct 06

Although the market did march ahead as expected, volume was not reflective of the festive season with total volume exceeding 800m shares. Plantation stocks led the rally yesterday on the back of a rebound in crude oil price that led to hopes for future biodiesel demand. For today, newsflow is thin with some notable items including Indonesia seeking bids for over 10 major infrastructure projects worth RM16.5bn and the SC adding 33 companies to the Syariah compliant list. Makro is likely to be sold to 1 of 3 shortlisted bidders including possibly Wal-Mart, Tesco and Dairy Farm. According to unconfirmed sources, MTD Capital may be taken private to make it a holding company for other listed players such as ACPI. Genting exits from London Clubs International to focus on Stanley Leisure while the SC has rejected Nasioncom’s appeal on its private placement. Despite US markets climbing again overnight, the slight dip in oil prices may put pressure on plantation counters that rallied yesterday. As such, we expect rangebound trading today with the KLCI likely to stay between the 980 and 984 pts support and resistance levels respectively.

Quote Of The Day

Winning is habit. Unfortunately, so is losing.

Vince Lombardi

October 25, 2006

Daily Commentaries 26th Oct 06

Market volume last Friday was still reasonable although as expected gains were capped due to the festivities this week. With only 2 trading days this week, we expect the volume to be lacklustre. Last Friday, companies that reported results included Digi with good growth numbers and BAT with earnings that were flat. A surprise announcement was Sime Darby selling off its associate stake in Singapore’s Jaya Holdings at SGD1.35 per share. Other news includes Landmarks calling off its REITs exercise, Ranhill issuing RM808m of debts and M3nergy buying a 26.5% stake in a gas power plant project in Thailand. Cahya Mata Sarawak is also rumoured to be in a leading position to win a potential multi-billion dollar contract to develop an industrial park in Brunei. With the US market continuing to hit record highs after the US Fed maintained its interest rates and good corporate earnings announcements, the feel good factor may trickle down to the KLCI. Oil rose back above US$61 per barrel as US inventories were down and Opec proceeded with its production cuts. Despite thin volumes expected, the overseas news may bolster the KLCI towards the 984 pts resistance level.

October 19, 2006

Daily Commentaries 20th Oct 06

As expected, the market rebounded slightly taking the cue from US markets although the upside was capped by profit taking ahead of the Deepavali and Hari Raya celebrations. For today, JVs are in the news with Sime Darby, Guthrie, Golden Hope and PNB entering into a JV to venture into the Cattle-rearing business, Berjaya Corp having acquired 12.5% of recent IPO StemLife, IGB entering into a JV with IJM Properties to develop land in Gombak with a sales value of RM300m, ILB entering into a JV to provide logistics services in the Middle East and MESB announcing a JV to construct telco towers and structures in Penang. Cancellation of previous agreements also seems to be the flavour of the day with Tebrau Teguh cancelling its development agreement with Aset Nusantara Development for the development of 530 acres in Johor and AIC terminating a MOU with Daewoo International for the manufacturing of wire harnesses for the auto industry. Aside from these, Sumatec is ordering 2 tankers from China for RM43.9m while JAKS is seeking an injunction against PUAS, SYABAS and the Government of Selangor for breach of contract in relation to the supply of water pipes and LCL proposed a private placement, bonus issue and transfer to Main board. YTL Power also announced a 1-for-25 treasury shares distribution, Sime Darby is planning a REIT and TRC Synergy secured a RM125m contract for the Dang Wangi Police HQ. Despite the slew of corporate news and the Dow breaking the 12,000 pts level, we feel that investors may stay away ahead of the festivities and expect rangebound trading. Oil was above US$59 per barrel on news that Opec would cut 1.2m bpd of production. Resistance is now at 984 pts while support remains at 970 pts.

Trading With Discipline

Disciplined trading is vital for lasting success. Profitable trading requires a combination of skill and odds. The winning trader implements proven trading strategies over and over, so that across a series of trades, the law of averages works in his or her favor. Unless you make trades, you have no chance of winning. It's just like in sports. Unless you step up to the plate, you cannot hit a home run. The more times you try, the more likely you will succeed. An important part of discipline is consistency. When a trader uses one approach one time, and a different approach at another time, performance is haphazard. It is essential to use a strategy consistently, following a specific trading plan on each and every single trade, so that across the series of trades, you will make an overall profit.

If you follow the plan sometimes and abandon it at other times, you throw off the probabilities, but many traders can't seem to stick with their plan. What precipitates a lapse in discipline? Many times, traders forget the consequences of not following a plan. They may suddenly see an opportunity to make a quick profit and decide to abandon risk limits. In another scenario, a trader may question his or her plan, and out of fear, abandon it. How can you make sure you stick with your trading plan? Many times, we forget why we need to follow a well-defined trading plan. A simple way to remember is to pull out an index card with the reasons and read it over and over again. You might write, "If I abandon my plan, I will lose in the long run." You may also list a few trades where you abandoned your plan and you regretted it. The images of the trade, along with the feelings of regret, will encourage you to stick with your plan. By putting the consequences of abandoning your plan right in front of you so that it is clearly in your awareness, you will be more likely to stick with your plan.

There are other reasons that trading plans are abandoned. One of the main reasons trading plans are abandoned is that they are not specified clearly enough. By specifying every aspect of a trading plan from how much you will risk to when you will enter and exit, you will have an easier time following your plan.

Another reason plans are abandoned concerns fear. When your money is on the line, it's natural to feel afraid. As much as you try to forget, it's hard not to worry about losing money. There are times when you may feel so panicked by the chaotic moves of the markets that you can't think clearly. You may feel agitated and on edge. A detailed trading plan, however, can help you stay calm during the storm of market action. The more clearly the plan is laid out, the easier it is to follow, especially when you are agitated and upset. And when the plan is easy to follow, it's likely that you'll stick with it. You'll be disciplined and in control of your emotions and thinking.

The difference between winning traders and unprofitable ones is the ability to muster unwavering self-control in response to chaotic, ever-changing markets. Trading is serious business. It's not a hobby, but many traders approach the endeavor as if it were recreational gambling. They don't develop a trading plan, and if they do, they tend to abandon it prematurely. Winning traders, however, are methodical. They carefully develop a trading plan, execute it, and stick with their plan. If you want to trade profitably, develop well-defined trading plans and follow them.

October 18, 2006

Daily Commentaries 19th Oct 06

Profit taking was evident in the KLCI ahead of the long holidays next week. In today’s news, Dialog secured a letter of acceptance for a RM89.5m EPCC contract to build an oil terminal in Johor and IJM proposed to acquire Road Builder via a share swap of 1 new IJM share for 2 Road Builder shares. On the MESDAQ front, Scicom released results that reflected its strong growth prospects. CME Group announced a RM211.2m contract from Jabatan Bomba for the delivery of 200 fire trucks while Transmile may benefit from additional air freight rights to carry cargo from China to the US. After 2 days of retracement, we believe that the market may experience a rebound today bolstered by a new overnight high of the DJIA in the US which briefly flirted with the 12,000 pts level. However, more profit taking ahead of the festive season next week will likely cap the rebound with resistance at the 980 pts level. Support is still at 970 pts.

Daily Commentaries 18th Oct 06

The KLCI succumbed to profit taking activities after the recent rally. Worse hit sectors were the Finance and Plantation. Public Bank’s 3QFY06 results as well as Top Glove’s the sterling FY06 performance, tops corporate news today while the automotive sector saw continued decline of vehicle sales in September. Other M&A news: (i) Sime Darby is allowed to acquire Ramunia’s ICPS based on market price; (ii) Ezywood Options acquisition of Huaren’s 21.01% stake in Nanyang Press will trigger a MGO; and (iii) KUB is inviting bids for the A&W franchise in Malaysia and Thailand. IJM Corp, Road Builder and RB Land are suspended pending an announcement while Putrajaya Perdana will debut on the Main Board today. The coming long festivities holidays as well as the lower closing of the Dow overnight may prompt follow-through profit taking activities. The immediate resistance level is 980 with an initial support of 970, followed by the 966 pts level.

October 16, 2006

Daily Commentaries 17th Oct 06

As expected, the market did take a slight breather yesterday after recent gains but profit-taking was well absorbed. The KLCI managed to close flat with losers topping gainers 485 to 278. Digi has upped the ante on the telco tariff war with the introduction of one flat rate for all voice calls irrespective of networks, in keeping to its core value proposition. F&N announced the acquisition of Nestle's liquid milk products businesses in Thailand and the latter's 'Tea Pot' brand in a deal worth RM310m. Golden Hope also revealed an RM18.1m JV in China to manufacture, distribute and sell an oleochemical derivative for the production of detergent. Meanwhile, Puncak should continue to fuel interest with the confirmation of a capital distribution of up to 65sen/share in addition to a 1-for-1 bonus issue. With the revelation of few key positive corporate developments coupled with another winning streak on the Dow last night, the market is expected to tread with a positive bias today. No change in the immediate resistance and support levels of 990 and 980 respectively.

October 15, 2006

Daily Commentaries 16th Oct 06

The market may extend its fine run riding on the coattails of Dow's record performance last week and positive local retail sentiment. Bursa's deferment of short-selling to next year is likely to be a non-event today as it would have already been discounted by the market. The Government has also agreed on a water tariff hike for Klang Valley although the effective date has yet to be determined. Other major news includes the announcement of a corporate exercise by F&N Group later today and Boustead's acquisition of a 4.9% stake in Boustead Shipyard from KUB. Also, a decision is expected soon on the RM15bn undersea cable project linking the Bakun Dam in Sarawak and the Peninsular following top-level presentations made to the government last week. Unconfirmed news also points to Tronoh winning coal power plant projects in Indoneisa. We believe any profit-taking from the strong rally last Thursday and Friday should be well absorbed with the market likely to attempt the next immediate resistance at 990 on buying support. The long festivities next week and year-end window dressing activities by local funds are positive upside catalysts. Support for the market is pegged at 980.

October 12, 2006

Daily Commentaries 13th Oct 06

OSK Research

Technical View

The KLCI’s finally broke through the 970 pts resistance level convincingly to record a 5.25 pts gain. With gainers outnumbering losers 2 to 1 on an above average volume of 840.4m shares, it would appear that the outlook is looking more positive. For today, Golden Hope and its subsidiary Mentakab Rubber announced plans to expand their rubber and oil palm plantations respectively. Unconfirmed rumours point to Puncak Niaga planning a RM1.25 per share capital repayment while Tenaga’s strong results may give it a boost today. Top Glove is buying a 60% stake in Singapore-listed Medi-Flex who owns 2 glove plants in Klang and Banting. Finally, CCM has proposed a RM18.5m acquisition of a 15% stake in US biotechnology firm Synergy America Inc. With the overnight rally on Wall Street which again took it to record highs, the local market looks set for a run up riding on Tenaga’s results. As for oil prices, a fall in US heating supplies has led to oil price climbing above the US$58 per barrel mark. This may prove positive to plantation stocks in relation to biodiesel’s potential. Resistance is now at the 980 pts level while support is at 970.

Losing May Not Hurt As Much As You Think

Humans don't like to lose. Whether it is losing a job or a romantic partner, when contemplating the possibility of a loss, the prospect of losing is worse than reality. That is, we tend to believe that a loss is going to hurt us emotionally more than it actually will.

People often base their choices on how they think the outcome of the choice will make them feel. Investors and traders, for example, seem to believe that a loss will hurt more than a win. For example, when contemplating a trading outcome, we are more concerned with losing $1,000 than potentially winning $2,000. Surely, winning $2,000 will make us happy, but the possibility of losing $1,000 is so dreaded that unpleasant feelings of loss far outweigh the potential joy of winning. Psychologists Deborah Kermer, Timothy Wilson and colleagues (2006) at the University of Virginia conducted a novel experiment to illustrate this phenomenon. They asked a group of participants to play 44 trials of a gambling game in which a computer randomly ranked playing card suits (hearts, spades, diamonds, and clubs) from first to last. Participants were asked to guess what the top-ranked suit would be. They won 50 cents if the suit they guessed was ranked first, and won 25 cents if ranked second. They lost 50 cents if their guess was ranked third, and lost 50 cents if ranked fourth. Participants forecasted how they would feel if they lost. After playing the game, participants discovered that they felt must better after losing than they had anticipated: The prospect of losing felt worse than the actual reality of losing.

Why do people think they would feel worse after a loss than they actually do? Kermer and colleagues argue that people have many ways of looking on the bright side, but forget this fact when contemplating a potential loss. People know how to cope with defeat. They build up their ego automatically and unconsciously. These psychological processes happen so quickly that we don't realize we have these coping abilities until we need them. People are inaccurate in their expectations regarding a loss because people do not remember similar losses in the past. They do not accurately remember how they felt and wrongly assume they felt worse than they actually did. What is the solution? The solution may be obvious to seasoned traders: Make a bunch of losses, and repeatedly experience how you cope with them. Once you see how well you can cope with losses, you will tend to be less averse to losses in the future.

Perhaps one of the biggest reasons that losses are hard to handle is that losing money is not socially accepted. If you told your frugal parents, for example, (who were unfamiliar with trading) that you had lost $20,000 last month, they would treat it like a tragedy. It may not be a great feeling to lose such a large amount, but as most traders know, losses are commonplace and you must take them in stride and move on to the next trade to make profits in the long run. It is easy to put yourself in a fearful, pessimistic state of mind by allowing conventional social standards about losing money to make you feel awful. But with the proper mindset, you can cope with losses and the prospect of losing money. First, remember that losses are just an everyday fact of life when trading the markets, and that losing is not morally wrong. Second, remember the times you have lost in the past but survived to trade earnestly and make huge profits. When you are stunned and paralyzed from the prospect of losing, remember that the prospect of losing is much worse than reality.

October 11, 2006

Daily Commentaries 12th Oct 06

The KLCI’s struggle with the 970 pts level continues with yet another unconvincing breakthrough attempt. Profit taking at Genting was evident after the recent run up. In today’s news, oil prices continued to slide with no confirmation that Saudi Arabia is cutting production and the IEA cutting its demand forecast. CPO stocks hit a record high of 1.8m tonnes in September while Telekom is in talks with the Government about deregulation of the fixed line business to give it more flexibility in determining rates. Sime Darby is again in the news with plans to assemble Hyundai SUVs locally by the middle of 2007 and also continued rumours that it would launch its takeover offer for Ramunia as early as next week. Investors will undoubtedly be keeping an eye out for Tenaga’s results due this evening. With US markets moderating as hopes for an interest rate cut ebbs, we feel there is a lack of clear fundamental factors to drive the market ahead for now though speculation on strong results for Tenaga may spur interest in the afternoon. We expect the market to remain rangebound today with stronger support remaining at the 966 pts level.

October 10, 2006

Green Packet

Green Packet is valued at RM4.80 by Kenanga Research.

Daily Commentaries 11th Oct 06

The KLCI advanced 0.33 points led by Genting after the media reported that the company has submitted its bid for Singapore’s second casino in Sentosa Island. The proposed US$3.1bn project would include a Universal Studios theme park and six hotels. Two positive news that has been discounted by the market are (i) the Energy, Water and Communications Minister statement, which said that there will be no more electricity rate hike this year although gas prices to the country's power generators are likely to be increased; and (ii) a possible improvement of retail sales in 2006 to 7.5% (2005: 6.2%). In the telco industry, government will make available three or four licenses to operate wireless high speed Internet services. Malaysia Airports has submitted a bid to build, operate and manage a RM1.03bn new terminal at the Queen Alia International Airport in Jordan. Meanwhile, Mah Sing Group is planning a property development project along Jalan Tun Razak with an estimated GDV of RM246m. The market is likely to hover at the 970 resistance level despite another closing high by the Dow overnight. Concerns on possible interest rate hikes as the Fed worries that it hasn't done enough to curb inflation as well as North Korea’s nuclear testing, may keep the local market rangebound. Immediate support remains at 966.

October 9, 2006

Trading Is A Serious Business

You must treat every aspect of trading seriously. Getting the right equipment is part of it. Do not compromise anything, even when it comes to practising your paper trades.

Daily Commentaries 10th Oct 06

The upside on the market proved shallow as regional markets fret over the contagion effect arising from North Korea’s detonation of a nuclear weapon. BCorp stopped short of confirming speculation that it will take Cosway private indicating it is still mulling the proposal. Genting’s offer for Stanley Leisure has become unconditional after its stake increased to 69.4%, while the counter will likely attract further interest ahead of the close of the Sentosa bid today. Malaysia’s August IPI numbers also did not provide any spark. Also in the news today, Gamuda is believed to be vying for a US$2bn rail network in Saudi Arabia, Salcon inked a 30 year contract to operate and manage the supply of treated bulk water in China and Transmile’s proposed private placement of RM287m to fund aircraft purchase. With the combination of geo-political concerns and little forward looking catalysts, the market should languish further today. There is no change in the previous support of 966 while resistance moves back to the 970 level.

Quote Of The Day

The ability to learn faster than your competitors may be the only sustainable competitive advantage.

Arie De Geus

October 8, 2006

Daily Commentaries 9th Oct 06

News of Harrah's eleventh hour exit from the Sentosa bid boosted Genting's shares last Friday, helping the market close 2 points firmer at 970.98. The local bourse had earlier profited from the bullish upside of the Dow and softening oil prices, keeping a tight rein on inflation. The construction sector spearheaded news over the weekend with the government saying payment for work done should take no longer than 3 weeks. UMW is targeting sales of its new Camry model at 500 units a month while Bursa does not expect significant revenue upside from the near-term launch of short-selling. Aside from that, AirAsia said it will not consider operating long haul budget flights while chipmaker, Unisem expects stronger sales from the expansion into the Taiwan market. With the much touted 970 level taken-out, the market now faces a uphill task to sustain the bullish bias stance on the backdrop of continuing lackluster retail participation and dry leads. Hence, the range-bound trading should persist this week with interchanging focus on internal and external leads. Support remains at the 966 level with upside target at 980.

OSK Research

Technical View

October 5, 2006

Quiet Please....I Am Trading Here....

Daily Commentaries 6th Oct 06

The KLCI did indeed make an attempt at the 970 pts level but it was a distant target and the market closed with a respectable gain of 4.83 pts. Lower liners recorded a comeback of sorts with Iris and Mobif rising by 19.5% and 20.6% respectively. Newsflow is thin for today with corporate announcements including Scomi proposing to issue up to RM630m worth of Islamic bonds as part of its refinancing exercise and Ayer Molek calling off its rights and bonus issues. Malaysia’s export growth for August was up strongly at 14.8% y-o-y which may help to shore up sentiment together with statements from the Bank Negara governor who stated that inflation could average less than 3% in 2007. Rumours continue to surround Ramunia with the latest being Sime’s application to acquire Ramunia’s preference shares at a discount to its normal shares. Nonetheless, our market should be more dependent on overseas catalysts to point the direction for today with US market again inching higher to another record high. Oil prices also look comfortably supported by possible Opec production cuts if prices fall further. As such, our market looks set to make another attempt at the 970 resistance level today. Support is at 966 pts.

October 4, 2006

Daily Commentaries 5th Oct 06

The KLCI made another attempt at the 970 pts level but again failed to break above the key resistance and instead fell some 3.5 pts at the close. Major news for today is confirmation that Road Builder’s Executive Vice Chairman and founder, Tan Sri Chua Hock Chin, had sold his stake in the company and resigned from his position. Other than that, UEM Land proposes to reduce its borrowings through the issuance of shares to UEM and Khazanah, MAS continues to rationalize its routes as part of its turnaround plan, I&P proposes to sell land worth RM63.5m to LTAT, Alam Maritim announced 2 new contracts worth RM23.9m and Samudra proposed a private placement. The only major local catalyst that appears to be currently circulating is rumour of more M&As in the local bourse. As such, we are unlikely to see any broad rally for today. However, with the DJIA hitting record highs and oil price appreciating slightly, the local bourse may just have enough impetus to have another go at the 970 pts resistance level. Support is now at the 960 pts level.

Psyche Yourself Down?

I don't psyche myself up. I psyche myself down. I think clearer when I'm not psyched up.

Steve Cauthen

October 3, 2006

Daily Commentaries 4th Oct 06

The KLCI continued its tight range trading yesterday with top gainers coming from stocks with overseas exposure. The major corporate news today is the possible takeover of Road Builder by IJM Corporation at over RM3.00 per share following the off-market transactions over the last two trading days. Meanwhile, Genting has strengthened its hold in Stanley Leisure by increasing its stake to 31.7%. Heavyweight, Telekom’s operations in Cambodia has ended with its deletion from Cambodia’s trade list. OYL has confirmed the 45.2% acquisition by Daikin, which has been approved by the EU’s relevant regulatory authority. The slowdown in the automotive sector proves to be challenging for UMW Holdings, which indicate that it is not on target to sell 100,000 units of vehicles this year. On the regional front, the resignation of Thailand’s deposed prime minister, Thaksin Shinawatra, should have minimal impact on the local and regional economies. The lack of fresh catalysts and weak buying momentum has failed to push the KLCI to close at the resistance at 970. Trading may remain sideways despite the strong performance of the Dow and continued decline in oil prices to US$59. Reduce holdings on strength and accumulate at support of 966.

Commitment To Excellence

The character of a person is in direct proportion to his commitment to excellence.

Vince Lombardi

October 2, 2006

Daily Commentaries 3rd Oct 06

The market treaded within a narrow trading range yesterday but managed to close a tick of the 970 level, helped by buying support on IOICorp and DiGi. The latter decorates headlines today with renewed speculation on a marriage with Timedotcom. DRB-Hicom is said to be exiting its loss-making waste management activities in Bharain while VADS delivered a major coup in the form of a RM255m contract from TM Retail. Aside from that, TM’s Sri Lankan subsidiary, Dialog has acquired a 90% stake in a television broadcasting company to enhance its triple play offerings. Tanjong Offshore also bagged a RM10m contract for a switchgear package. While the listless trading is expected to persist, we would expect the 970 level to be taken-out on an intermittent basis despite the slightly weaker close on the Dow. Note however that the KLCI still needs to overcome the previous intraday high of 971 to vindicate our view of a more sustainable upside.

October 1, 2006

Daily Commentaries 2nd Oct 06

Last week saw numerous attempts by the KLCI to overcome the 970 level but late profit taking on heavyweights such as Tenaga, Maybank and Proton provided the anti-climax. Among the key headlines over the weekend, AIMS- listed GMO acquiring a 20% stake in Chinese content provider- Wisdom Choice, Crest Builder’s RM182m contract for the building of an apartment and Ramunia’s RM200m contract for the construction of a jacket and platform for an oil field project off Terengganu. Aside from that, Maxis has slashed the price of its starter kit from today while Gamuda revealed weaker FY06 earnings on the lack of domestic contracts. There does not seem to any meaningful catalyst to lift the market out of its stupor and we would expect a continuum of the range-bound trading pattern. We note the Dow’s heavy fall last Friday following a re-test of the 6 year high earlier.

Focusing On You and the Markets

Throughout our lives, we are told that the key to success is to compete with others, and beat them. We compare ourselves to others, inspire ourselves to do better, and try to outperform our peers. As children playing sports, we were advised to hone our skills and become a star player. In school, we were often told that higher grades were the key to long-term success, and that we better get them, or else we would fail. And when we enter the working world, we learn that survival depends on beating out our competition. But when it comes to trading, you aren't actually competing with anyone but yourself. When it comes to trading, an obsession with winning can actually do more harm than good.

Comparing our performance with others does seem to have some advantages. Knowing that a goal is attainable is often a powerful motivator, for example. Several scientific discoveries were slow to materialize because they were thought impossible at first. But once the goals were deemed feasible through comparisons to others in the scientific community, progress was accelerated. But comparisons can also have adverse influences. Ironically, people who achieve great things usually work independently. They follow their own timeline, follow their own passion, and look inward for where to go next. Trading is a similar creative process. You are the only one who needs to hone your trading skills. You are the only one who must find a method that matches your aptitudes and personality. Comparisons to other traders can often prove problematic. How you perform has nothing to do with how others perform. And comparisons are likely to cause upsetting emotions, such as jealously or envy. Upon seeing that you are doing relatively poorly compared to a fellow trader, you are likely to think distracting thoughts such as, "Why can't I do as well?" or "I must not be as good of a trader as I had thought," Such thinking does nothing to keep you focused on honing your trading skills.

Don't look at anyone else's record but your own. You'll often be tempted to compare your current performance to that of others. That's how it's been throughout your life, and it's not easy to change a lifelong pattern overnight. But with trading, you must restrain this urge. Everyone has a different learning curve. To keep your spirits up, you'll do best as a trader to focus on improving your past performance record in your own time and in your own way, rather than trying to match other traders. You don't know what factors created their performance records, so comparisons can only mislead and hinder you. Other people's records do not have a direct bearing on your own record. Who cares if you make 50% less than other traders? Your energy should be focused on making yourself a master trader as defined on your own terms, not on beating others. Such comparisons will only disappoint and distract you. Focus on you, the markets, and nothing else. You will trade more calmly, creatively and profitably.