AusGroup: Update.

AusGroup seems to have some trouble breaking resistance at 61.5c. If we draw a trendline support from 9 Feb, we see the support at 59.5c today, it is quite clear that the uptrend is broken.

However, I would like to point out that volume was rather low and, in fact, it is true for other down days in the past few weeks. Volume has been generally lower on down days and higher on up days for AusGroup recently. This suggests that a longer term accumulation is underway and this is confirmed by the rising OBV in recent weeks. However, with the MFI turning down, I expect some weakness in the near term but I do not expect a crash in price.

If 58.5c gives way, the next supports are at 57.5c (50% Fibo) and 56.5c (38.2% Fibo).  If the price action moves above the trendline support once more, resistance remains at 61.5c.

CapitaMalls Asia: Inverted black hammer.

CapitaMalls Asia's volume expanded on a down day as the 50dMA was breached.  It closed at $2.26, forming an inverted black hammer in the process, which happens to be another possible reversal signal.

OBV has declined but the overall trend of accumulation is still intact.  MFI shows reduced buying momentum while the MACD has dipped below zero, signalling the end of positive momentum.  Having said this, the picture of a low volume pullback has not changed.

Drawing Fibo lines to determine where the supports are in case the price does continue to decline shows the next support levels at $2.25 and $2.23.  The low in February was established at $2.19 and should be a strong support if tested.  The downside is still pretty limited, therefore.

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The Chinese people love to shop. Grand Gateway Plaza in Shanghai:

Golden Agriculture: Partial divestment at 57.5c. (Rabobank's John Baker speaks.)

Golden Agriculture breached the resistance at 57.5c and closed at 58c, forming a nice bullish white candle in the process.  In my usual style, I partially divested at resistance on the way up and it's 57.5c in this case.  I have put in a sell queue at the next resistance of 60c, the previous high.

Although price action formed a white candle today, the slight reduction in volume creates a bit of unease, especially when volume expanded on the STI as the index tumbled almost 46 points to close at 2,887.46.

OBV continues to rise and MFI has turned up, indicating continuing accumulation and a return of positive buying momentum.  This is comforting.  MACD has touched the signal line and a bullish crossover seems imminent.

-------------------------------------------------------
Baker Says Palm Oil `Stands Out' Among Soft Commodities.
22 March 2010, Bloomberg.

A tale of two reversals and Saizen REIT.

In the last two sessions, I spoke of reversals for CapitaMalls Asia and Golden Agriculture and how their prices are likely to move higher.

CapitaMalls Asia disappoints today as its price closed at $2.29, supported by the 50dMA, forming a black hammer in the process.  A black hammer is actually another possible reversal signal.  The trading volume continues to decline which re-inforces the picture of a low volume pullback.  The MFI turned down, forming a lower high while the OBV is more or less flat.   All these suggest that the selling is half-hearted at best.

I continue to believe that buying at the current price has limited downside even though the buy signal on the MACD yesterday was negated today.

Golden Agriculture, on the other hand, put on a satisfying show of strength as it gapped up and closed at 57c, forming a bullish white candle in the process today.  Volume has also expanded with the rise in price, suggesting some sustainability.  The MACD's buy signal is confirmed as it moved upwards today, poised to do a bullish crossover with the signal line.  OBV continues to rise, signalling ongoing accumulation.

MFI, however, continues to decline, suggesting weak buying momentum.  We want to see the MFI turn up as that would signal a strengthening buying momentum.  Otherwise, any appreciation in price might turn out to be mediocre.

Saizen REIT has a new substantial shareholder, Credit Suisse Securities (Europe) Limited.  Credit Suisse Securities (Europe) Limited bought 2,149,000 units on 25 March 10, making it a substantial shareholder with 49,659,000 units or 5.2112 % of Saizen REIT.  Percentage of issue share capital computed based on unit capital of 952,927,055 units.  Saizen REIT closed unchanged at 16.5c today.  Longer term MAs are all rising and the longer term uptrend is intact.

CapitaMalls Asia: Reversal confirmed. (With comments on the US economy.)

Last Friday, I suggested that a reversal might be on hand as price action formed a white spinning top, with stalling selling pressure and continuing accumulation.

MFI turned up today and OBV is still rising as price action formed a white hammer.  Suggestion is for the price to continue rising with immediate resistance being provided by the 20dMA at $2.32.  Breaking this will see the recent high of $2.41 tested as resistance and I have an eventual target of $2.55 which should be the top of a longer basing process. The MACD has a buy signal today.

Buying at the current level has limited downside as it would be almost at the support provided by the 50dMA at $2.29.  Vested.

------------------------------------------------
Growth May Slow But "There's No New Recession Anywhere in Sight"

Posted Mar 26, 2010 01:51pm EDT by Peter Gorenstein



My sentiments are similar for 2010.  This guy makes sense.

And, as for a double-dip recession, Achuthan says it isn't in the cards. "There's no new recession anywhere in sight. In 2010, the business cycle remains your friend," he says with confidence.
---------------------------------------------------

IMF foresees rapid US growth
AFP - Tuesday, March 30

WARSAW (AFP) - – The US economy looks set to return to relatively rapid growth soon, International Monetary Fund chief Dominique Strauss-Kahn said here on Monday. "The US economy, whilst it has been hard hit by the crisis, may recover rather rapidly," Strauss-Kahn said in a speech at the Warsaw School of Economics, during a visit to Poland.

"It's a flexible economy," noted Frenchman Strauss-Kahn, who is managing director of the Washington-based global lender.

"We'll see how rapid the recovery in the US economy can be. But I'm rather confident that the US economy will grow rather rapidly again quite soon," he added.

In January, the IMF raised its forecast for US growth this year to 2.7 percent from output in 2009, from its earlier 1.5-percent forecast. Strauss-Kahn did not say whether the IMF was set to revise its forecast upwards again.

Golden Agriculture: Reversal confirmed.

Last Friday, I suggested that Golden Agriculture spotted a Bullish Harami Cross pattern.  OBV showed a cessation of distribution and a reversal to accumulation.

Price action formed an inverted white hammer today with OBV continuing its rise and the MFI upturning, suggesting a return of buying momentum.  The MACD also spots a buy signal today.  The support at 54.5c is confirmed and is underpinned by the 50dMA.  Immediate resistance at 56c.  In the event that this is taken out, next resistance is at 57.5c.  This is followed by 60c, the recent high. 

The rising 100dMA is at 52c and the rising 200dMA is at 47c.  The longer term uptrend is intact.  In the immediate term, we want to see the price closing above 55c to rejoin the uptrending channel to resume the short term uptrend.  A close above 56c would be a firm signal that the short term uptrend is back in play. Vested.

A movie: How to train your dragon.

I know this has nothing to do with the stock market but we need to unwind and not think of the stock market all the time, right?

I am sharing this with all my readers:



Uber cool! I must watch this movie!

Golden Agriculture: Reversal signal?

Golden Agriculture was sold down yesterday due to negative news regarding Sinar Mas group:

Cargill wants Sinar Mas to address concerns over its agri practices. Cargill has threatened to drop Sinar Mas as a supplier if it fails to address general concerns over alleged illegal logging, a statement on its website said. Top European palm-oil buyers such as Unilever and Nestle have already stopped buying palm oil from Sinar Mas after Greenpeace released a report about forest clearing by Sinar Mas. A statement on the Cargill website said the firm had asked the secretariat of the Roundtable on Sustainable Palm Oil (RSPO) − an industry body of planters and green groups − to investigate the allegations made by Greenpeace "about illegal forest clearance and the Indonesian palm oil company, Sinar Mas.".....

There are two listed plantation companies listed under the Sinar Mas Group: Golden Agri and PT Smart. If Cargill pulls Sinar Mas from its supplier list, Golden Agri’s reputation in the palm-oil products market could be further dented. Furthermore, Cargill would become the third client to remove Sinar Mas from their supplier lists. To recap, Unilever and Nestle have stopped buying from the Sinar Mas Group since Dec 09 and Feb 10, respectively. Unilever accounted for 3% and Nestle for 0.2% of Golden Agri’s sales in 2009. Should Cargill follow suit, the impact could be more material at around 5% of its sales...

Read full report:
http://www.remisiers.org/research//GoldenAgri-260310[1].pdf

Golden Agriculture's price action today formed a doji, closing at 54.5c, seemingly recapturing this support level.  A doji formed after a long black candle in the previous session is a possible two stick reversal pattern which chart watchers call the Bullish Harami Cross pattern.

Although the MFI is down, suggesting a weakening buying momentum, the OBV has turned up suggesting that distribution has stopped for now and, indeed, reversed to see some accumulation.

We will need confirmation in the next session to see if the reversal signal is valid.  In the event of a reversal, the initial resistance is at 56c, a many times tested support turned resistance.  This is followed by 57.5c and 60c, the recent high.

CapitaMalls Asia: White spinning top.

A possible reversal signal is observed in CapitaMalls Asia's chart today: a white spinning top.  This has happened on the back of lower volumes as its price declined, suggesting a classic textbook case of a low volume pullback.  MFI has flattened while the OBV is still showing a gradual rise.  This suggests that the selling momentum has stalled and that accumulation is ongoing.

The 50dMA seems determined to act as the immediate support as its rate of decline slows.  The price action is caught between the 50dMA and the 20dMA which has flattened at $2.31.

Bollinger bands will squeeze as the volatility in price action falls.  The probability of an upward movement in price is higher than a downward movement in this instance.  The target of such an upward movement is the top of the base formation which is also where we find major resistance and that is at $2.55.

Saizen REIT: 1,627 lots bought up.

It is quite obvious that Saizen REIT is rangebound between 16c and 17c since late February.  The gradually rising MAs suggest that the longer term uptrend is intact.

Today, a single buy order at 3pm mopped up the entire sell queue at 16.5c. 1,627 lots bought up.  This caused the MFI and OBV to turn sharply up.  The MFI has been dipping in and out of the oversold region recently.  There is a lot of room for the index to move in the event of an upturn in price before it becomes overbought.

Is the high volume buy up today a one-off event or is it the beginning of more aggressive buy ups? Your guess is as good as mine. My purchase of Saizen REIT units is based on its compelling valuation and a potential upgrade by rating agencies.  I shall wait and see.

Golden Agriculture: Broke supports on higher volume.

Golden Agriculture broke all supports today on higher volume to touch a low of 53c before closing at 54c.  That the OBV and MFI both show obvious decline indicates heightened selling pressure.

The rising 100dMA is at 52c which happens to be the recent low as well.  This should provide some support in the event that the price continues to decline.  This is where I will queue to buy more but I will not break my piggy bank because if this breaks, the rising 200dMA is at 47c.  That is some way to fall.

Is this a whipsaw or the start of a downtrend? It is hard to say at this point in time but it is never wrong to be cautious especially when today's decline happened on the back of much increased volume.

----------------------------------------------------------
From Budi Wijana, Vice President Director, PT SMART Tbk, in response to the Indonesia Stock Exchange’s letter dated 18 March 2010:


"Nestle has recently announced that it has discontinued the Company as its supplier for Nestle’s manufacturing in Indonesia arising from a recent Greenpeace’s report based largely on earlier related allegations. We will continue our dialogue with Nestle and seek ways to verify the Greenpeace’s report.


"We would like to reiterate our commitment to the production of sustainable palm oil, our full compliance with the Indonesian Government rules and regulations, and our adherence to the Roundtable on Sustainable Palm Oil’s principles and criteria for sustainability.

"Sales to Nestle represented approximately 0.2% of the Company’s total sales in 2009. The outstanding contracts will be fulfilled by Nestle. Nestle’s decision will not have a material impact on the Company’s financial condition because the size of its purchases is not significant and our products have ready buyers and a strongly established and growing demand base in both the local and export markets."

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_06519F0A59E673D3482576EB0038E4A9/$file/BEINestlePutuskanKontrakNo007190310EngFinal.pdf?openelement

Healthway Medical: Touched 16c.

A declining MFI shows weakening buying momentum but a flat OBV says that there is no distribution.  So, the overall picture is one where selling is being absorbed quite well.  This is all the more impressive when we realise that the volume is the highest in seven sessions.  However, the volume is still lower than ten sessions ago when price action hit a high of 18.5c.  Therefore, overall, the picture of a low volume pullback is still intact.

Forming a doji at 16c today is meaningful.  I have suggested that 16c is an important support as it is the midpoint of the recent high at 18.5c and the recent low of 13.5c.  If 16c holds up, we would have the formation of a higher low but if 16c breaks, Healthway Medical could see the formation of a double top.  I would keep an eye on 16c.  It is critical that it holds up.

Related post:
Healthway Medical: A beautiful symmetry again.

LMIR: Bought more at 48c.

LMIR's chart looks like it might be in the early stages of a symmetrical triangle.  Since late January, the price action has been trapped between 47.5c and 51c.  Stochastics has turned up and seems ready to emerge from the oversold region.

Using Fibo lines to determine where the supports are, we see clearly that 48c and 47.5c are important supports.  47.5c is the support to watch.  If it breaks, the symmetrical triangle is out the window and we have to see if the rising 200dMA holds up well as the new support then.

As the reason for buying more units in LMIR recently is to lock in a yield of 10% per annum, I am unfazed by any near term weakness in the counter's price.  In fact, I bought more at 48c.

CapitaMalls Asia and AusGroup.

CapitaMalls Asia: Price closed below the trendline support today at $2.29, after touching a low of $2.28 (the 38.2% Fibo line).  Technically, this is supported by the declining 50dMA.  The decline is on the back of low volume with the MFI and OBV more or less unchanged.  These signs suggest that a benign low volume pullback is taking place.  However, this does not mean that price would not continue to drift downwards.  If the $2.28 support is broken, the next support level is at $2.25 which would see me buying more.

AusGroup:  Nice up day with price closing at resistance provided by the 50dMA at 60c after hitting a high of 61.5c on the back of increased volume.  MFI and OBV have both turned up which suggest that buying momentum and accumulation are both moving up a notch. 

We have a buy signal on the MACD as well and it seems poised to cross above zero. Resistance is provided by the merged 100d and 200d MAs at 63c. Initial support is at 58.5c. A negative is the long wick on the white candle which suggests selling later on in the session today.  This adds a cautionary tone in an otherwise positive picture.

Charts in brief: 23 Mar 10.

Golden Agriculture: 56.5c, up 0.5c. The rising 20dMA has been doing a great job of supporting the price so far.  Buying at the initial support of 55.5c yesterday and a bid higher at 56c as a hedge, I am now waiting to buy more if the price corrects to 55c and 54.5c.  No satisfaction as yet.  Lower trading volume since the high formed on 10 March suggests that this is a low volume pullback.  Looking at the OBV, we do not see any obvious distribution.  Looking at the MFI, 50% appears to be functioning as a support.  The underlying support is intact.

Healthway Medical: A low volume black candle day as price closed unchanged at 16.5c.  MFI continues to decline and a lower low is a forgone conclusion, suggesting that the buying momentum is weakening yet again.  OBV has flattened and this suggests a temporary respite from distribution activities.  16c remains the support to watch.

CapitaMalls Asia:  $2.32.  I did a FA for this counter recently when a reader asked me about it.  This is the first time I am doing a TA for this counter as I think it is beginning to look interesting technically.  The counter is fundamentally strong and, technically, I see a fairly good entry price at $2.30.

Looking at the OBV, it is fairly obvious that distribution peaked on 11 Feb 10.  There has been a slow but gradual accumulation since then.  Despite a sharp decline in the MFI since 12 Mar 10, the OBV has been rising gradually.  This suggests that even as the buying momentum declines, the weakness is being seized to accumulate more shares here as weak holders sell out.

Price action went momentarily below the trendline support today which is almost where the 50dMA is at $2.30.  $2.30 is also the 50% Fibo support.  There is a good chance that the price will move higher from here as the 20dMA is rising and there is an uptrend channel since the price bottomed in February at $2.19.  The target of the next move up could be estimated by looking at the trendline resistance which I have drawn by connecting the two recent highs.  In time, we could expect the top of a larger base formation at $2.55 to be tested.

Downside seems limited.  In the event that the price moves lower, supports are at $2.28 and $2.25, the 38.2% and 23.6% Fibo lines.

Charts in brief: 22 Mar 10.

Healthway Medical: Decline continues as the MACD makes a bearish crossover with the signal line.  MFI's decline is accompanied by a decline in OBV.  This accentuates the bearish picture.  The 50dMA might be tested next at 16c.  Technically, 16c should be a support to watch.  Please see: Healthway Medical: A beautiful symmetry again.


Golden Agriculture: Price hits first support level at 55.5c today.  Even as the MACD makes a bearish crossover with the signal line, the MFI and OBV remain more or less unchanged.  The technicals suggest that there is weakness but no strong selling pressure.  I would continue to accumulate at supports as we might see 55c and 54.5c tested. Please see: Golden Agriculture: Approaching supports.

AIMS AMP Capital Industrial REIT: We have a buy signal on the MACD today as price rose 0.5c to close at 22c.  It remains to be seen if the flat 50dMA at 21.5c is resistance turned support.  Top of the base formation is at 23c.

Saizen REIT: A friend mentioned to me that it is very hard to get units of Saizen REIT at 16c these days.  Today, some lucky fellow queueing to buy at 16c got 3 lots.  Saizen REIT's daily MAs continue rising gently.  MFI is in the oversold region.  In the weekly chart, the Bollinger bands are beginning to squeeze and this bears watching.  Technically, the uptrend is intact and suggestion is that the picture might not remain placid for too long.

LMIR: Although the price stayed at and above the 49c support throughout the day, MFI and OBV declined sharply with the price moving down to 48.5c minutes before closing and then 48c in a post closing trade.  That the decline was on the back of increased volume suggests that the price might go on to test the previous low at 47c and the rising 200dMA 46c.  I would accumulate more then.  Please see: LMIR: Weakness is an opportunity.

Genting SP: Obvious downtrend.

Genting SP is in an obvious downtrend.  On 5 March, I said: "If the 50wMA (93.5c) is taken out in the next session, we might see the price rising to the 20dMA, which is descending sharply and should be at 97c then. All eyes would be on whether the price action would be able to break through the 20dMA to close higher, failing which, a resumption of the downtrend is more likely. I still see strong supports provided by the 100wMA (74c) and the 200wMA (70c) then."

Genting SP's price rose past the 20dMA and reached a high of 97.5c on 17 March, forming a white spinning top in the process.  The higher high formed on the MFI shows that buying momentum has strengthened recently.  However the OBV's rise does not mirror the steep fall weeks ago which suggests that the recent accumulation is weak.

On 15 Mar, I said:"This counter has been enjoying a revival lately but on decreasing volume. Daily volume has been lower with the price moving higher since 5 March, the day when price and volume spiked up. This suggests that the buyers are, probably, mostly shortists covering their positions. This is not to say that the price cannot move higher but without a significant number of new participants coming in on the long side, any move upwards would lack sustainability."  The negative divergence in price action and volume is still quite obvious and my earlier observations are still valid.

In the event that price does move up higher, immediate resistance is provided by the 200dMA at 99.5c.  Declining 50dMA is at $1.05.  Lady Luck could be quite generous on occasions.



Related post:
Genting SP: Stale bulls' second chance.
Charts in brief:15 Mar 10.

Charts in brief: 19 Mar 10.

AIMS AMP Capital Industrial REIT: This is more a buy because of the strong fundamentals but it's interesting to see how the price has not been able to move beyond 21.5c this week.  The price is basically being resisted by the flat 50dMA at 21.5c.  The rising 20dMA is currently at 21c and it looks like it is on course to do a golden cross with the 50dMA.  Nice. This might take another couple of weeks.  This counter is still basing and the top of the base formation is at 23c.

China Hongxing: A sell signal is seen on the MACD today, the first in almost two weeks.   The descending 20dMA nears 15c next week and this might pressure the price to move lower.  Please see: China Hongxing: Downside target?

FSL Trust: It had a nice run up recently but the price action has detached from the upper limits of the Bollinger bands. Is this a sign that price will correct downwards? If we observe how the price action has been affected by the rising 20dMA recently, we would notice that the 20dMA was pushing up the price, forming steps in the process. So, FSL Trust has been doing a correction using time instead of a correction in price. Could it continue its winning streak? The technicals point to the negative.

The MFI has been in decline in the last few sessions, suggesting that the buying momentum is fizzling out.  The MACD's rise is also less vigorous now and the distance with the signal line has narrowed, increasing the chances of a bearish crossover.  The 200dMA has also flattened, together with the 50d and 100d MAs.  Being trapped in a sideways trading range might a more probable near term development.  Support is seen at 60c thereabouts, the confluence of the 50d and 100d MAs.

Golden Agriculture:  MACD seems poised to make a bearish crossover with the signal line.  Price action formed a doji today, signalling indecision.  Someone said to me that the price refuses to fall to the supports I have identified.  Well, we could consider a hedge and buy a bid above initial support which means buying at 56c.  Hedging has always worked for me.  All MAs are still uptrending and I believe that buying at supports is still the way to go.

Healthway Medical:  Similarly here, the MACD seems poised to make a bearish crossover with the signal line.  Although the MFI has been forming lower highs and lower lows, the malaise has been accompanied by decreasing volume.  So, there is no heavy selling. 

Rising 20d and 50d MAs are at 16.5c and 16c respectively.  It remains to be seen if the price action will respond to these two MAs or will it respond more to the 100dMA like what happened in mid-February.  Remember that low volume does not mean that price cannot drift lower.  This is quite evident in the price decline which happened from 26 Jan to 12 Feb on declining volumes.  The 100dMA is currently at 14c.

Saizen REIT:  Saizen REIT closed unchanged at 16.5c, a price it has maintained for the last three sessions.  This is admirable if we notice how the counter has been subjected to some heavy selling which suggests that support is strong.  The uptrend, though gentle, is quite obvious.

LMIR: Weakness is an opportunity.

LMIR closed 1c lower at 49.5c today, supported by the 50dMA.  Forming a wickless black candle on increased volume, more downside looks probable.  However, with the 20d and 50d MAs merging and rising in tandem, we should see support at 49c.  The trendline support nears 49c next week and 49c also happens to be a 38.2% Fibo support.

There is obvious distribution taking place today and this can be easily seen in the OBV but the longer term picture of accumulation is intact.  MFI continues to form lower highs and higher lows and the index does not indicate any trend per se.  The MACD turned down towards the signal line and we will have to wait and see if a bearish crossover takes place or if there will be a reversal.

I bought more units at 50c and 49.5c today.  I will now wait to see if the 49c support holds up next week.  If the 49c support breaks, we might see LMIR moving lower to test the recent low of 47c or even move to test the rising 200dMA as support.  The 200dMA is currently at 46c.

I mentioned that I have been waiting for months to buy more at 46c and I am probably not the only one.  If LMIR does test the 200dMA at 46c, I'm going to buy many more units to lock in a yield of almost 11%.  This weakness presents an opportunity to accumulate.

Related post:
LMIR: More units at 10% yield.

Golden Agriculture: Approaching supports.

The price of crude palm oil declined RM57 or 2.2% today to close at RM2,538.00.  Since testing the three months high of RM2,710, CPO's price has been in retreat.  There is a danger that we might see the formation of a double top.  This is quite clear in CPO's three month chart.  The neckline? RM2,400.00.  This situation bears watching.

On 12 March, in a post titled, "Golden Agriculture: Waiting for support", I said that "The ascending 20d and 50d MAs have merged and should provide initial support at 55c. I have also drawn a line connecting the previous two lows which would give an indication of where the trendline support is in the next session, 54c. If this uptrend is violated, the ascending 100dMA would be called upon as support, 51c." 

These observations are more or less still valid except that the trendline support is now higher up at 54.5c which also coincides with the gap support.  Interestingly, 54.5c has been a gap support and gap resistance in the recent past before 5 March. It is also a many times tested candlestick support and resistance level.  This implies that it should be a strong support if tested.

Golden Agriculture's price retreated 1c today to close at 56c.  This is after starting at a high of 57.5c in the morning.  So, we have a wickless black candle today.  Very bearish.  The MACD looks set to make a bearish crossover with the signal line. 

Expecting further weakness in price, I am ready to accumulate at supports.  However, if the price breaks through all the near term supports I have identified including 54.5c which I expect to be a strong support, I would wait to buy more closer to the rising 100dMA which would be around 51.5c next week.

LMIR: More units at 10% yield.

I have liked the Indonesian economy for some time now.  In fact, I've liked it before the onset of the last crisis.  I was accumulating units in LMIR when many others were giving it the "Indonesian discount".  During the last crisis, I bought more units in LMIR.  Just like units in First REIT which I bought at 42c during this last crisis, these units are for keeps as they have an estimated annual yield of 14.5% on average.  They have also appreciated nicely in price, of course.

Much of my funds was held in my investments in Healthway Medical and Golden Agriculture for many months.  I divested much of my positions in these two counters in January 2010 and again earlier this month, bagging some nice gains in the process.  See: Rationale for partial divestment. 

With the gains from the partial divestments, I have since increased my exposure in AIMS AMP Capital Industrial REIT and Saizen REIT to increase the size of my high yield portfolio.  After all, the core aim of my investment activities is to generate passive income streams with high yields. 

I have also been waiting for a chance to buy more LMIR at 45c to 46c since January when it declined after forming a high of 53c.  Unfortunately, it never did sink that low.

In LMIR's latest report, its NAV is a higher 83c per unit with gearing at a very healthy 10.5%.  At today's price of 50.5c, the discount to NAV is almost 40%! Yield is also a very attractive 10% at the current price of 50.5c.  The numbers are good.

Fundamentally, I believe in the strength of the Indonesian economy.  Susilo Bambang Yodoyono has led the country through the recent crisis without it sinking into a recession and the economy is likely to register even stronger growth in the next two years.  Indonesia has a large domestic economy and domestic consumption accounts for 60% of its GDP.  LMIR will be a key beneficiary of such a situation in an improving economy.

On the REIT level, LMIR's very low gearing will allow it to make yield accretive purchases without having to resort to asking for funds from existing unitholders.  LMIR will also have a ready stock of malls from its sponsor, Lippo, in Indonesia.  In the event that such purchases take place, we would most likely see an increase in the REIT's distributable income.  I also like the fact that Singapore's Mapletree, a Temasek company, is a partner in the joint management of LMIR.  LMIR has a strong pedigree.

Although I like the fundamentals of LMIR, I have been waiting for an entry point using TA.  On hindsight, when LMIR was testing the lower limits of the Bollinger bands at 47c, those instances could have been good opportunities to buy some units but the MACD was negative and the price could have gone lower.  So, I held back.

Anyway, I have been waiting for a couple of months but the merged 20d and 100d MAs are moving up in tandem now and seem to be giving LMIR a much needed push upwards.  Also, the price action seems to have formed a mini double bottom in February with the neckline at 50c.  This neckline is also a many times tested resistance for LMIR and will be a strong support one day, as a result.  Today, LMIR traded at and above 50c.  We will need confirmation on whether 50c is the new support in future sessions.

MACD has turned positive and the the OBV shows gradual long term accumulation.  All signs point to an increased level of safety in buying LMIR now.  Any negatives?  The volume remains low which seems to indicate a lack of sustainability.  However, if we remember, apart from a few occasions, LMIR has always been a relatively thinly traded counter despite having 1.075 billion units in issue.  If we look at the list of shareholders, we will know why:

1. Lanius Ltd                         19.7%
    (includes Lippo Karawaci)
2. Mapletree                          13.2%
3. Stichting Pensioen              9.9%

4. CPI Capital Partners Asia  8.4%
5. ABN Amro Asset Mngmt  6.4%

The free float is only 42.4% of all available units!

So, I decided to buy up some units today at 50.5c to increase the weight of LMIR in my high yield portfolio.  If 50c is confirmed as the new support for LMIR, I will buy more.  More units at 10% yield in the bag!

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The following was added on 18 March 2010:

Indonesia c.bank revises up GDP, sees low H1 prices


JAKARTA, March 11 - Indonesia's central bank has revised up its 2010 economic growth forecast to 5.5-6.0 percent from an earlier 5.0-5.5 percent rise, helped by stronger exports, deputy governor Hartadi Sarwono said in a statement on Thursday.


The central bank, which maintained its economic growth forecast for 2011 at 6.0-6.5 percent, also forecast no significant inflationary pressure in the first half of 2010. Stronger economic growth was being partly led by exports, Sarwono said.


"Besides strong domestic demand, the recovery especially comes from external factors, which is in line with the global economic recovery," he said in a statement on the central bank's website .


Southeast Asia's biggest economy reported a surge of nearly 60 percent in exports in January to $11.57 billion, bouncing back from a low base a year earlier... - Reuters - Friday, March 12


Related posts:
High yield portfolio.
New global economic leadership.
Lippo Mapletree Indonesia Retail Trust.
First REIT: This one is for keeps.

Japan's 2010 economic outlook.

I rarely cut and paste entire articles but I am sure that there are many who are concerned about the Japanese economy despite what Marc Faber might say about being a contrarian.  So, I am sharing this latest report from Bloomberg here:

Double-dip worries abating

Tokyo upgrades economic view for first time since July


05:55 AM, Mar 16, 2010, TOKYO - The Japanese government yesterday raised its assessment of the economy for the first time in eight months, saying the recovery had begun to spur profits, home building and consumer spending.

"The economy has been picking up steadily," though it remains in a "difficult situation" because of high unemployment, the Cabinet Office said in its report for March. It added that the rebound was still weak.

Reports in the past month have shown that the nation's export-led recovery is starting to benefit consumers, with wages rising for the first time in 20 months in January and households increasing spending for a sixth month. Yesterday's upgrade comes on the eve of the Bank of Japan's board meeting, where the central bank may expand credit measures amid deflation.

"There are budding signs for a self-sustaining recovery in domestic private demand," Finance Minister Naoto Kan said yesterday.

"Concerns over a double- dip recession are abating," he added.

The Cabinet Office raised its evaluation of corporate profits, business investment, consumer spending, housing construction and employment.

The upgrade of five components is the most since July 2009. The government had said last month that the recovery was "short of autonomous factors".

Earnings are "improving" and capital spending "is starting to level off", the report said. Housing construction and private consumption are "picking up", it said.

Profits surged 102.2 per cent in the three months ended Dec 31 from a year earlier, the first increase in 10 quarters, a Finance Ministry report showed this month. Capital spending fell 18.5 per cent, the smallest decline in a year.

The unemployment rate dropped to a 10-month low of 4.9 per cent in January. Though the labour market remains severe, evidence of an "incipient recovery can be seen recently", the government said.

The improvements in the job market helped consumer confidence climb to a four-month high in February, a separate Cabinet Office report showed yesterday. Bloomberg

Charts in brief: 16 Mar 10

The STI defied gravity to add 22.1 points today, closing at 2,896.43, it is only a bit more than 100 points away from the magic number 3,000.  However, today's volume of 1,143,954,590 and total value of  $989,019,766 suggest that the upward movement is weak.  Volume is low and the value is lower.  Activity has clearly reduced and moved to the pennies.

It would not be wrong to lock in some gains for anyone vested in index linked counters. For anyone looking to add to their positions, waiting for a pullback might be prudent.  However, if in doubt, my strategy is always to hedge.  For the person who is vested, divesting half of his position might be a good idea.  For the person looking to add to his position despite the technicals, adding a smallish position would be less risky.

Saizen REIT: 469 lots sold down at 16c towards the closing bell pushed the MFI further into oversold territory.  Stochastics has also dipped into oversold territory.  That buying momentum is lacking is quite obvious.  Any further weakness would be an opportunity to load up.

Golden Agriculture:  Price closed unchanged on lower volume today. It has formed higher highs and higher lows since early Feb.  Uptrend is intact and I am still waiting to collect at supports.

Healthway Medical: A black candle day on increased volume.  Since mid January, this is a rare black candle day with such high volume.  A decline in the OBV indicates that distribution is underway.  A lower high and a lower low on the MFI confirms weaker buying momentum. The MACD is closing in on the signal line which might result in a bearish crossover.  Initial support is still at 16c and it looks like it will be tested.

Charts in brief: 15 Mar 10

I decided to just do a summary, charts not included, to highlight what I think might be some interesting observations for a few counters I charted this evening.  I call this "Charts in brief" and this will be something I might do more often as and when I don't really have a lot to say about any counter in particular.

Golden Agriculture: The sell signal on the MACD is confirmed today.  Price closed at 57c, forming a doji, on reduced volume.  I am still waiting to accumulate at support.  Please see: Golden Agriculture: Waiting for support.

AIMS AMP Capital Industrial REIT:  MFI and OBV both turned up.  The MACD has crossed zero, suggesting a return of positive momentum.  An expansion in trading volume with the next upmove in price would be nice.  Please see: STI and Aims Amp Capital Industrial REIT.

Healthway Medical:  A black candle day but on much reduced volume.  OBV is flat.  So, no distribution.  MFI declined but is still in the overbought region.  Although the uptrend is intact, buying on weakness would be a safer option than buying now and hoping for a breakout.  Basically, the risk premium is much higher now.  Please see: Healthway Medical: A retest of recent high.

Saizen REIT: MACD seems set to make a bearish crossover with the signal line.  MFI has gone into oversold territory; buying momentum is weak. OBV has dipped.  This is a sign of distribution.  The uptrend is intact even if the price should retreat to 15.5c. I know many people ready to pounce on the counter if this should happen.  I would buy more on weakness.  Please see: Saizen REIT: March 2010 presentation.

Genting SP:  This counter has been enjoying a revival lately but on decreasing volume.  Daily volume has been lower with the price moving higher since 5 March, the day when price and volume spiked up.  This suggests that the buyers are, probably, mostly shortists covering their positions.  This is not to say that the price cannot move higher but without a significant number of new participants coming in on the long side, any move upwards would lack sustainability.  Please see: Genting SP: Stale bulls' second chance?

Saizen REIT: March 2010 Presentation

Regular readers would know by now that I am accumulating units in Saizen REIT as it is a huge bargain.  I have likened it to buying a $2.9m condominium unit for $1.6m before.  That analogy still stands.  On 3 March 2010, Saizen REIT's manager, Japan Residential Assets Manager Limited, presented their latest results and I would like to share some numbers here with fellow unitholders and other interested parties.

The NAV per Unit is S$0.40.  However, some are worried that the portfolio of properties under YK Shintoku might be foreclosed.  In case of foreclusure, the NAV per Unit excluding YK Shintoku would be S$0.36.  On top of this, some are worried about the dilution that would take place once all the warrants are exercised.  In such an instance, the diluted NAV per Unit would be S$0.28.  The diluted NAV per Unit is based on 1,446,357,417 Units and warrant proceeds of S$44.7 million.  Please find the full details at:
Saizen REIT: March 2010 Presentation

Saizen REIT is on track to resuming income distribution to unitholders in mid 2010 and its gearing level would fall upon the the full repayment of its CMBS loan for YK Keizan in April next month. A re-rating upwards by credit agencies is highly probable.


Although Saizen REIT's remaining CMBS loan for YK Shintoku is still being negotiated, personally, I do not foresee foreclosure taking place. If the loan is still being serviced, why would the lender want to proceed with foreclosure, especially with the punitive (aka lucrative) interest rate of 7% imposed on the borrower, more than doubling from the 3% before? Having said this, it would be in the interest of all unitholders that Saizen REIT's manager secures re-financing at a more reasonable cost soon.

June 2009 data from CB Richard Ellis, Colliers International, show that the average rental yield in Japan is the highest for residential properties at 5.5 to 6.5% p.a. This is followed by industrial properties, retail properties and office properties. Such high yields have attracted the attention of institutional funds which are expected to snap up assets at bargain basement prices. It is when things look the bleakest that the most opportunities are to be found. According to one Japanese investment bank analyst, for example, “we’ve been approached recently by many pension funds that want to increase their exposure to real estate because they realize prices are going down. They are happy to buy early because their return target is very low, maybe 5 percent.”

Some people have asked me why not go buy some Japanese residential real estate? Well, obviously, I do not have deep pockets like the institutional funds. I won't be able to buy a single apartment in Japan, let alone a whole apartment block.
The way I see it, Saizen REIT's financial health has improved significantly and will continue to improve. With its units trading at such a deep discount to NAV, if I have the money, why bother buying the underlying assets? I would just buy the REIT. To make it more tantalising, Saizen REIT is likely to yield upwards of 10% p.a. when it resumes income distribution to unitholders from mid 2010.  This is much higher than the average of 5.5 to 6.5% yield for Japanese residential real estate as reported by CB Richard Ellis, Colliers International in their findings published in June 2009.

Some people I spoke to responded by saying they have missed the boat and lamented that they should have bought some units when it was 10c.  I would tell them that I started buying at 13c, not 10c, and I am still buying today.  Why? The fundamentals are still very compelling and the charts look good.

Related posts:
Passive income with high yields: Saizen REIT.
Buy Japanese real estate.
Saizen REIT: Long-term buy.
Saizen REIT: A symmetrical triangle?

China Hongxing: Downside target?

On 6 Mar, I had a post titled, "China Hongxing: Another S-chip bites the dust."  In that post, I said: "Analysts are downgrading the prospects of the company en masse despite the company reporting a net cash position of 22c per share. The share price closed at 14c on 5 March. CIMB-GK and Kim Eng Securities even ceased coverage of the company altogether."

In 12 Mar, Lim & Tan Securities, remarked that although China Hongxing's price has declined, at the current level, it is still expensive compared to peers.  "While Hongxing has declined 14% since we downgraded it to a Sell on 2 March ’10, we see no reason to change it due to its still demanding valuations and potential for more market share loss..."

Technically, I mentioned that "..14c is currently at the channel support. However, if this breaks, the next support is at 12c and a stronger one is at 10c. Any upmove from 14c is likely to be just a rebound from oversold conditions and would meet with resistance at 16c, thereabouts, which is provided by the descending 20dMA. If, in the unlikely event that the 20dMA is taken out, very strong resistance is provided by a confluence of the 50d, 100d and 200d MAs, which are at 19c, thereabouts."

The decline in China Hongxing's price seems to have halted and rebounded as it was supported by the channel support at 14c.  The decline in price has been accompanied by a decline in trading volume.  The Stochastics has just turned up from the oversold region.  These indicators suggest that downward pressure is limited but it might be a temporary respite.

A broader head and shoulders pattern which stretched over a duration of about nine months is now quite obvious.  This, coupled with the obvious downtrend of all the moving averages suggest that more downside is on the cards.  Accumulating at supports in an uptrend is a good idea.  Accumulating at supports in a downtrend is a different story as supports could quickly become resistance.

Using Fibo lines, we see that 14.5c is a 123.6% support.  Unless there is an upmove with meaningful volume in the near future, a test of the 138.2% Fibo support is most likely and that is at 13c.  Thereafter, the 150% Fibo support is at 12c. Further downside cannot be discounted as a valid head and shoulders pattern would see the ultimate downside target somewhere at 10c.

The following video clip is quite funny.  It has a twist in the end.   I thought since this post is about a sneakers manufacturer, why not?  In case you are wondering, no, I'm not working for Microsoft and they are not paying me to do this.  Enjoy:



Related post:
China Hongxing: Another S-chip bites the dust.

Healthway Medical: A retest of recent high.

Healthway Medical moved from 17.5c to retest the recent high of 18.5c in the last session but failed to move higher, establishing 18.5c as a strong resistance in the minds of market participants.  This is all the more significant when we remember that the price action was accompanied by volume more than four times that of the previous session.  This might be a bit more than disappointing for shareholders looking forward to the formation of a new high.  The nagging question on their minds: Is it a sign that distribution has started?

Technically, any price movement up or down without significant volume is seen as unsustainable.  What about significant volume without any significant price movement?  Usually, it means we have a stalemate between the bulls and the bears.  Neither camp is willing to give the other any satisfaction.  That the price managed to inch up 0.5c at the close was a small victory for the bulls.  That 18.5c remains a significant resistance was a small victory for the bears.

Looking at the MFI, the decline has halted and formed a higher low.  The buying momentum stopped weakening although it has not strengthened enough to form a new high.  Now, look at the OBV.  No sign of distribution.  Instead, accumulation has spiked.  This is bullish.  Finally, the sell signal on the MACD has been negated.  All signs point to the bulls having the upper hand, for now.  However, we have to remember that these are lagging indicators.  TA can never tell us what will happen for sure.

So, in the event that price does not move up but declines instead, we should have a plan.  The uptrend is intact.  So, my usual style is to buy at supports.  Initial support is where we find the merged 20dMA and 50dMA.  Connecting the two previous lows yields a trendline support that coincides with these merged MAs at 16c.  This should be the initial support and also a strong one, albeit in the short term.

Related post:
Healthway Medical: A beautiful symmetry again.