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Charts in brief: 20 April 10.

Tuesday, April 20, 2010

The STI clawed back 20.44 points today to close at 2,981.31 on respectably high volume. U.S. Futures are all showing an upward bias as of now.  This bull has legs.

Despite guarded sentiment, Phillip Securities says longer-term outlook for market still positive: “The reaction to Goldman’s fraud charges could eventually be trumped by what has been very positive S&P 500 earnings results.” Written by The Edge, Tuesday, 20 April 2010 13:30.

CapitaMalls Asia: Another black candle day as price closed at the support identified at $2.20.  My overnight buy queue was done.  Will the counter retest the low of $2.19 made in February this year or would price bottom here and start a basing process to form a double bottom?  Only time will tell.  Stochastics is suggesting that the counter is very oversold and further downside should see the next significant support at $2.12.

Golden Agriculture: Another doji as price stays above the rising 20dMA.  Volume has reduced. All MAs are trending upwards. From the MFI, it is obvious that positive buying momentum is lacking. Hard to say which way this might go.  So, no fresh positions for now.  Would buy some if price retraces to 56.5c.

China Hongxing: Closing at 15.5c, it formed a gravestone doji as price touched a high of 16c today.  Although it is a gravestone doji, I think it more positive than negative here as price did not touch 15c the whole day.  This means that, for the first time since 26 January, China Hongxing managed to trade at or above the 50dMA the whole day. The MACD continues to rise and seems to be sneaking a peek above zero, heralding a return of positive momentum. However, volume is anaemic and this will have to expand for a convincing move up.

Courage Marine: Low volume day as MFI and OBV both turned up slightly. Not much to say here. I would accumulate on pullbacks. Overcoming the gap resistance at 23.5c should test the immediate target of 25.5c.  Eventual target is still 27c.

Saizen REIT: Someone sold down 3m warrants and 1m shares at 7.5c and 16.5c respectively, rather late in the day.  This caused the OBV and MFI to both turn down.  16.5c is now the new floor for Saizen REIT.  This is a support level provided by the 50dMA.  My overnight buy queue for more warrants at 7.5c was filled.

Healthway Medical: 16c is still holding up nicely as the support.  OBV is flat.  No obvious distribution.  MFI is declining gently, which is logical. This counter might just be basing at 16c for a while. Further downside will find support at 15c.

NOL: Formed a higher low yesterday as it closed at $2.24 today, forming a wickless white candle.  Nice.  Uptrending OBV suggests continuing accumulation. Taking out the recent high of $2.35 would suggest an immediate target of $2.50.  Eventual target is still $2.60.  A rising 20dMA and candlestick supports should limit downside in the near term to $2.11 but a stronger support is found at $1.96.

Goldman Sachs reported first-quarter earnings of $3.3 billion, or $5.59 a share, on revenue of $12.78 billion. Earnings nearly doubled from a year ago and the results were well ahead of consensus expectations. Posted Apr 19, 2010 05:16pm EDT by Aaron Task.

Related post:
Charts in brief: 19 April 10.


Aspire said...

Hi AK,
Just a quick check, what's the yield like for Capitamall Asia at price $2.20? Can't seem to find that information.


AK71 said...

Hi K,

You do not want to buy CapitaMalls Asia's shares for the dividend. It is 1c a year. Hahaha... Yes, it is true. So, at $2.20, the yield is 0.45%. Well, still better than what we get from a POSB savings account, I guess. ;)

Anonymous said...

Hi AK,

What are your thoughts on what is ailing the Japanese economy and what it takes to turn around the property sector? Could it turn out to be another multi-year bear ppty market in Japan?


AK71 said...


The Japanese government took too long to respond to the Japanese economic malaise twenty years ago. It is actually a matter of too little, too late. From all accounts, the government's ensuing stimulus measures over the years were "badly spent" and did little for the real economy.

Japan's economy remains very open to global trends as it is still an exporting country. There were 2 years where property prices actually bumped upwards before this global financial crisis took place in late 2008. As long as the global economy does well, Japan will too.

Japan still has allure. It is a well run country and everything works. It is like a more expensive Singapore, I always say. I always enjoy my visits to Japan.

What makes a country's real estate appreciate in price? It's a simple matter of demand and supply. With demand in the doldrums for much of the last two decades, few Japanese developers are building new. In fact, quite a few developers went bust. Consolidation is still going on as the weaker players fold.

Saizen REIT's manager said that the buildings they own are now below replacement cost. That means that it is cheaper to buy an old building than to build a new one! This shows the extent of deflationary pressures in Japan.

However, I believe that it is when things are the bleakest that we find opportunities to make a lot of money. Dr Marc Faber says Japan's valuation is a huge bargain now and I believe him. Is it a value trap? I am not smart enough to answer this but I will tell you that we can make some good money as long as the global economy continues to do well as Japan will continue to do well too.

Japan's population is ageing and domestic demand is dropping but consumer confidence has improved for two months in a row now. A short term improvement? Perhaps.

The government needs to encourage immigration and the Japanese society has to be more welcoming to foreigners. Japan has to encourage investments in the country and this will lead to an influx of expatriates. Japan's problem is not only economic and political, it is also cultural. So, can we hope? Yes, of course, but we have to stay realistic.

Why am I so bullish about Saizen REIT then? Precisely because I am realistic, I am bullish about Saizen REIT. NAV of 40c and trading at 17.5c. It is like buying a $40m building for $17.5m. Furthermore, it is generating a nice yield of almost 10%. :-)

Aspire said...

Wow! Ak, 0.45%? That's like a 1 year FD at the banks. Well, I'm looking at REITs as a source of passive, high yield and all that. Long term. So you're right. CapitaMallAsia's not for me. Good luck to you though =)

Question on Saizen REIT though. Has it paid out the dividend yet? I'm wondering why SGX REIT Data still keeps it as 0c div, therefore 0% yield & that the gearing is 43.5%. I've read most of your postings on Saizen and I know you're bullish and 've been recommending it, so I know you believe this not the case. *ponder*


AK71 said...

Hi K,

The blogmasters of SGX REIT Data are doing a fine job but the information on Saizen REIT needs updating and fleshing out.

Saizen REIT has advised that they would resume distribution of income from mid 2010. So, wait for it. :)

I always say if one is uncomfortable with a counter, don't invest in it. It will cause sleepless nights. Not worth it. :)

Anonymous said...

Hi Ak,

Capitamall asia dropped to 2.19 today.
testing 2.12 is highly possible? but this stock is really oversold now....


AK71 said...

Hi Sa,

Yes, testing $2.12 is a possibility. If sentiments stay bearish for some time, the stock could stay oversold.

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