December 25, 2006

Daily Commentaries 26th Dec 06

The KLCI ended 3.04 points up prior to the Christmas holidays after recovering from the intraday low of 1,072.89 points. Corporate news for today are Golden Hope’s the widely expected acceptance of Synergy Offer’s takeover proposal and Wah Seong’s plans for an internal restructuring, which should be completed by 2Q07. The flood in south Peninsular Malaysia is likely to cost TNB RM10m in maintenance costs as the substations are submerged. Over in the US, consumer spending surged in November and inflation remained flat. Meanwhile, the Japanese economy is recovering but private consumption is sluggish, as rising production and capital investment fuel the country's longest economic expansion since World War II. The KLCI may be cautious ahead of another long holiday break this weekend. Immediate resistance stood at the 1,082 pts level with support at the 1,069 pts level.

December 20, 2006

Daily Commentaries 21st Dec 06

The KLCI did indeed rebound as the Thai Government decided not to impose capital controls on equities and the Malaysian authorities issued statements to ease concerns that Malaysia may follow suit on capital controls. For today, we believe that volume will continue to be lackluster although blue chips may continue clawing back some gains. Amongst major news today includes foreigners no longer needing Foreign Investment Committee approval to purchase properties above RM250,000 which we believe will spur further interest in the property sector. Green Packet has proposed a 1-for-2 bonus issue and transfer to the Main Board while YNH Property announced a MOU with CapitaLand to develop a 131,000 sq ft site along Jalan Sultan Ismail in KL’s Golden Triangle. Maxis’ Indian subsidiary, Aircel, has reportedly been offered to join the Reliance-led consortium to bid for Hutchison Essar while Tan Sri Quek Leng Chan is rumoured to be taking up a stake in recently listed IPO Kencana Petroleum. A reminder also that AmFirst REIT will be listed today. As mentioned, blue chips may continue to climb leading the KLCI back towards the 1082 pts resistance level, spurred by Sime Darby’s rumoured imminent acceptance of the Synergy Drive merger deal. Support is at the 1069 pts level.

December 19, 2006

Daily Commentaries 20th Dec 06

The KLCI closed 20 pts down, in tandem with the regional markets, after the Thai government imposed capital controls to curb speculation on the Baht. Vehicle sales fell for the 10th consecutive month in November as higher interest rates and stricter lending rules deterred buyers. Sime Darby has confirmed two things: (i) it is in negotiations with BMW to dispose-off its leasing arm and (ii) it had expressed an intention to the Government to take up an interest in Sarawak Hidro and take a lead role in a consortium for the proposed undersea cable project. Plans for a high speed train linking KL to Kuantan by 2015, under the proposed Kuantan District Locality Plan, may spur trading interest in construction stocks. For today, the abrupt U-turn by the Thai government to exclude equity investments from the restrictions could limit further downside on the regional bourses today. Meanwhile, Malaysia's government assurance that it will not implement capital restrictions to control the Ringgit should be well received by investors. The Dow hit another record close last night while wholesale prices and housing construction rose. Support for KLCI is lowered to the 1,049 level.

December 18, 2006

Daily Commentaries 19th Dec 06

Despite starting the day firmer, the KLCI slipped 7.72 points at the close with the likes of TM, Genting and IOICorp sold down. The modest volume of 887m shares reflected the increasingly cautious and mixed stance among investors in recent days following the meteoric rise in the KLCI over the past month. MMC is in the news today with the planned listing of the JV company with Saudi's Bin Ladin Group to finance the US$30bn Jizan Economic City, RHB having secured the green light from BNM to start talks with Kuwait Finance House, KLK acquiring a specialty Swiss oleochemical company and Gamuda inking a new tariff agreement with Thailand on future purchase of hydroelectric power. The company also it is eyeing potential power plant projects in South East Asia and the Middle East. The market is likely to find excuses to drift further today on the back of the latest query over Kuchai that could undermine broad market performance further and the Dow’s weaker close last night. Support retreats to the 1,078 level with 1,090 acting as the immediate resistance.

December 17, 2006

Daily Commentaries 18th Dec 06

The market clawed back some losses made over the past 3 trading sessions to end 13.85 points higher last Friday, spurred by positive corporate developments such as Wilmar's takeover of PPB Oil. However, broader sentiment remained somewhat cautious with volume staying shy of the 1bn mark. Headlines out of the weekend include DRB Hicom putting in its proposal to acquire a 33% stake in Proton to the Cabinet Committee on Transportation, Ranhill securing a oil & gas production sharing contract in Indonesia and Sompo Japan Insurance buying a 30% stake in Berjaya General Insurance from Berjaya Capital for RM101m. On the results front, Tanjong and Hiap Teck reported earnings that were above market expectations. Rumours also indicate that Sime Darby may be taking over the ownership of the Bakun dam project together with the associated submarine cable. The KLCI appears headed for a White Christmas and to finish the year on a positive note, supported by another record high on the Dow. We do expect trading to wind-down towards the penultimate week of 2006. Key support and resistance levels are at 1080 and 1100 respectively.

December 14, 2006

Daily Commentaries 15th Dec 06

After a good start, the KLCI failed to sustain its momentum yesterday and lost ground before closing off its lows at 4.13 pts down. Volume again failed to break the 1bn shares mark. The sharp hike in toll rates, up to 60%, was announced as expected. Today’s main news is on Wilmar’s US$1.1bn GO for PPB Oil Palms shares via an exchange of 2.3 Wilmar shares for every 1 PPB Oil share. Excitement may also be focused on new oil & gas IPO listing, Kencana Petroleum while Favelle Favco announced a new AUD9.4m contract to supply 3 cranes. In other news, N2N Connect proposes a 1-for-1 bonus issue. With the market having suffered from profit taking for the last 3 days, we believe a rebound is crucial today to sustain momentum for the rest of the year. The new record level achieved by Dow Jones overnight also points in this direction. Failing this, the market may well take a breather for the holiday season before turning buoyant again next year. Support and resistance remains at 1073 pts and 1080 pts respectively.

December 13, 2006

Daily Commentaries 14th Dec 06

The KLCI closed off its lows although profit taking was still evident. Volume also failed to crack the 2bn shares mark. Nonetheless, we believe that the bulls will be back in play today with the potential merger of PPB Oils with Singapore’s Wilmar, another example of a major plantation merger and improving Malaysia-Singapore relations as is Muhibbah Engineering’s SGD18.7m contract in relation port works in Singapore. Major corporate developments are also in the form of UEM World confirming the RM767m contract for the completion of the Ipoh-Rawang double track rail project and the privatization of Bernas rumoured to be near to completion. Aside from PLUS, toll operators could also see a boost today with the Government likely announcing a sharp toll rate hike on Dec 14th. Lion Diversified expands in Vietnam with its second store in Hai Phong while RB Land is buying 3 parcels of commercial land in Melaka for RM55.3m. With US markets up moderately on good retail news and strong corporate newsflows, we see the market heading back towards the 1080 pts resistance level. Support is now at the 1073 pts level.

December 12, 2006

Daily Commentaries 13th Dec 06

The KLCI succumb to profit taking yesterday after most heavyweights staged a strong run over the past few trading days. Top corporate news for today is SP Setia’s commendable FY06 results despite the soft property market and Measat-3 successful launch, boding well for Astro. Meanwhile, Genting’s private placement has been completed and proceeds would be used to finance the Sentosa casino. Bursa Malaysia’s plans to re-introduce regulated short selling in January after postponing it several times this year should be well accepted by the retailers. Kejuruteraan Samudra Timur has confirmed that its major shareholders have received KUB’s proposal for a 32% stake in the company for RM1.30 while E&O informed that the company is not aware of any plans to be taken private. Last night, the FED held interest rates steady for a fourth-straight time, acknowledging that the economy has weakened and the housing pullback has gathered force, but reiterating its concern about inflation. This led to a 12.90 pts fall on the Dow. We may see KLCI consolidating sideways over the short term. Immediate resistance is at the 1110.12 pts followed by the 1138.21 pts level. Support is represented at 1087.37 pts, followed by the 1080 pts and the 1065 pts level.

December 11, 2006

Daily Commentaries 12th Dec 06

Genting led the early rally on the KLCI yesterday although broad selling pressure was quick to set-in thereafter to frustrate the upside. The KLCI settled above the 1,101.70 level after hitting an intra-day high of 1,110.2. Among key headlines today, BCorp has sold a 30% stake in Berjaya General Insurance (BGI) for RM101m to Sompo Japan Insurance Inc, TMC Life Sciences venturing into cord blood and adult stem cell banking and CIMB's foray into the Middle East Islamic banking business via a JV with Bahrain based, Kanoo Group. Also, VW is reported to be the frontrunner for the strategic partnership with Proton with a due diligence audit agreement likely to be inked before Christmas. Over in the US, expectations are for the FOMC to keep interest rate unchanged at the meeting today with the Dow raking another positive gain overnight. For today, we believe there is still enough meat for our local market to power ahead on the back of the healthy trading momentum. Immediate resistance is now pegged at 1,110.12 followed by the 1,138.21 pts level while the 1,110 pts level has become the immediate support for the market followed by the 1,080 pts level and the 1,065 pts level.

December 10, 2006

Don't Get Stuck

When your money is on the line, it's natural to want to make every effort to protect yourself. You want to account for every possible adverse event that may thwart your trading plan, but you don't want to overdo it. Some traders have difficulty making a distinction between sound decision making and an obsessive need for perfection. Rather than acting decisively, they have an insatiable need to seek out certainty and security. One of the ways they seek out certainty is to make up superstitious rules to follow. They continuously search for rules that identify the "right" and "perfect" way to trade, but many times, there are no infallible rules that guarantee success. Traders must live with uncertainty and accept the fact that there are times when you have to go with your gut instinct and see what happens. But the obsessive-compulsive trader is overly concerned with trading perfectly. It is as if a little voice in the back of their mind nags them, and threatens to punishment them when the "right" rules are not identified and followed unconditionally. They may waste time trying to find the "right" indicator or the "right" trade setup. And even when they see it, they have a strong need to want everything to be perfect. Because if they don't, they are certain that they will pay for it. Perfectionism can be a curse when trading the markets, however. It's essential that you strive for high standards, but not get so obsessive with perfectionism that you get stuck.

"The harder you strive for perfectionism, the worse your disappointment will become," according to Dr. David Burns (1980). Perfectionism has more disadvantages than advantages. When you strive for overly exacting standards, you feel so uptight and nervous that you actually aren't very productive. You are unable to take risks because you fear failure. Trading is a profession where you must take risks and explore new market opportunities. If you continuously strive for perfectionism, you'll never feel satisfied. You'll always think, "I could have done better."

If you have a problem with perfectionism, Dr. Burns suggests a simple exercise: Lower your standards. Rather than try to trade to perfection, feel what it is like to be average and see what happens. Rather than search for the ideal setup, why not just find a profitable setup? What happens when you just make an average trade? Sure you won't make as much profit, but you might feel better. You will probably feel relaxed. Compare what it feels like to strive for high standards, moderate standards, and low standards. You may find that merely going for moderate standards makes you feel better. You may also find that you put on more trades, and achieve greater levels of profitability. Trading can be a matter of probabilities. To get the law of averages to work in your favor, you must make trade after trade. If you manage your risk, and put in a moderate effort, you can make enough trades to come out ahead. As long as the setups are reasonable, and you are using sound trading strategies, you can get the losing trades "out of the way" and focus on the winning trades. But if you are an extreme perfectionist, you'll always be on edge and unable to make trades. And because you are so concerned with overly high standards, you may never discover and take advantage of new, profitable market opportunities. By easing up, you'll feel more relaxed and creative. Ironically, you may end up more profitable by daring to be average, instead of striving for absolute perfection. So lower your standards a little. You may be surprised at what you find.

Quote Of The Day

Do what you can, with what you have, where you are.

Theodore Roosevelt

Daily Commentaries 11th Dec 06

Profit-taking on the market was well absorbed last Friday with the KLCI eking marginal gains to close largely flat. Genting makes headlines over the weekend as the winner of Singapore's second casino bid, ousting Kerzner International and Eight Wonder. BCorp has inked a deal with Agromash Holding BV to dispose-off its entire 56.7% stake in Dunham-Bush at RM3.50/share while Green Packet announced the completion of the purchase of a 55% stake in MIB Comm S/B. Tronoh was also awarded a contract for the construction of an office tower and service apartments at the Dubai Internet City while TRC Synergy received a LOI to build a submarine base for the Royal Malaysian Navy in Sabah. Meanwhile, several parties have also expressed interests to acquire Jaring from MIMOS. ASTRO's 9MFY07 results came in above expectations with shares expected to ride on the launch of Measat-3 tomorrow. On the overseas front, US markets continued its uptrend ahead of the weekend with better than expected November jobs data fuelling expectations that the FED will maintain interest rate at the meeting tomorrow. Given the slew of positive corporate developments, we would expect the KLCI to resume its Northward march today spearheaded by Genting's news. Resistance is pegged at 1,100 with support pinned at 1,080.

December 7, 2006

Daily Commentaries 8th Dec 06

After taking a breather yesterday when profit taking emerged on lower liners, the market is poised to march ahead today on news of mergers and acquisitions. The main acquisition news would be IOI’s proposed acquisition of Pan Century Edible Oils and Pan Century Oleochemicals from Trapti Trading and Investments Private Ltd. for RM423m while Allianz General Insurance’s minor announcement that Bank Negara has no objection to it negotiating to buy BCHB’s stake in Commerce Assurance should also be positive. Carlsberg has also announced a 45% owned JV to build a Greenfield brewery in India. In other news, Dialog was awarded another EPCC contract for Petronas’ methanol plant worth RM50m while WCT Engineering secured a RM435m contract for satellite works related to the Universiti Teknologi Mara campus in Selangor and another RM331m subcontract works related to the Kajang-Seremban highway. Coastal Contracts has also secured 2 MOA for the sale of offshore supply vessels for RM76.5m. With all this good news flowing in, the market should attempt the 1100 pts resistance level again. Should that be broken, the next resistance level is at 1138 pts. As for US markets retracing overnight, we feel the impact will be muted on our local market.

December 6, 2006

Daily Commentaries 7th Dec 06

With volume surging to 2.2bn shares, blue chip stocks rallied to bring the KLCI briefly to the 1100 pts level before easing slightly. Nonetheless, the broader market was less bullish with profit taking emerging on lower liners. Today’s headlines include MAS reviewing its fares to be more flexible, Naza confirmed as being keen to take up a stake in Proton whose partners will only be revealed in 1Q2007 and details on Malakoff acquisition of a 20% stake in Oman’s Dhofar Power Co. On the broader Malaysian economy, 2 oil refineries are expected to be set up in Yan, Kedah while Malaysia will be signing an MOU with Brunei, Indonesia and Philippines which would liberalise the aviation sector between the countries. Tesco would also be buying Makro’s stores in Malaysia while Seagate would be investing US$200m in its Penang operation over 5 years. As such, the headlines are all generally bullish and will likely sustain momentum in blue chips. Nonetheless, we advise caution on the broader market sentiment as profit taking may continue on lower liners. The US market closed down yesterday on concerns over tech stocks and some profit taking. Support and resistance levels remain at the 1080 and 1100 pts levels.

Quote Of The Day

I am careful not to confuse excellence with perfection. Excellence, I can reach for; perfection is God's business.

Michael J Fox

In the Moment, and In the Zone

Existential psychotherapists point out that people experience fear and anxiety when they think about, and regret, their past mistakes, or when they worry about an uncertain future. The antidote: Experience the moment. Focus on the process of living in the here-and-now. Seasoned traders describe a similar experience when they enter "the zone." There's a point where a trader isn't worried about past mistakes or future profits. All one's attention and energy are focused on the current trade. When they are in this optimal mental state, they achieve a higher level of existence. They are more in touch with their instincts. They see the markets and their trades more clearly, and are intensely aware of their feelings, sensibilities, and judgments. They can review a multitude of details, and can effortlessly identify the key factors that are likely to drive market action. Moving into this higher level of awareness during a trade can greatly increase one's chances of success. It's useful to learn how to move into this peak performance state.

How does one live in the moment? Perhaps the first step is just intellectually considering the existentialists' proposition that anxiety is sometimes a matter of focusing on, and mulling over, the past, or worrying about the future. When you consider it, it seems reasonable to think that if one could just forget about the past and avoid thinking about the future, one will live in the present. It seems unrealistic and perhaps a little reckless, however, since it is often prudent to both learn from past mistakes and to make sure you avoid potential adverse events. But again, when you do so, it takes you out of the moment. You start to analyze and remove yourself from the ongoing experience rather than enjoying it. In contrast, trying to stay in the moment will keep you focused on the trade. And by focusing all your energy on the trade of the moment, you will reach that higher level of awareness where you'll see the market more clearly and be able to run through all possibilities at lightening speed.

These concepts sound good in theory, but how does one put these ideas into practice? Well, first it may all depend on how many past conflicts you have in the back of your mind and your self-esteem. If you are unsure of your abilities, it's hard not to worry about the future, especially when you are facing extreme pressure in the midst of a trade. If you are easily shaken by uncertainty and stress, your mind will tend to wander toward your past mistakes and regrets and you'll tend to question your ability to control your destiny. But, if on the other hand, you are especially confident, you are not likely to be troubled by your past, and can more easily live in the moment. That said, it may be extremely difficult for some people to live in the moment for very long, or to stay there and completely cast aside all past regrets or worries about the future. One can strive to reach this state of existence for a short time, however, at least long enough to evaluate a trade and take decisive action. The first step is to monitor one's thoughts and identify instances where one is mulling over the past. The second step is to actively try to push such thoughts out of one's awareness. For example, one may think, "I wish I didn't lose so much money on my last trade," or "I'm frustrated that I've had so many losing trades." One may think these thoughts throughout the day and it's difficult to just shut them out. But it is definitely possible to put them aside for about an hour, while you monitor a trade and decide what action to take next. One may similarly worry about the future: "I wonder if I will keep losing or will I finally make huge gains?" After one is aware of the kinds of thoughts that indicate one is mulling over the past or worrying about the future, such thoughts can be pushed aside temporarily. It may be necessary to yell "stop" or think, "Don't think about that right now; I can consider these issues later, after I'm done evaluating my trade." Now, using these strategies won't put you in that ideal mental state where you are completely in the moment, but it will help you get to a mental state that is close to the ideal. It may take some practice, but you can eventually reach this mental state (and if you have some difficulty, always consider the possibility of seeking out some professional help from a trading coach).

The best traders are not self-conscious about their mistakes. They don't regret past mistakes or worry about the future. They live in the moment. You can also live in the moment, if you practice cultivating the proper mindset. When you reach this peak level of experience, you'll not only be more profitable, you will enjoy trading, and find it to be fulfilling in its own right.

December 5, 2006

Daily Commentaries 6th Dec 06

The KLCI staged a strong rally yesterday, closing 11.52 points, with continued buying on blue chip counters. MIER’s upgrade of 2006 and 2007 GDP forecasts added further confidence on the market. Top corporate news today is the likelihood of an increase in the cost for the controlling stake in RHB as a bidding war looms, while Genting is confident of winning the bid to operate Singapore's second casino resort. Meanwhile, Tronoh expects new and existing overseas projects to be the group's main revenue driver for the next financial year while UEM Group has shown interest in the construction of a transaction highway in Cebu, Philippines. Follow through buying may continue today on the back of strong economic fundamentals (strengthening Ringgit, increase in GDP projections), companies’ commendable financial performance in the last financial results quarter as well as M&A theme, which spur interest in many GLC stocks. The Dow Jones closed higher on upbeat data on inflation and the services sector of the economy. Support is still pegged at the 1,080 level with resistance at 1,100.

December 4, 2006

Daily Commentaries 5th Dec 06

The market dipped slightly after hitting a high of 1,082.58 with few heavyweights succumbing to selling pressure. In the headlines today, TM has quashed media reports that it will acquire Timedotcom (TDC), Time Engineering selling-off a 2.1% stake in TDC in the open market and NSTP/Utusan confirming the merger is still on. TM is also reported to have put up for sale its payphone business. Meanwhile, Singapore’s public transport operator, SMRT has offered to partake in Johor’s monorail project. On the economic front, Malaysia posted another trade surplus for October despite seeing a m-o-m contraction in exports. US markets closed firmer on M&A newsflows and the fall in crude oil prices. We think there is enough meat for the market to attempt another high today, noting the immediate upside resistance of 1,080 with support at 1,065.

December 3, 2006

Daily Commentaries 4th Dec 06

The KLCI closed marginally flat last Friday after hitting a high of 1081.30 on the back of sporadic profit-taking following 2 days of heavy gains. Volume remained robust at over 1.6bn shares. TM was in the news over the weekend with talks of it buying into Timedotcom, Khazanah, Morgan Stanley and Credit Suisse entering into a RM2bn re-insurance deal and the 1 year extension granted by FIC to DiGi to meet Telenor's strategic and its own Bumiputra shareholding requirements. Elsewhere, Ranhill has entered into a service contract to explore, develop and exploit oil and gas at a block in the Sulu sea while Kuwait Finance confirmed it is eyeing RHB Group. Shares of Utusan Group and NSTP, which were suspended ahead of a merger announcement today may see the deal being postponed after both companies were asked to return to the drawing board by the government. US markets were down Friday after reports showed the manufacturing sector contracted in November, fuelling concerns of a hard landing for the economy going into 2007. We remain cautiously optimistic on the market's performance today noting the upside bias led by corporate newsflows and the strengthening Ringgit. Support is still pegged at the 1,080 level with resistance at 1,100.