The best way to trade the Singapore Index: SiMSCI warrants.

Macquarie introduces a new warrant to the Singapore market. Macquarie's SiMSCI warrants allow investors to take a leveraged view on movements in the broader Singapore sharemarket.

Macquarie's warrants allow you to take a leveraged exposure to the SiMSCI with no margin calls or forced selling, thus limiting your capital at risk. Macquarie has listed both call and put warrants, so you can potentially profit from both rises and falls in the market.

99.9% correlation with Straits Times Index (STI)
The MSCI Singapore Index has a basket of 30 stocks and tracks the Straits Times index (STI) very closely. In fact, the MSCI Singapore Index has a 99.9% correlation with the STI over a period of two years, and a 99.6% correlation over five years.

SiMSCI - the only liquid alternative to the STI
The SiMSCI is the name for the futures over the MSCI Singapore Index, and tracks it closely. The SiMSCI is much more liquid than the STI futures in terms of volume traded. In fact, the SiMSCI is the only liquid alternative to trade a Singapore sharemarket index.

For both futures expiring in August, the SiMSCI had 228,287 contracts traded (for the month of Aug 2010) while the STI futures only had 6 contracts traded over the same period of time.

Why SiMSCI warrants?
As the SiMSCI is a liquid and efficient futures market it provides a live tradable market reference price for the warrants to track, this makes it a more transparent and easy reference point for warrant investors. Investors can now see the live SiMSCI price at this website and also the dedicated live SiMSCI pricing page which includes a list of the current warrants.

Read more about it at http://www.warrants.com.sg/en/warrants/simsci_live_e.cgi

FAQ: What are warrants?

A warrant is a powerful investment tool that enables you to gain exposure to a security for a fraction of its price. Warrants can be used to either increase or decrease your level of risk and, unlike ordinary shares, they can be used to profit from both a rise and fall in asset price.

Macquarie Warrants are available over individual shares or indices, they are listed on the SGX and can be bought and sold like ordinary shares.

A warrant gives the holder the opportunity to buy or sell a share at a future date for a fixed price. The two basic types of Warrants are "Call Warrants" and "Put Warrants". Call Warrants give investors the potential to profit from share price rises. Put Warrants give investors the potential to profit from share price falls.

A Call Warrant gives the holder the right, but not the obligation, to buy the underlying share at a fixed price known as the "exercise price" at a future date or, in the case of a cash settled warrant to receive a cash settlement amount reflecting the amount by which the share is above the exercise price. A Put Warrant gives the holder the right, but not the obligation, to sell the underlying share to the Warrant Issuer at the exercise price, or, in the case of a cash settled warrant to receive a cash settlement amount reflecting the amount by which the share price is below the exercise price.

The price at which a warrant holder may buy or sell the underlying shares or the price used in determining the cash settlement amount is known as the exercise price.

A call warrant is said to be out-of-the-money when the exercise price is higher than the share price and in-the-money when the exercise price is lower than the share price.

A call warrant will be worthless if the share price is lower than the exercise price on the expiry day. However, with upward movements in the share price, the holder can still earn excellent returns trading the warrant prior to the expiry date.

The opposite occurs for a put warrant. It will be in-the-money when the exercise price is above the share price and out-of-the-money when the exercise price is below the share price. With downward movements in the share price, the holder can make profits trading the put warrant prior to its expiry date.

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Asian REITs 1H 2010.

The report by CBRE RESEARCH (ASIA) titled REITS AROUND ASIA 1H 2010 makes for interesting reading. See the following two paragraphs from the report regarding S-REITs:

The total market capitalisation of S-REITs stood at US$21.1 billion as of the end of the first half, making it the second largest REIT market in Asia after Japan. The outlook for S-REITs is stable as the sector continues to be supported by the strong rebound in Singapore’s economy, the stabilisation of rents across the retail, office and industrial property sub-sectors  as well as the steady performance and lower refinancing risk of many S-REITs.

The simplicity of S-REITs as an investment instrument, their strong underlying fundamentals and relatively risk averse nature continue to make them an attractive option for investors. The S-REIT market has developed and matured over the last eight years, in size as well as in complexity and depth. S-REIT portfolios now cover a wide array of assets in retail, commercial, industrial, healthcare, hospitality and residential sectors, all of which are situated in diverse locations around the region. Investors in REITs have also evolved and now look towards the potential of a REIT’s property portfolio. These include factors such as asset type, geographical location, occupancy rates, demographics, lease terms, tenant quality and diversity, all of which combine to provide support for the portfolio’s aggregate rental income and in turn the sustainability and stability of the REIT’s distributable income. Investors also consider the REIT manager as this directly involves the development and implementation of the REIT’s investment strategy, the management of its portfolio and capital structure to foster long-term profitability.

Read complete research paper here.

Saizen REIT: More buying interest.

I received an email from a reader today saying:

"Seems like u like japan. Saizen see pick up in vol today and yesterday"

My reply:

"I like Japan a lot. Beautiful country, nice people, good food. Everything works. It is like Singapore but costs more.

"Saizen REIT is very undervalued. It is a matter of time that more investors take notice. It also takes time for its troubled past to fade. I have been holding for a year. I can wait a few more months."

Reader's reply:

"About one of your question, if the yield at 6.5% is attractive. I think the current yield is not attractive, and if the price goes up, the yield will fall further?

"Even though it has upside potential due to the NAV, it may be cap by the yield, unless the revenues improve?"

My reply:

"6.5% is attractive because the properties are Freehold. It is perpetual. If the properties are leasehold, then, it is not very attractive.

"For such a portfolio, a fair yield should be 5% which means unit price should be about 21c."

This reader is not the only person with negative perceptions or reservations about Saizen REIT, I am sure. There are also those who are worried about Japan's future which includes its debts and its demographics. I have voiced my opinion about these concerns before and you might want to read it here.

How do I feel towards these negative feelings and perceptions? Glad. Yes, glad.  There are still many doubters and the wall of worries is still intact. When everyone is bullish about something, that is a sign that we should think of exiting.

However, I noticed that there seems to be more buying interest in Saizen REIT today too. Of 3,260 lots that changed hands today, 2,968 lots were bought up at 16c. This could just be an anomaly or this could be the beginning of something bigger. Who can say for sure? A crack in the wall of worries? Perhaps.

The very thin trading volume of this counter makes TA unreliable but, for want of a better tool, let us look at the charts anyway. In end May and early October, Saizen REIT touched a low of 15c. It is interesting to note that the MACD has formed a higher low in early October. This is interpreted as a positive. The MACD has, in fact, moved higher into positive territory which suggests the return of positive momentum.

The MFI, a function of volume and price, is in oversold territory. The OBV does not show any big moves of accumulation or distribution. All the daily MAs seem to be bunching together. I have seen such a gathering before and likened it to a spring coiling up with tension. The 20dMA is set to complete a golden cross with the 50dMA. Immediate resistance at 16c.  Immediate support at 15.5c.

Let us now look at the weekly chart which could be revealing for a counter with such thin trading volume like Saizen REIT. It is immediately apparent that 16c is a formidable resistance level as that is where we find the merged 20w and 50w MAs.  However, the gently upturning 100wMA and the rising MACD which just did a bullish crossover with the signal line suggests that the longer term trend of Saizen REIT is positive.

Related post:
Saizen REIT: AGM on 19 Oct 10.

Golden Agriculture: Up or down?

Golden Agriculture's share price staged a recovery today, forming a short white candle, closing at 68c. Note that the price moved higher today on relatively low volume. Since 18 Oct, this is the counter's second attempt to move higher. We need to see volume expansion to have a meaningful upward movement in price that is sustainable at the same time.

Would the rising 20dMA be able to push the price higher? My suspicion is that sellers would turn out in force if price moves closer to 70c as it is a thrice tested resistance in recent memory.  Therefore, 70c remains the resistance to watch.

Critical support is at 65c. If this were to break with high volume, we could see price retreating to 61c, a possible resistance turned support and this is also where the rising 50dMA is approximating soon.

Golden Agri +5.3%; Positive press helps a tad: Analyst. Analyst adds, fundamentally, no impact on company, RSPO compliance actually a money-losing issue, estimates RSPO compliance cost at U$3/tonne. “It’s a PR issue for Golden Agri, and now they’ve got some positive press, the stock has moved up.” $0.705 recent peak may cap medium term.
Monday, 01 November 2010

© 2010 - The Edge Singapore

NOL: $2.21 and moving higher?

NOL's share price pushed higher today, forming a nice white candle, to close at $2.21, just 2c shy of the intra day high at $2.23. Volume expanded nicely as well.

All technical indicators show that the uptrend has positive momentum: MFI has formed higher lows suggesting a sustained demand and this is reinforced by the OBV which shows consistent accumulation. Every single pullback in NOL's share price in the past few months was an opportunity to accumulate, it would seem.

Taking in the Fibo lines, we could see 138.2%, which coincides with the high of 15 April, retested.  This is at $2.35. This, of course, is based on the assumption that the current bullish momentum follows through. With the MFI poised to enter overbought territory, taking some profits off the table in such a situation is not a bad idea although in extremely bullish conditions, the MFI could stay overbought for a long while.

Rare earth minerals: A new old frontier?

On 21 Oct, I blogged about rare earth minerals and how China mines 93% of the world's supply.  I concluded the blog post by saying "Mining almost all of the world's rare earth minerals, non-renewable resources which seem to have no viable alternatives at the current point in time, makes the Chinese a force as formidable as OPEC and possibly more."

Well, the recent belligerent attitude of China towards its trading partners in the West could possibly backfire at least in the rare earth minerals trading department as I read this just now:

The rising global demand for rare earth metals - the elements needed to make items like hybrid electric cars and laptop batteries - have caused the value of rare earths mining companies to soar in just a few months.

We've told you about one company, Rare Element Resources, that saw its stock surge 1200% in the last year.

But China's outright monopoly in the industry, along with fears that it will cut down on its rare earth exports, are driving plenty of other stocks higher too.

Posted Oct 28, 2010 01:00pm EDT by Gregory White and Hannah Kim, Yahoo! Finance.

Read article here.

Related post:
Control of non-renewable resources!

Tea with AK71: Hand sanitiser.

I started using hand sanitisers after the SARS outbreak years ago. Basically, everyone became a bit more conscious of the need for good personal hygiene. It is very sad but we usually need some earth shattering tragedy to effect some positive changes in society. I guess society evolves more rapidly due to such seismic events.

For many years now, I carry in my sling bag a small bottle of hand sanitiser. I would use it before meals or after doing some work with my hands. It gives me a peace of mind.

In the last two or three years, I switched to Dettol's hand sanitiser as it is the only one that did not leave a sticky feeling after use. The stickiness from using hand sanitisers is what puts off some people.  Dettol's formula solved that problem although it costs more.

Today, while driving to work, I saw a large bus ad announcing that Dettol's hand sanitiser kills 99.9% of all bacteria.  I guess this claim must be on the bottle too but I never really bothered to think about it before.  99.9% of all bacteria? What are the 0.1% of bacteria that remain alive and well?

Is that statement just a quantitative one which means that the sanitiser kills all types of bacteria but some are lucky enough to fall through the cracks? Or is the statement a qualitative one which means it kills 99.9% of all types of bacteria but 0.1% of bacteria types are so strong that they could resist elimination?  I would be very worried if 0.1% of bacteria types are strong enough to resist elimination!

Mapletree Commercial Trust: IPO in early 2011.

For anyone who did not get any shares in MIT's IPO, here's a chance to own some of Mapletree Commercial Trust's. This is a S$1.3 billion IPO expected to take place early next year.

The commercial REIT will draw its initial portfolio from Mapletree Investments’ $6.4 billion worth of Singapore commercial properties, including assets like Vivocity, the island’s largest mall, and several office buildings west of the city-state’s central business district. 

Besides its plan to list its commercial trust, Mapletree Investments also intends to launch several private property funds including a US$300 million Japan fund focused on IT-related infrastructure, a US$300-500 million Vietnam fund in which Mapletree may inject existing commercial and residential projects, and a US$500 million China-focused fund that will invest in a wide range of sectors.

Read full article here:

Mapletree hires bankers for $1.3b IPO: Update
Friday, 29 October 2010

© 2010 - The Edge Singapore

Tea with AK71: A better car.

Reading the latest issue of Newsweek and this really makes sense:

"Instead of jumping through hoops to make an electric car that most people can't even afford, why not just develop an internal-combustion engine that gets really amazing gas mileage? That's the premise of Troy, Michigan based EcoMotors...."

"Our carbon footprint will be smaller than a full blown electric car running on electricity generated in the U.S., where about 50 percent of electricity is made by coal.  In places like China, where 90 percent of the electricity comes from coal, we'll be far below the carbon footprint of an electric car," says EcoMotors CEO Don Runkle.."

Source:  "Finding more in the tank" by Daniel Lyons in Newsweek, 1 Nov 10.

I have never heard people questioning whether electric cars are really environmentally friendlier, questioning how the electricity that would run the cars is produced.  This is a pertinent question.

There is also the question of wastage as other forms of fuel are combusted to produce electricity which would in turn run the electric cars.  How much is wasted in the conversion process? Would it not be better to build a more efficient internal combustion engine?

I am not an engineer but this idea makes a lot of sense to me. Any thoughts?

AIMS AMP Capital Industrial REIT: 2Q FY2011.

The REIT saw lots of buying interest today as more than four fifth of the 49 trades were Buy Ups at 22.5c, a total of 1,613 lots out of a total of 1,923 lots that changed hands. I guess market participants were expecting a good set of numbers today as the management reported on its 2Q FY2011 results after market closed at about 7pm.

DPU for the quarter which would be payable on 17 Dec 10 is 0.3968c instead of the anticipated 0.52c.  This is because of the issue of 513.3 million rights units on 14 October 2010 and 7.2 million units to the Manager on 19 October 2010 for payment of the acquisition fee in relation to the acquisition of 27 Penjuru Lane.

Distributable income from 27 Penjuru Lane would be included in the next distribution, not this one, since the acquisition was done in 3Q FY2011 and not in 2Q FY2011.  Expect the DPU for 3Q2011 to be much higher, therefore.

Substantial Unitholders:
16.07%  AMP Capital Investors (Luxembourg No. 4)
11.46%  Dragon Pacific Assets Limited
9.45%   APG Algemene Pensioen Groep N.V
8.24%   Universities Superannuation Scheme Limited
7.65%   George Wang

I have mentioned a few times before that I am waiting to accumulate more at 21.5c. The last time I said this was on 25 Oct: "A reason why I am not in a hurry to accumulate is because I already have a sizeable investment in this REIT. I don't need to accumulate at 22c. I can wait. The technicals suggest that waiting might not be a bad idea too."

If there should be some panic selling next Monday, I would be ready to buy more.

See presentation slides here.

Related post:
AIMS AMP Capital Industrial REIT: Accumulation price?

FCOT: Testing supports.

On 22 Oct, when I blogged about FCOT turning around, I suggested that 17c is a formidable resistance and we know that buying at resistance is not a good idea. We want to buy at supports and, strictly speaking, these supports should be confirmed.

"FCOT has probably turned the corner and the numbers speak for themselves. However, would I buy at the current price level? The encouraging numbers could give FCOT's unit price a lift upwards but it is obvious to any chartist that 17c is the immediate resistance. 17c is the top of a base formation and a thrice tested resistance level in mid-January this year....

"From the looks of it, volume seems to be reducing since hitting a high on 24 Sep. In subsequent up days, volume had been lower. So, it could turn out to be a case of "sell on news". Immediate support is at 16c but I see a stronger support to be provided by the 50dMA which coincides with an uptrend line.  That might be a better entry price.  I do not like to chase."

Closing today above the 20dMA at 16c shows that the shorter term uptrend is still intact although price did touch an intra day low of 15.5c.

What are the chances of price declining further? No one can say for sure but it is obvious that upside momentum is somewhat limited with the RSI forming a lower high and the MACD poised to form a bearish crossover with the signal line.

Although the MFI has formed higher lows, which suggest sustained demand, we could see it retreating to retest its uptrend line or 50%.  So, I won't be surprised to see price declining a tad more and/or volume declining further.

With the fundamentals having improved, buying in at 15.5c or 15c seems like a good idea for a possible annualised DPU of 1.24c, assuming that the last quarterly DPU of 0.31c is sustainable.  This would translate to a yield of 8% at the entry price of 15.5c.  Pretty decent.

Related post:
FCOT: Turning around.