Tea with AK71: Top 5 posts (Part 2).

On 17 April 2010, I mentioned that I was surprised to find that the most read post in my blog was one of my first blog posts written last year on Christmas Eve. That same post remained in the top spot until recently.  It is now in number three position.  Considering its age and having more time on its side, which later posts could have dethroned it?

The following ranking is based on the number of pageviews each post generated since the day they were published:

Number One:
Create more passive income with limited capital.
(29 May 2010)
- All of us have limited capital.  How do we make our capital work harder to give us more in return?  That is a question that many would like to have answered.  This post provides a possible answer to this question and this is probably why it is in the top position.

Number Two:
A minimum of 50k in annual passive income.
(5 Sep 2010)
- The interest this post has generated has been astounding thus far. The allure of passive income is unmistakable and when we put a value to what could be achieved annually if we work at it, it becomes a powerful statement.

Number Three:
High yield portfolio.
(24 Dec 2009)
- Previously Number One and the only post in the previous top 5 posts to retain a position in this ranking exercise.  The interest in building a high yield portfolio is perennial, it seems, and stronger than I could ever imagine.

Number Four:
K-Green Trust: A stable source of passive income.
(3 Jul 2010)
- Making it to the top 5 is my first post on K-Green Trust.  This is a very safe instrument for passive income generation.  I like this trust but wish it could be cheaper, of course.

Number Five:
AIMS AMP Capital Industrial REIT: Rights issue.
(23 Aug 2010)
- This is a post which could slowly fade into oblivion once the rights issue is done and over with.  For now, it is generating quite a lot of interest.

Related post:
Tea with AK71: Top 5 posts.

SPH: Touched $4.20.

SPH touched $4.20 today but that price saw few transactions although volume expanded.  Few were willing to buy at that price, it would seem.  A short legged doji was formed and this could be interpreted as a day of tight price action with price closing ultimately unchanged from the opening. There is little conviction by either the bulls or the bears today although an increase in trading volume suggests that the tug of war grew in strength.

A rising OBV suggests more accumulation activities while the momentum oscillators are flattening in overbought territories. This suggests that demand is faltering and buying pressure is tapering off. A correction from oversold conditions could very likely be next.

Although a correction could be avoided if volume expands in the next few sessions as price pushes upwards, such a move would have a formidable sell queue to clear at $4.20. If ever this resistance was cleared, SPH's share price could fly.  At the moment, chances are slim that this would happen.  TA is all about probability after all.

Related post:
SPH: Waiting for elusive $4.20.

Hock Lian Seng: Ready to break resistance?

Hock Lian Seng isn't the most exciting counter in the market, for sure. However, today, volume expanded as all shares transacted were traded at one price and one price only, 30c.  To me, this suggests that all the weak holders have been weeded out.  If anyone wants to buy shares of this company now, buying at 30c per share is the only choice.  This is a resistance level which has been tested a few times before in the last one month.  Could this resistance level be taken out soon? I believe so as the massive 30c sell queue was wiped out today.

We could draw an uptrend support line from 15 July and this would approximate the rising 20dMA.  Nice. Could we be seeing the formation of an ascending triangle? Possibly.  If this is this case, could we see price rising to 34c? We could but I would expect rather strong resistance at 32c.

The MFI has successfully stayed above 50% and the uptrend is still intact.  The OBV has risen very gently and consistently. Demand and accumulation are present. With this fundamentally sound counter, patience is definitely required.

Related post:
Hock Lian Seng: Steady accumulation.

Golden Agriculture: Triangle.

Accumulation of shares in Golden Agriculture seems to have come to a halt as the OBV flattens. Over a shorter term, momentum oscillators are still rising but this could change quickly.  The MACD histogram has turned red and volume shrank dramatically today as price action formed a doji, suggesting indecision.

The technicals are somewhat ambivalent at this stage.  Up or down?  The probability seems to be quite even either way.  If we look at the bigger picture, we would understand why.  It seems that price action is forming a large symmetrical triangle. Volume has also been declining.  Which way would its price go?  Being in a symmetrical triangle, price could go either way.

Personally, I am vested in Golden Agriculture because I believe in its fundamentals.  CPO price is up again today at RM2,674. This is an increase of 1.75%.  However, for anyone who is in doubt and feeling unsure, staying out is the best thing to do.

CapitaMalls Asia: Upgraded by Daiwa.

CapitaMalls Asia broke out of a downtrend on 2 Sep and touched a high of $2.25.  Today, Daiwa upgraded CapitaMalls Asia to outperform but the share price fell instead to $2.20.  Could price fall further?

The MACD histogram has turned red. This is a sell signal. MFI has formed a lower high which suggests weakening demand. OBV shows a slowdown in accumulation but there isn't any serious reversal.  RSI has dipped and left the overbought territory behind.  The current weakness could just be a correction from overbought conditions. If so, where is the next support?

I see the next support at $2.14, a many times tested candlestick resistance level and should be a strong support. This is also where we find the downtrend resistance line which the counter broke out of on 2 Sep. This price level is likely to be fresh on the minds of market participants.

CapitaMalls Asia upgraded to Outperform by Daiwa... says property group’s recent $788.9 million joint acquisition with CapitaLand (C31.SG) of Singapore’s Bedok Town Centre site, which can be developed into residential-cum-retail property, reinforces CMA’s dominance in local retail property market.

Wednesday, 08 September 2010

© 2010 - The Edge Singapore

China Hongxing: New target.

Yesterday, when Edmond asked if we should set a higher target for China Hongxing at 22c, I replied "22c is what could be the eventual target if 19.5c is taken out convincingly (ie. volume has to expand significantly as price rises). However, along the way to 22c, there are many minor resistance levels to overcome."

Well, 19.5c was demolished as the price touched a high of 20.5c before closing at 20c today. This was achieved on very high volume. 20.5c was a resistance level that broke in early January.  Based on Fibo lines, it looks like a minor resistance and we could see 22c tested next (138.2% Fibo line). Congratulations, Edmond. :)

OBV is still rising strongly signalling continuing accumulation. The uptrend in the MFI is intact as it formed higher lows.  Demand is still strong.  It is however on the verge of being overbought but this does not really mean anything apart from suggesting that we stay vigilant, especially with such strong underlying momentum.

This is possibly the reason for the breakout:

China Hongxing Sports bags $198m worth of orders from Xiamen trade fair. The order book of RMB 1 billion represented a 12.6% increase as compared to that held in August 2009.
Wednesday, 08 September 2010

© 2010 - The Edge Singapore

Related post:
China Hongxing: Pushing upwards.

SPH: Waiting for elusive $4.20.

On 1 Sep, I mentioned "if SPH does retest $4.20, I expect that to be a strong resistance as many who missed selling then would sell now.  So, I would sell some at $4.20 and buy back if price retraces to the 20dMA."

I reckon that many investors and traders are able to read charts and many know that SPH's resistance is at $4.20. When too many people anticipate something happening, then the event might not take place. Market participants are wary of buying too close to $4.20 as they recognise that as buying close to resistance.  Market participants waiting to sell at $4.20 might sell at a few bids lower just in case the resistance does not get retested.  In such a scenario, we need a day or two of massive buy ups to clear all the doubt and suspicions surrounding the major resistance.  In this case, it is $4.20.  How likely is this? Your guess is as good as mine.

Technically, it is easy to spot a short term negative divergence between price and volume. This probably explains the weak push upward in price as volume is the fuel that drives rallies. Today, the MACD histogram turned red.  This is a warning that price could face more downward pressure in the near future. The MFI and RSI are rising strongly into overbought territory and such overbought situations could not last too long, normally. Notice how the rising OBV is much gentler in its gradient in recent sessions.  Although there is no distribution, accumulation is slowing down.

Should we panic? Should we sell? The uptrend is still intact.  I want to draw your attention to the orange color trend line support I have drawn.  This would approximate $4.10 soon.  You want to also take a look at $4.13.  This looks like a natural support level and should serve as immediate support but, of course, it needs confirmation.  I expect some semblance of support between $4.13 and the orange color trend line support in the immediate term.  If these supports break,  look to the individual rising daily MAs for the next supports.

Related post:
SPH: Another white candle.

STI little changed at 3,036.09 at closing
Tuesday, 07 September 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: Buying up.

There has been quite a bit of buying up activities in this REIT in recent sessions.  Today, of the 2,595 lots transacted, 1,763 lots were bought up and, of these, 843 lots were bought up at 23c.  From the transaction sizes, it would seem that there is some amount of interest returning to this REIT from retail investors.  Why buy some units of this REIT now?  The attraction, I suppose, is the entitlement to rights at a price of only 15.5c.  Of course, unit holders will also be able to apply for excess rights and in the process, possibly, improve the overall yield of their investment.

A while back, some readers asked me if they should buy in at 22c and my advice was that it was a fair price.  Buying 20 lots at 22c would give us 7 rights at 15.5c.  That would give us an average price of 20.31c.  With an estimated DPU of 2.08c per annum, XR, that gives us a yield of 10.24%.

Technically, the MACD has completed a bullish crossover in negative territory. If the MACD crosses into positive territory, that signals a return of positive momentum. The MFI has just emerged from oversold territory and has formed a higher low which suggests a return of demand. A recovering OBV suggests some accumulation is underway.

For a second session running, this REIT is trading above all the daily MAs.  22.5c could possibly be resistance turned support.  This needs confirmation.  The long term resistance remains at 23c but remember that this was compromised in early August.  So, it is not as strong a resistance as it once was.

Related post:
AIMS AMP Capital Industrial REIT: Sell the rights.

Genting SP: Staying cautious.

The cautious tone in Genting SP continues today. There is talk that speculators have moved from Genting SP to Genting HK, contributing to the latter's spectacular run up in price.

Technically, the negative divergence between price and action here is rather glaring. Price has detached from the upper Bollinger and moved sideways. This could be the start of another consolidation period.  The detachment from the upper Bollinger is accompanied by reducing volume which is a good sign for the bulls.

Look at the MACD and we see it still rising above the signal line in positive territory.  Bulls want to watch out for signs of a bearish crossover with the signal line.

The MFI, although declining, formed a higher high before doing so and is still above the longer term uptrend support. OBV has flatlined in the immediate time frame but its longer term rise is unbroken.  Demand and accumulation seem healthy.

For anyone with a long position here, congratulations but look to the support at $1.70 for guidance.  If this support breaks, it might be a good idea to take some profit off the table as the next support is at $1.50.

Related post:
Genting SP: Flip flop.

Genting Hong Kong +3.6%; Earnings growth priced in: UOB
Monday, 06 September 2010

© 2010 - The Edge Singapore

STI climbs 1.1% to 3,034.58 at closing
Monday, 06 September 2010

© 2010 - The Edge Singapore

China Hongxing: Pushing upwards.

On 3 Sep, I suggested that China Hongxing might be taking a break with the near term resistance at 18c. Today, volume expanded significantly as the 18c resistance level was demolished.

Momentum oscillators are trending higher, forming higher lows.  The MFI's rise shows strong demand while the OBV's upward climb shows accumulation continuing. The MACD is still rising above the signal line in positive territory and the distance between the two is growing, a sign of strength.

On the flip side, the RSI is going into overbought territory, suggesting that the buying momentum is getting somewhat overdone.  Jumping in at this juncture to go long might be a risky proposition as the immediate upside target identified some time back at 19.5c seems within reach.

If price action starts detaching from the upper Bollinger and if the MACD's distance from the signal line starts narrowing, we could be seeing precursors of a reversal. So, we have to stay cautious and keep our eyes peeled.

Related posts:
China Hongxing: Taking a break.
China Hongxing: Retesting resistance.

Blog statistics: January to August 2010

It has been more than eight months since I started this blog and I am still blogging away. By now, regular readers could probably read me like a book.  I am, after all, almost forty and probably quite set in my ways.  The following is a summary of how my blog has performed in the last eight months:

The number of monthly unique visitors reduced dramatically in the month of June, from 19,449 in May to 15,500. That's a 20.3% decline!  The number of returning visitors fell from 10,297 in May to 8,173.  A 20.6% decline!  Terrible.  What could be the reason?  Well, I had the least number of posts in June, relatively.  Only 46, to be exact.  So, maybe, that has something to do with it.

The numbers recovered modestly in July and improved dramatically in the month of August when the number of monthly unique visitors formed a new record at 19,578.  This trumped the high formed earlier in May which saw 19,449 unique visitors.

I have no doubt that I have some very loyal readers who are spreading the word.  Your support is encouraging and you can bet that I will continue blogging!  Thank you. :)

Related posts:
Blog statistics: January to April 2010.
Alexa.

A minimum of $50k in annual passive income.

Anyone who has been reading my blog would know that I seek to build a strong stream of passive income through my investments in the stock market. On 29 May 2010, more than three months ago, I mentioned that "between LMIR and AIMS AMP Capital Industrial REIT, the annualised income distributions I receive could be as much as 4x my monthly salary".  In aggregate, this has not changed.  However, I have made some changes in allocation and shifted funds from LMIR to AIMS AMP Capital Industrial REIT.  This is because I am a little disappointed with the former and at the same time, I am feeling more optimistic about the latter.

In my post of 29 May 2010, I also said that "things should get better from here as from the month of September, income distribution from Saizen REIT would add to my passive income stream. I might just stop trading the market and sit back, relax and let the passive income stream in.  Of course, it remains to be seen if my calculations as to Saizen REIT's potential income distribution would come to pass."

I was pretty confident that things would go the way I think they would but we can never be too sure of anything. As things turned out, happily, Saizen REIT's results and DPU were better than expected.  It seems that their CEO is much more astute compared to LMIR's and did not engage in any 100% currency hedging.  To recapt, "LMIR announced a DPU of 1.04c payable on 27 August 2010.  This is lower than the 1.2c paid in the last quarter. This is due to a higher realised loss on the foreign exchange forward contract."

I did some back of the envelope calculations as to the passive income I would be receiving from my investments in Saizen REIT, AIMS AMP Capital Industrial REIT and LMIR in future:

Assuming that all of Saizen REIT's warrants are converted to regular units and assuming that YK Shintoku's CMBS is successfully refinanced with a conventional bank loan with an interest rate of about 4%, I estimate the DPU to be about 0.4c per quarter or 1.6c per annum from December 2010.

As for AIMS AMP Capital Industrial REIT, with the impending rights issue, I would probably increase my investment in the REIT by at least a third and enjoy a higher yield at the same time.  This would increase the amount of passive income I receive from this REIT from December 2010.  DPU is estimated at 0.52c per quarter or 2.08c per annum.

For LMIR, although I believe in the strength of the Indonesian economy and the strength of its currency, the management's decision to continue using foreign exchange forward contracts is likely to limit any DPU growth.  In fact, it has led to a DPU reduction in S$ terms so far as the Rupiah strengthened against the S$.  However, I expect the S$ to appreciate more robustly in future and it is unlikely that the DPU would reduce much more.  Conservatively, I estimate the DPU to be 1c per quarter or 4c per year from December 2010.

With Saizen REIT's contribution, I would probably exceed the target I have set for myself which is "to create a minimum of $50k in annual passive income from investments in the stock market alone."  I shared this aim here in my blog on 27 Feb 2010, more than half a year ago. Like with everything, however, this needs confirmation. Let us see what happens in December 2010.

Related posts:
Create more passive income with limited capital.
LMIR: DPU reduced 20%.
AIMS AMP Capital Industrial REIT: Steady performance.
Saizen REIT: Better than expected DPU.
Seven steps to creating passive income from the stock market.

Building and preserving our wealth.

When I was a secondary two student, I had to write an essay on whether television had brought more harm than good to our society?  The internet did not exist then. To own a 25 inch CRT TV set was a BIG thing.  I doubt school teachers would set an essay question like that today.

Well, I remember giving it much thought and decided that the television was just a tool and whether it did good or harm depended on how we used the tool.  This is true with any other tool as well.  A tool is just a tool.  How we use the tool is the important thing.  Similarly, in the world of investment, there are many tools at our disposal. All these tools, if used appropriately, could boost our wealth.

Human society has grown more complicated from the days of Socrates and Plato.  In those days, scholars were learned in different aspects of life.  As our knowledge base widened over time, we built colleges and universities. Within these institutions, we find different faculties and within faculties, we find different departments and within departments, we find different subjects.  Scholars have become specialists and not generalists in modern society.

We classify things, putting things in neat boxes with labels, to manage the complexities of modernity. This promotes efficiency as it helps us know exactly where things are and what they do.  However, compartmentalising also masks finer details which could set apart one item from another in the same box.

Two of the boxes in the world of investment are labeled "Blue Chips" and "REITs". 

Some prefer Blue Chips, believing that these are strong companies with stable dividend payouts with a nice possibility of share price appreciation.  I have been a shareholder of SPH and ST Engineering for as long as I can remember.  I was also a shareholder of Chartered Semiconductor and, unfortunately, I remember this too.  Certainly, not all Blue Chips are created equal.

Are REITs then all created equal?  Most certainly not. Some are stronger and better than others. REITs are primarily income instruments but they are not just income instruments.  Like any counter traded in the stock market, REITs have the ability to appreciate in price.  If they have the ability to appreciate in price, are they beginning to sound like certain entities with stable dividend payouts with a nice possibility of share price appreciation?  In fact, many S-REITs are now trading above their NAV.  There are still many S-REITs out there which offer value as they are still trading below NAV, have high yields and relatively low gearing levels.  The attraction of high yields coupled with the possibility of capital appreciation is universal.

Any undervalued counters could appreciate nicely in price once discovered by enough people who believe in them.  It does not matter if they are REITs or companies. The risks and rewards of investing in companies and REITs are similar, if we think of it less dogmatically.  Invest in the right ones and we could be rewarded. Invest in the wrong ones and we're sunk.  There are certain characteristics of a REIT which make it a REIT and not a company, for sure, but I would stop there and not over read.

Some might say that REITs are for the rich or the rich and old because these people don't need to grow their wealth aggressively, that they just need regular passive income since their wealth is sizeable already. I do not think that this is entirely correct as there could be the not so rich or the not so rich and young who just want to make sure that their wealth is not being eroded by inflation.  Choosing the right REITs could do this for these people. So, REITs are not just for the rich or the rich and old.  What we choose to invest in would depend on our motivations for being in the stock market in the first instance.

Finally, most wealthy people are wealthy because they run successful businesses. For most of us, having a well paying job and having good money management habits are the bedrock to building our wealth. Whether we choose to invest in Blue Chips or REITs later on could then build and preserve our wealth at the same time. Indeed, why not invest in both? I am not religious about either one.

Treasury China Trust: A chat with Nick.

While chatting with Nick earlier this evening in LP's cbox, he said that he is looking at Treasury China Trust (TCT). A trust to consider for passive income plus growth, perhaps? The following exchange is reproduced with Nick's permission:

Nick @ Home: Treasury China Trust is an interesting company to ride the property boom in China. I must study it more
Nick @ Home: Trading at 70% discount to its NAV......
AK71 @ home: 70% discount to NAV?!
Nick @ Home: Yea...despite owning 3 high quality assets
AK71 @ home: what's the gearing?
Nick @ Home: 35%
Nick @ Home: Debt: S$658 million. Asset: $1.94 billion
AK71 @ home: debt profile?
Nick @ Home: Debts was recently refinanced...mature in 2015
Nick @ Home: Interest expense will be halved
AK71 @ home: hmmm... nice yield?
Nick @ Home: DPU forecast is $0.05. They will use equity (profits earned from property sales last year) to fund dividend payout near term. Once their development projects come online, they expect cash-flow to triple.
Nick @ Home: From now to 2012, dividend payout ratio will be 80% after which it will drop to 50% to fund more development projects
AK71 @ home: very promising... sounds tempting
Nick @ Home: This year yield will be around 3%...I guess with the rising rentals and lower interest expense, DPU can rise in 2011....in 2012, its development projects come online and DPU should increase significantly
Nick @ Home: But being a development trust, it has a growth element inside unlike a REIT
Nick @ Home: So its yield won't be high but it more growth potential since they can build and sell assets to other REITs haha
AK71 @ home: huge interest in the last 2 sessions
Nick @ Home: Yea...they announced that they renew their lease at over 8% higher rates
AK71 @ home: short term overbought but very strong momentum...
AK71 @ home: $1.60 is resistance turned support... can consider Nick @ Home: http://www.treasurychinatrust.com/
Nick @ Home: JP Morgan gave a very bullish report on 16 August
Nick @ Home: available in the tct website JP Morgan's report at this link: http://www.treasurychinatrust.com/Pics/httpmarklogic-b.jpmchase.net8005GPS-434739-0.pdf

Healthway Medical: Up or down?

Price hit 16c on 31 Aug.  That was exactly on the rising 200dMA.  Today, the counter hit a high of 17.5c.  Technically, 17.5c is a formidable resistance level as it is a many times tested resistance and it is also where we find the declining 20dMA and the flat 100dMA.  Healthway Medical is at a critical crossroads, it would seem.

Looking at the 20dMA, there is no doubt that the counter is in a downtrend in the short term. With the 50dMA declining as well and the 100dMA flatlined, the short term picture is not encouraging.  However, the 200dMA is still rising and if it holds, Healthway Medical could just be going through a period of consolidation.

Today's upward movement in price is probably in response to the oversold situation as suggested by the RSI which has risen out of the oversold territory. The MFI, which has been rising since 18 Aug, signalling a return of demand, however weak, is testing the downtrend resistance.  If it breaks this in the next session, it would provide some much needed momentum to help push price higher.

The MACD, although still declining in negative territory, is seeing its distance with the signal line narrowing and we could be seeing the early stages of a bullish crossover. Remember, TA is about probabilities, not absolutes. Punters could make some nice gains here if everything pans out nicely.

Related post:
Healthway Medical: A low of 16c.

MIIF: Seeing value.

I used to have a very large position in MIIF about a year ago but I've divested most of it.  I still have a smallish investment left in the trust but I am not really doing anything with it.  It broke out yesterday and I blogged about it.  See: MIIF: Breakout.

Today, I received this very interesting email from The EDGE and it seems that we could see MIIF's price going higher in the near future:

Market punters have been fixated on Macquarie International Infrastructure Fund of late, a mutual fund which owns four assets. After selling British broadband operator Arqiva for $238.4 million and Canadian Aged Care for $91 million this March, the fund now owns primarily Asian assets. These are a 38% stake in Changshu Xinghua Port (Jiangsu), an 81% interest in Hua Nan Expressway in Guangdong, 20% stake in Taiwan Broadband Communications (TBC) and a 100% stake in Miaoli Wind, a wind farm in Taiwan.
                   

For 1H10, MIIF announced a distribution of 1.5 cents per share which will be paid on Sept 9. The fund has no borrowings at the corporate level, cash of 36 cents per share, and NAV is 80 cents. Dividends for 2H10 are expected to be maintained, and Macquarie Research has forecast a full-year dividend of three cents for FY10, rising to 3.4 cents for FY11.
 

Why have investors suddenly woken up to the value in MIIF? In a tough market, investing in an infrastructure trust offers yield potential and turnaround potential if it sells its assets. And it isn’t quite the same as investing in property via REITs. For one thing, China isn’t clamping down on infrastructure investment. On the contrary, the country continues to build roads, railroads, renewable energy assets and money is still available to fund their construction.

However, the real reason for the interest in MIIF is probably not China but Taiwan. In the past few months, there has been corporate activity in the broadband and cable TV industry on the island. Taiwan-exchange listed Kbro, owned by Carlyle, was sold in July to the Tsai family, who are Taiwan Mobile’s shareholders. Reuters reported that the price was around NT$65 billion ($2.7 billion), implying a 12–13x EV/EBITDA multiple.
                

Macquarie Research says such pricing implies that TBC is worth NT$51 billion. If so, MIIF’s interest is worth $221 million, the research report states. In 2007, the fund acquired the stake for just $161 million. Meanwhile, another Taiwanese broadband company, CNS, is being auctioned off by MBK Partners and Macquarie Bank and Providence Equity Partners were identified by Reuters as bidders. Macquarie Research says that MIIF could sell its stake in TBC to Macquarie and Providence which could use TBC to acquire CNS. A sale of TBC would add 14 cents to MIIF’s cash balance, Macquarie Research says. TBC accounts for 17% of MIIF’s asset base.
 

Already, MIIF’s discount to its NAV has been narrowing, from almost 70% to the current 30%. Macquarie Research has a target of 70 cents for MIIF. On Aug 26, MIIF announced that Macquarie Bank had raised its stake from 8.88% to 9.06%.

The EDGE Weekend Comment Sept 3, Goola Warden.
Disclaimer: The Edge Publishing Pte Ltd does not accept any liability whatsoever for any direct, indirect or consequential losses or damages that may arise from the use of information or opinions in this newsletter. The information and opinions are not to be considered as an offer to buy or sell any of the companies discussed.

China Hongxing: Taking a break?

On 1 Sep, I suggested that the technicals were pretty strong and the immediate target of 19.5c seemed attainable.  In the last two sessions, however, volume shrank as price got stuck between resistance turned support of 17c and what is now the near term resistance at 18c.

The MFI is declining and it could decline further to retest the support line which would approximate 50% soon.  This could happen if the volume simply declines further without the price having to decline below 17c.  This is a likely scenario given a picture of constant accumulation as suggested by a rising OBV.  A slowdown in momentum is good as some weaker holders are weeded out.

In case 17c support is broken, there should be a rather strong support at 16c.  This is a many times tested resistance and should be a strong support, if tested.  16c is also where we would find the rising 20dMA in the next session.

Related post:
China Hongxing: Immediate target in sight?

AIMS AMP Capital Industrial REIT: Sell the rights.

Now, this blog post's title might make it look as if I have changed my mind about the REIT.  No, I have not.

Some people are wondering if they should accept and pay for the rights or if they should just sell the rights away.  To me, it is a no brainer to accept and pay 15.5c for the rights shares.  With a DPU of 2.08c per annum estimated, post rights, the yield is a most irresistable 13.42%!  In fact, we should apply for excess rights and hope to get more units at 15.5c.

Well, that's all very nice but what if we have no money to pay for the rights or what if we simply do not want to fork out more money? Would our stakes be heavily diluted? Apart from the NTA per unit declining from 31c to 26c, the dilutive effect is not as bad as some opponents to REITs make it out to be.

REITs are income instruments.  Therefore, we must remember that we are investing in REITs for regular income.  The DPU per unit would decline from 2.15c to 2.08c, post rights.  This is a DPU loss of 0.07c a year.  It is not dramatic.  We would also be able to sell away the nil-paid rights when trading starts.  At an exercise price of 15.5c and with expectations that price would see a modest decline to 21c per unit, post rights, we can expect the nil-paid rights to trade at around 5.5c each.  Selling these away would bag 30 months' worth of DPU (post rights) straightaway!  Now, is that such a bad thing?

On top of that, our current investment would still make an annual DPU of 2.08c!  This is provided that everything remains constant, of course.

Accept and pay for the rights or sell away as nil-paid rights, either way, unit holders end up winners.  There will always be detractors but as long as we are clear headed and know what to do in any given scenario, we will be fine.  Good luck to fellow unit holders.

Related post:
AIMS AMP Capital Industrial REIT: Rights issue.

Saizen REIT: Something is brewing?

While chatting in Bully the Bear's cbox, I shared my observation that a certain substantial shareholder seems to be tightening their grip on Saizen REIT.  In fact, they were just accorded two non-executive directorships on the board.  Saizen REIT also gained a CO-CEO, Mr. Koh.  Our dear Mr. Chang is now a CO-CEO too.  Power sharing.  Interesting.  What could be afoot?

Technically, Saizen REIT seems to have turned somewhat bullish although it is early days yet.  The MACD has turned up as the histogram turned green. The MFI is still in oversold territory but it is turning up, possibly forming a double bottom.  The OBV has turned up sharply, suggesting a return of accumulation activities.

Related post:
Saizen REIT: More insider moves.

MIIF: Breakout.

There was a sudden rush to accumulate units in MIIF today as volume expanded and price touched a high of 56.5c before closing at 55.5c.  The many times tested resistance of 53c could possibly be the new support. This needs confirmation.  In case of a breakdown, the 50dMA would be a crucial MA to watch as it served as support very nicely before pushing the price up.

The MACD which was declining until two sessions ago has turned up, completing a bullish crossover. A rising MFI with higher lows shows rising demand and a rising OBV shows accumulation. None of the momentum oscillators are overbought and we could see price go higher if the volume continues to expand.  We could even see a retest of the 12 months high of 58c.  Good luck to fellow unit holders.

Genting SP: Flip flop.

As I was advising caution on Genting SP, some analysts are turning cautious on Genting SP as well, it seems.

Genting Singapore off 1.1%; Gaming demand slows: UOB. UOB KayHian, which has Hold call with $1.59 target, says its own checks show gaming activity at Resorts World Sentosa over July-August points to noticeably weaker 3Q10 vs 2Q10, with traffic in August affected by “hungry ghost” month.
Thursday, 02 September 2010

© 2010 - The Edge Singapore

Genting Singapore down 2.2%; Overbought: DBS Vickers.
Thursday, 02 September 2010

© 2010 - The Edge Singapore

Related post:
Genting SP: An amazing run.

Genting SP: An amazing run.

Genting SP has amazed me with its continuing upward move in price. Many punters must have made good money here.  Congratulations!

Volume has expanded for three straight sessions as price pushed higher.  The volume, although higher, is not dramatically so and there is, therefore, a suggestion that price could be rising from a lack of sellers and not because of an abundance of buyers. The MFI has just joined the RSI in overbought territory and the risk of going long at this point in time is surely higher. OBV shows consistent accumulation and it seems that the party could continue for a bit more but when would it come to an end as all parties do? No one knows and I would advise caution.

Related post:
Genting SP: Twin spinning tops.

Genting Singapore rises to record on earnings outlook
Wednesday, 01 September 2010

© 2010 - The Edge Singapore

SPH: Another white candle.

My favourite blue chip is in top form and has been advancing for several days in a row.  Today, another white candle was formed as price closed at the high of $4.13.  Could we see a retest of $4.20?

Some analysts are saying that there could be a bumper dividend and that is driving accumulation.  Some people are saying that it is just quarterly window dressing and that it is just a blip.  Which camp is right?  I don't know but volume has been pretty high in the last two sessions as MACD formed a bullish crossover and rose in positive territory. The MFI has formed an almost straight line up and seems set to cross into overbought territory in the next session. RSI has already peeked into overbought territory.  OBV, although rising, does not show very strong accumulation activity.

What would I do? If SPH does retest $4.20, I expect that to be a strong resistance as many who missed selling then would sell now.  So, I would sell some at $4.20 and buy back if price retraces to the 20dMA.  Good luck to fellow shareholders.

Related post:
SPH: Doji at $4.00.

SPH +0.7%; More upside as bumper dividend eyed: UOB
Wednesday, 01 September 2010

© 2010 - The Edge Singapore

Golden Agriculture: Breaking out.

Yesterday, I mentioned Golden Agriculture's "next resistance is at 57c. This is where we find the declining 20dMA and the downtrend line." Today, it broke this resistance level in a most convincing manner as volume expanded significantly.  Price touched a high of 58.5c before closing at 58c.

58.5c is a many times tested resistance level and one wonders if this could be taken out as we eye 62c, the longer term resistance which I said could possibly be tested.

Technically, chances are good with both the MFI and RSI rising strongly. Being at around 50%, they are nowhere near overbought and they could go much higher.  The OBV shows accumulation.  The MACD seems ready for a bullish crossover.  Most importantly, volume is the fuel that drives rallies and this has been increasing nicely.  Let us see if this continues to be the case.

Related post:
Golden Agriculture: Moving higher?

China Hongxing: Immediate target in sight?

On 27 August, I mentioned that "China Hongxing's volume expanded today as it retested resistance at 17c. Unlike in early August, the technicals are now looking much stronger and China Hongxing's share price could break 17c this time round."  Today, China Hongxing closed at 18c on high volume.

The MACD has completed a bullish crossover in positive territory. The MFI is rising, forming higher lows, suggesting strong demand and it is nowhere near overbought yet. OBV shows no sign of distribution and accumulation is powering ahead. RSI is just peeking into overbought. Overall, the immediate target of 19.5c identified on 27 August seems attainable.

Related post:
China Hongxing: Retesting resistance.

Saizen REIT: More insider moves.

A substantial shareholder of Saizen REIT, V-Nee Yeh, increased deemed interest in Saizen REIT from 20.201 % to 21.976 % (209,572,352 units).  This is a consequence of the open market purchase of units by ASM Hudson River Fund,  ASM Asia Recovery (Master) Fund and HC Capital Limited.

AND

Chang Sean Pey, CEO of Saizen REIT, converted 842,000 warrants into 842,000 new units.  He now holds 2,200,000 units of Saizen REIT.  This is 0.23% of total issued capital.

The percentage figure of issued share capital (after the transaction) was calculated based on Saizen REIT’s total issued 956,304,205 units as at 30 August 2010. It should also be noted that Saizen REIT had 490,053,212 warrants outstanding as at 30 August 2010.

Related post: 
Saizen REIT: Insiders buy.

Healthway Medical: A low of 16c.

On 17 August, I mentioned that "there is a chance price could decline further.  If it happens, the next support is at 16c." Price touched a low of 16c today on moderate volume.  16c is also where we find the rising 200dMA today. Could this support hold?

The MFI has formed lower highs which suggests weakening demand but it recently emerged from the oversold territory which suggests the return of some demand, although weak.  The OBV does not show any drastic distribution activity while the RSI continues to decline in oversold territory, suggesting that the selling might be overdone.  Lacking in positive catalyst, this counter's price could, however, trade lower.

Taking a look at the weekly chart, we see the 50dMA at 15.5c and this would be a stronger support.

Related post:
Healthway Medical: 17c support.

Golden Agriculture: Moving higher?

The fundamentals of CPO remain good and the recent price weakness in Golden Agriculture was accompanied by rather light volumes. Price broke resistance at 55.5c in today's session and closed at 56c.  55.5c is where we find the 50dMA.  Next resistance is at 57c. This is where we find the declining 20dMA and the downtrend line.  If this resistance level is taken out, we could possibly see the longer term resistance at 62c retested.

The MFI is rebounding from a low while the RSI has risen out of the oversold region. The MACD's decline in negative territory has halted and it is pointing slightly upwards.

Aug 31: Golden Agri, Kim Eng, Yangzijiang, Ezra. Crude palm oil for November delivery increased 1.1% in Kuala Lumpur yesterday, extending its three-day advance to 3.4%.
Tuesday, 31 August 2010

© 2010 - The Edge Singapore

Related post:
Golden Agriculture: Breaking the 200dMA.

Saizen REIT: Insiders buy.

Mr. Raymond Wong Kin Jeon, a director of Saizen REIT, made open market purchases of 2,584,000 units which bumps up his deemed stake from 1,262,100 units to 3,846,100 units. The units are held under HSBC (Singapore) Nominees Pte. Ltd.

A substantial shareholder, Argyle Street Management Limited, made open market purchases which increased its deemed stake from 166,340,912 units to 175,048,912 units.  Kin Chan, who is the beneficial holder of more than 20% of the issued share capital of Argyle Street Management, increased the stake further to 177,469,217 units.  This is 18.609 % of the issued capital of the REIT.

The percentage figure (after the transaction) is calculated based on Saizen REIT’s total issued 953,657,355 Units as at 27 August 2010. It should also be noted that Saizen REIT has 492,700,062 warrants in issue as at 27 August 2010.

Related post:
Saizen REIT: Better than expected DPU.

Tea with AK71: Bought an iPhone 4, almost.

I am an techno dinosaur.  Till today, I do not know how to use Excel.  When a reader asked if I would consider starting a Tweeter account, I couldn't figure out the reason why I should start one. At a recent visit to a customer's shop, one person asked how many in the room had an iPhone and I was the only one who did not answer in the affirmative. Why an iPhone? Maybe, I am an endangered species.

A few weeks ago, I read that people were selling their iPhone 4s at $1,300 to $1,400 at Sim Lim Square! They would re-contract, get their iPhone 4s and sell them for a quick buck.  Does it really work? Recently, my contract came to an end and remembering what I read, I went to Singtel to see if I could get an iPhone 4 and, perhaps, make a quick buck in the process too.

Here's the deal: I had to pay $480 for a new iPhone 4 and upgrade my plan which means paying an additional $20 per month.  I did some math. It worked out to be $480 + $20*24 = $960.  I figured if I could sell the phone for $1,300, I would make $340 right away!  That's not bad.  So, I told the salesman I would take the iPhone 4. 

The salesman gave me a look, that kind that suggested he had seen my type before. Was I that obvious? Maybe, I took too long to do my mental sums.  He asked in a voice that sounded rather bored if I had made a reservation.  A reservation?  Yes, apparently, we had to make a reservation to get an iPhone 4 as there was a long line of people waiting! 

Wow!  Apple is definitely rolling in the dough.  This is the best kind of business to be in, goods are presold and no stocking is required.  A HTC or a Samsung and I would not have to wait.  Nokia only came to mind belatedly.

Anyway, I went ahead and made the reservation after being advised that it would take about 3 weeks before I could get the phone.  I then found out that evening that the price of the iPhone 4 had fallen to $1,080 in Sim Lim Square.  Apparently, the price was very high weeks ago because of shortages.  The supply is not so tight now.  I was too slow. 

I could still make $120 at $1,080 but the price could drop more in another 3 weeks while I waited for my phone. Sheesh! So much work for so little profit plus lots of uncertainty thrown in.  I will stick to a free phone.

Invest in Asian equities and inflation is here to stay.

Invest in Asian equities and forget US Government bonds (Marc Faber on CNBC, 16 Aug 10):



Inflation in Asia is here to stay.  0.125% per annum in interest payment from savings accounts in Singapore banks will erode your wealth:



Related post:
Grow your wealth and beat inflation.

Marc Faber is right again.

"More quantitative easing by the US Fed in September or October", Faber predicted in July, 2010:



It seems that Dr. Doom is right again and it is probably good news for equities:



The Fed "will do all that it can" to support the economy, he said, including "provide additional monetary accommodation through unconventional measures if its proves necessary."

At the top of Bernanke's ‘tool box' are "additional purchases of longer-term securities," including Treasuries and mortgage-backed securities. 

Posted Aug 27, 2010 01:35pm EDT by Aaron Task


Oh, stay away from long term US Government Bonds and buy some gold and silver (Marc Faber on CNBC, 16 Aug 10):




Related post:
Marc Faber: S&P will not fall below 1,010.
Gold: To buy or not to buy.

Hock Lian Seng: Steady accumulation.

Hock Lian Seng's share price retested resistance at 30c. That a gravestone doji was formed in the process suggests that there are many willing sellers at the current level. However, look at the OBV and we see a picture of steady accumulation.  The MFI has formed higher lows which suggests strengthening demand.  So, the sellers at 30c will probably be taken out in good time.

The 20dMA continues to rise and could provide immediate support at 29c.  Breaking 30c resistance would give an immediate target of 31.5c.

SPH: Doji at $4.00.

SPH's price action formed a doji, closing at the $4 resistance level. With the 20dMA still declining and the MACD in negative territory, there is a chance that price could continue lower in the next week.

The MFI has been forming lower highs and the recent uptick in price could be a weak rebound, therefore. For sure, OBV is lacklustre and does not suggest any accumulation activity. Immediate support is found at $3.92, as provided by the 100dMA although a stronger support is at $3.80 or so, which is where we find the 200dMA.  Judging from the high of $4.20 on 30 July and the current resistance of $4.00, $3.80 is also a technical downside target in case of a continuing decline in price.

Feeling the stress in Singapore?

"Singapore, one of the world's richest cities, has a land area of just 710 square kilometres (274 square miles) but until recent years, it had avoided the congested feeling of places like Hong Kong and Tokyo.

"Widely acclaimed as one of the world's most "liveable" cities, Singapore is now experiencing urban growth woes as it moves to expand its population to 6.5 million in 20 years, up 30 percent from the current level of five million."

Some facts:

1.  Tourist arrivals surpassed the one million mark in a single month for the first time in July 2010.

2.  Despite increased train frequency during peak demand periods, trains were more cramped than before.

3.  As of July, there were 936,311 vehicles plying the roads of Singapore, with cars accounting for 61.5 percent of the total, compared to 755,000 vehicles just five years ago.

4.  Demand for homes in Singapore's public housing blocks, where 80 percent of the population reside, is also straining supply. Foreigners who enjoy permanent residency and are eligible to purchase public housing totalled 533,000 in 2009, a 37.8 percent increase from 2005.

Read the full article here.
Singapore shows signs of urban stress.
AFP, Wednesday, 25 August 2010.

Raffles Education: Downtrend in force.

Raffles Education's downtrend continues. Distressed shareholders must be wondering if there is any end in sight. 29.5c is where we find the merged 20d and 50d MAs. This level was previously a support and is now resistance. Volume expanded as price drew to a close at 27.5c in the last session.

The MACD is declining in negative territory.  Momentum is clearly negative. After enjoying a brief period of accumulation from 26 July, distribution activity which started on 11 August has wiped out all gains in the OBV by the end of the last session.  Traders who were nimble enough to offload at 31c before the distribution activity took hold would have made a gain assuming they bought in at 29.5c.

Raffles Education's downtrend is in force and it would take a brave punter to try and make money trading this counter. Selling on rebounds is the strategy to adopt here, at least until there are clearer longer term reversal signals.

Related post:
Charts in brief: 16 Jul 10 (Part 3).

Genting SP: Twin spinning tops.

No matter how bullish analysts might still be about Genting SP, I believe that taking some profit off the table for anyone who is still vested is the prudent thing to do.  Yes, the MFI is still uptrending and OBV shows accumulation.  However, take note that the RSI is in overbought territory and has formed a lower high.  This suggests that the buying momentum is weakening and being overbought, it has to be corrected in time.

The MACD is still rising above the signal line in positive territory but notice how the distance between the two lines is narrowing. Another cautionary signal could be found in the candlesticks formed.  We have twin spinning tops formed in the last two sessions, a sign of indecision and doubly so.  Indecision in an uptrend?  Doesn't sound positive, does it?  Also, notice the huge decline in volume as the counter tries to hang on to its gains.

Genting SP's price seems to have support at $1.50 but gaps are more often than not filled.  So, we could see price touching $1.46 in case of weakness.  From the chart, it is clear that the top of the base formation could be found at $1.30 and this is also where the rising 50dMA would approximate soon.  In case of a dramatic decline, expect strong support at $1.30, therefore.

China Hongxing: Retesting resistance.

On 13 August, I suggested that the immediate support was at 14.5c and anyone who bought some in the sessions which saw a low of 14.5c would be laughing to the bank right now.

China Hongxing's volume expanded today as it retested resistance at 17c. Unlike in early August, the technicals are now looking much stronger and China Hongxing's share price could break 17c this time round.

The MACD has turned up and is poised to form a bullish crossover with the signal line in positive territory. Unlike in early August, the MFI is not in overbought territory now and, this coupled with the higher low formed, bodes well for the counter.  Look at the OBV and we see a picture of gradual accumulation.

Overcoming resistance at 17c gives us an immediate target of 19.5c.  Good luck to readers who are vested.

Related post:
Charts in brief: 13 Aug 10 (Part 1).

Golden Agriculture: Breaking the 200dMA.

CPO at RM2,543 and Golden Agriculture's share price is at 53.5c. The 200dMA is at 54c and closing below this MA is bearish.  The question to ask is could this bearishness be short term in nature.

Although the MFI's dramatic decline has continued, signalling a rapid fall in demand, it is bordering on oversold.  The RSI has, in fact, plunged into oversold territory, suggesting that the strong selling pressure might be overdone.  Looking at the OBV, we do not spot any heavy distribution activities.  This suggests that the selling could be by weaker holders.  In fact, look at the volume and we realise that, although higher than the previous three sessions, it is not dramatic.

Drawing upon the gentlest of uptrend lines from the low of 25 May, we find the next support at 52.5c.  Look at the weekly chart and 52.5c is where we find the 50wMA and this has proven to be a reliable support before.  Very interestingly, look at the MFI and RSI in the weekly chart. They are rising and as price fell in the last three weeks, the MFI continued rising. If price bounces off 52.5c, we could have a reversal on hand.


"Palm oil prices must rise to around MYR3,000 ($955) a metric ton to curtail demand for exports, as bouts of bad weather have limited palm production growth in Indonesia and Malaysia, the world’s top palm oil producers, leading vegetable oils analyst Dorab Mistry said Thursday evening. 

"Global consumption of vegetable oils for food and biofuels will likely grow by 6 million tons during the year to March 2011, while growth in supply of those oils will likely be a dismal 2.3 million tons due to adverse weather around the world, Mistry said in a speech prepared for an industry conference in Belem, Brazil."

-By Shie-Lynn Lim, Dow Jones Newswires;
August 26, 2010 09:00 ET (13:00 GMT)