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Sunday, September 30, 2007

KMLoong- another medium-size plantation stock to consider

Background

Kim Loong Resources Bhd ('KMLoong') is involved in the cultivation of oil palm & palm oil milling. KMLoong owns about 12,960 hectares of oil palm estates located mainly in Sabah (of which 1,093 hectares are located in Johore).

Recent Financial Results

KMLoong has just announced its results for QE31/7/2007, where its net profit jumped by 159% q-o-q or 183% y-o-y to RM11.8 million, Turnover has soared 64% q-o-q or 74% y-o-y to RM111 million. The improved performance is attributable to 30%-increase in FFB prices as well as 26%-increase in CPO prices.



Valuation

If KMLoong could maintain the same earning of 6.71 sen in QE31/7/2007 for the full year, its EPS would jump to 26.84 sen. Based on its closing price as at Sept 28 of RM2.41, KMLoong would be trading at a PE of 9.0 times. The stock is trading at a slight discount to the plantation sector's average PE of about 13 times.

Technical Outlook

From the chart below, you can see that KMLoong is in a steady uptrend. Ignoring the sahrp spike-down in February & August, a buy at about RM2.20/30 level is probably near its uptrend "line".


Chart: KMLoong's daily chart as at Sept 28 (courtesy of Tradesignum.com)

Conclusion

Based on the good financial performance & nice technical outlook, KMLoong is a BUY for the medium-term.

Friday, September 28, 2007

CWs for HK stocks as at September 28, 2007

Since my update yesterday, we have another 2 new CWs (of Hong Kong stocks) listed today, i.e. CHLIFE-C4 and PETROCH-C4 (which are highlighted in blue). These are all non-collateralized European-style cash-settled CWs issued by CIMB. Like before, I have highlighted in green those CWs that are currently trading at a premium of less than 4%.

Ann Joo may continue its uptrend

Ann Joo has done very well since I posted a BUY for this stock in August last year (go here). After making a high of RM4.06 in April, the share price has been consolidating in a pattern known as a pennant. The share price broke to the upside, with big volume yesterday (with the breakout at RM3.80). Today, the share price has retraced back to the breakout level. If the share price can sustain above RM3.80, there is a good chance that this stock may continue its uptrend soon.


Chart : Ann Joo's daily chart as at September 27 (courtesy of Quickcharts)

Thursday, September 27, 2007

F&N may have a bullish breakout

F&N has been consolidating between RM6.80 and RM7.80 for the past 1 year. Recently, the company has announced that it will be investing RM430 million to build a dairy production plant each in Malaysia & Thailand under its expansion plan. This follows its successful acquisition of Nestle's canned milk, UHT and chilled dairy & juice business , which was completed in February.

The share price has also recovered steadily since making a low of RM6.75 in August selldown. Today, it managed to surpass the RM7.85 level; thus giving a bullish breakout for the stock. This breakout is, however, not accompanied by significant volume. If this breakout can sustain, F&N may hit a high of RM9.50-10.00 over the next 6 months. Incidentally, Aseambankers Malaysia Equity Research has placed a value of RM10.00 for F&N, and called a BUY at RM7.55 (go here).


Chart : F&N's weekly chart as at September 26 (courtesy of Quickcharts)

CWs of KLCI & HSI

The updated valuation table for CWs of HSI & KLCI is appended below.

CWs for HK stocks as at September 26, 2007

Since my last update, we have another 4 new CWs listed today, i.e. ANGANG-C1, CCCC-C4, CHEUNGK-C1 & CHLIFE-C3 (which are highlighted in blue). These are all non-collateralized American-style cash-settled CW issued by OSK.

For the purpose of preparing this table, I have used the IPO price to value these 4 new CWs. As at 10.00 a.m. this morning, they are up between 6 to 10 sen. That's a whopping 70-90% gain. The initial subscribers must be laughing all the way to the banks. I have highlighted in green those CWs that are currently trading at a premium of less than 4%.

Wednesday, September 26, 2007

YTL is resting at its uptrend line

Most construction stocks have recovered from their recent sharp selldown, except YTL. From the chart below, we can see that the stock is resting on its uptrend line support of RM7.10/20. If this support holds, the stock may see a rebound from here.

A slow accumulation at this level may be a good idea.


Chart: YTL's daily chart as at Sept 25 (courtesy of Tradesignum.com)

Tuesday, September 25, 2007

MMC has broken above its short-term downtrend

"MMC Corp Bhd said yesterday it has signed a memorandum of understanding (MoU) with the Dubai Government's investment arm to explore building a massive maritime centre and property development in Johor worth an estimated RM16bil.

The MoU, signed with Dubai World, would explore opportunities for joint development of a maritime centre master plan comprising oil terminal activities, dry docks, a shipyard, conventional cargo handling facilities, logistics parks and real property development in South Johor.

The development would include MMC’s 2,255-acre property in Tanjung Bin, Johor, the company said in a filing with Bursa Malaysia". For more, go to the news report in The Star today.

From the weekly chart below, we can see that MMC is in a medium-term uptrend. Nevertheless, the share price has been drifting lower in a short-term downtrend. The positive news on the MOU has prompted the share price to break above the short-term downtrend at the RM7.70 level. The share price went as high as RM8.30 before retreating. As at 4.15 pm, MMC was trading at RM7.90.

Over the next few days, MMC share price may re-test the breakout level of RM7.70 again. If the share price can hold above the breakout level, MMC's uptrend is likely to continue.


Chart : MMC's weekly chart as at September 24 (courtesy of Quickcharts)

Hang Seng Index- How high can it jump?

I have noted that the Hang Seng Index ('HSI') is likely to benefit from the expected flow of funds from China ( go here). Nevertheless, I am still quite dazed by the sharp run-up in Hong Kong stock market in the past 3 weeks. How high can this rally go?

When HSI broke above its strong horizontal resistance of 21,000 in June, it went to a high of 23,500- traveling a distance of 2,500 points. That's the distance traveled by the HSI when it corrected in February. If we apply the points lost in the August correction (about 4,200 points) to the recent breakout level of 23,600, the target of the current rally would be about 27,800. That's about 1,300 from yesterday's closing level of 26,495.

All these are just fanciful guesstimates. The HSI has gone up very sharply and in the face of an possible correction in China, I believe that one has to be very careful trading in Hong Kong stocks or index or the CWs of Hong Kong stocks or index. The time is probably ripe to take some chips off the table.



Chart: HSI's daily chart as at September 24 (courtesy of Yahoo Finance)

Shanghai's SSECI looks toppish

SSECI is looking toppish. From the chart below, we can see that in the past 2 corrections (in February & June), the MACD indicator had exhibited the bearish crossunder (in pink), then followed by the the 10-day SMA cutting into the 20-day & 30-day SMA (circled in red). Thereafter, the correction was upon the market.

In the past 2 weeks, SSECI's MACD has already given the selling signal but the market has continued to charge ahead. Nevertheless, we can see that the 10-day SMA is about to cut below the 20-day SMA. A correction of the SSECI is imminent.



Chart: SSECI's daily chart as at September 24 (courtesy of Yahoo Finance)

Monday, September 24, 2007

Landmrk's uptrend to continue

Landmrk has broken to the upside of the strong horizontal of RM2.36/38. As at 10.15 am, the stock was up 8 sen to RM2.42. The stock may revisit its February high of RM2.80/90.


Chart: Landmrk's daily chart as at Sept 21 (courtesy of Tradesignum.com)

Palm Oil prices may rally

The rally in the futures market for Palm Oil on Friday is expected to continue (see Chart 1 below). The firmer price is attributed to an expected fall in rapeseed & soyabean output in China. From Chart 2 below, we can see that soyabean price has just surpassed its recent high recorded in first quarter 2004 (albeit some correction was witnessed last week). The better prices for CPO is the catalyst for the recent resumption of uptrend for many bluechip plantation stocks as well as some second- & third-liners in that sector.


Chart 1: CPO's October futures 60-minute chart as at September 21 (courtesy of ifs.marketcenter.com)



Chart 2: Soyabean Oil's monthly chart as at September 21 (courtesy of Tradingcharts.com)

Friday, September 21, 2007

PPB surpassed its recent high

Earlier, I have posted about the strong recovery by KLK (go here) since its recent selldown. There is another stock that has done better than KLK. That stock is PPB.

From the charts below, we can see that PPB has dropped to a low of about RM6.00 in August. That's when the stock tested its medium-term uptrend line support & then it put in a scorching run over the past 5 weeks that saw the stock surpassing its April high of RM8.05 yesterday. As a rule, a stock that has made a new high is a BUY unless it reversed back immediately. I must admit that I have a lot of difficulty calling a BUY on PPB given its extreme sharp run-up.


Chart 1: PPB's daily chart as at September 20 (courtesy of Quickcharts)



Chart 2: PPB's weekly chart as at September 20 (courtesy of Quickcharts)

Cepat is poised to test its recent high of RM1.43

Background

Cepatwawasan Group Bhd (‘Cepat’) is involved in the cultivation of oil palm & palm oil milling. Cepat owns about 10,000 hectares of oil palm estates located in Sabah. The total acreage has increased by 1,295 hectares in May when it completed its acquisition of the entire equity stake in ASSB from its associate, MHC Plantation Bhd. ASSB owns a piece of plantation land measuring 1,954 hectares in Sabah which is partly planted with oil palm & partly leased out to a third party for fruit cultivation.

Financial Results

Due to the addition of the new estate in May & better prices for CPO, Cepat's topline & bottomline was given a healthy boost in the QE31/7/2007. Its net profit increased by 74% q-o-q or almost 3-fold to RM8.8 million, while turnover increased by 44% q-o-q or 74% y-o-y to RM47.1 million.



Valuation

If Cepat could maintain the same earning of 4.07 sen in QE31/7/2007 for the full year, its EPS would jump to 16.28 sen. Based on its closing price as at Sept 20 of RM1.10, Cepat would be trading at a PE of 6.7 times. That's very attractive for a plantation stock.

Technical Outlook

For the past 2 or 3 years, Cepat's share price has been trapped in a bottoming process known as the saucer bottom. A reversal is confirmed when the share price surpassed the reaction high that marked the beginning of the decline at the start of the pattern. In the case of Cepat, I believe that reaction high is RM1.15/16. In fact, this stock has surpassed that high before (in August), but the sharp rally could not sustain. Maybe, the next attempt would do the trick.


Chart: Cepat's weekly chart as at September 20 (courtesy of Quickcharts)

Conclusion

Based on good financial performance & very nice technical set-up, Cepat could be a good stock for a trade or for medium-term investment.

KLK to re-test its recent high?

One stock that has recovered very well after the recent selldown is KLK. From a low of RM10.80, the stock is now poised to challenge its short-term downtrend line at RM12.90/13.00. At the time of writing this post (10.15 am), the share price is at RM12.90. A break above RM13.00 could see this stock re-testing its recent high of RM14.00.


Chart 1: KLK's daily chart as at September 20 (courtesy of Quickcharts)



Chart 2: KLK's weekly chart as at September 20 (courtesy of Quickcharts)

For the aggressive traders, you can try KLK-CA or KLK-CD, which are at RM0.88 & RM0.08, respectively (as at 10.20 am). The former has an exercise price of RM9.27; exercise ratio of 4:1; and, expiring on Nov 16. The latter has an exercise price of RM13.90; exercise ratio of 10:1; and, expiring on Jan 17. At the said price, KLK-CA is trading at parity while KLK-CD is trading at a premium of 14%.

Adventa reported higher sales & earning

In March, I called a BUY on Adventa (go here). The stock has since moved up quite handsomely from RM0.80/90 to RM1.40/50.

Yesterday, it has announced its results for QE31/7/2007. The net profit increased by 20% q-o-q or 30% y-o-y to RM5.0 million. Turnover has also increased by 12.3% q-o-q or 26.9% y-o-y to RM51.1 million. The improved performance was attributable to increased capacity in its Kluang plant as well as the higher sale of premium products.



If the company can maintain its last quarter's EPS of 3.92 sen for the full year, it could report EPS of 15.68 sen. At yesterday's closing price of RM1.48, Adventa would be trading at a PE of 9.4 times. For a company with steady growth, this PE multiple is not too demanding.

The share price of Adventa is in a steady uptrend, with trendline support at RM1.35/40 level. A break above the overhead horizontal resistance of RM1.52/53 could signal the next upward rally for this stock.

Chart : Adventa's daily chart as at September 20 (courtesy of Quickcharts)

Based on nice technical set-up and healthy financial performance, Adventa is still a BUY at this level.

Thursday, September 20, 2007

RHBCap is poised for a bullish breakout

In June, EPF offered to acquire all outstanding shares & warrants of RHBCap at the price of RM4.7562 & RM1.7962, respectively. At the close of the offer [on July 18], EPF has raised its shareholding in RHBCap to 82.23%.

Prior to the closing date of the said offer, the share price of RHBCap was moving past the offer price to reach a high of RM6.25 on July 31. This could be due to speculation that EPF might not be able to secure sufficient acceptance to force the privatization of RHBCap & thus it might maintain the listing status of RHBCap . As many funds were still bullish on this stock, their buying had pushed the share price higher.

In the past 8 days, we can see the share price of RHBCap firming up again. An ascending triangle pattern has formed. A break to the upside of RM5.65 could trigger a test of the recent high of RM6.25. Alternatively, this potentially bullish pattern would frizzle out if the share price were to drop below the RM5.45 level.


Chart : RHBCap's daily chart as at September 19 (courtesy of Quickcharts)

Watch this stock closely. It could be good for a quick trade.

Wednesday, September 19, 2007

Cocolnd could be a good BUY

Cocoaland Holdings Bhd ('Cocolnd') is involved in the manufacture of snack food, chocolate, sugar confectionery & soft drink. It is the leading fruit gummy manufacturer in Malaysia. For more, you may visit its website (here).

In mid-August, there were 2 research reports which have a differing view on this stock. S&P has a BUY call on this stock with a 12-mth target price of RM1.27 when the stock was trading at RM1.10 on August 14. Kenanga has a HOLD recommendation with a target price of 12-mth RM1.17 when the stock was trading at RM1.09 on August 13. S&P and Kenanga have forecast anEPS of 9.6 sen and 10.1 sen respectively for FY2007.

Since the reports, Cocolnd has fell back fairly sharply. Cocolnd, which closed at RM0.72 today, is still near its medium-term uptrend line support of RM0.70 This is also a strong horizontal support area. At this price, Cocolnd is trading at a relative undemanding valuation of about 7 times.

Chart : Cocolnd's weekly chart as at September 18 (courtesy of Quickcharts)

Based on good technical set-up, I believe Cocolnd is a good candidate for either a quick trade or for a medium-term hold. Those, who choose to buy for a trade, should have a protective stop set just under RM0.70, in case there is an unpleasant surprise awaits us.

Tuesday, September 18, 2007

O&G stocks could be a BUY

In the current market correction, one sector that investors may look at is the Oil & Gas sector. The main reason is that Crude Oil price is making new high (see Chart 1 below) and this sector should see more activities in the years ahead.


Chart 1: Crude Oil October 2007 daily chart as at September 17 (courtesy of Barchart.com)

Below, I have appended the daily charts of 3 stocks that have corrected back to their respective uptrend line support or marginally below it. The violation of the uptrend lines in August for all 3 stocks are noted but the uptrend lines are drawn above the August troughs. The uptrend line support for Kencana is at RM2.25, for Ranhill at RM2.80 and for Sapcres at RM1.75.


Chart 2: Kencana's daily chart as at September 17 (courtesy of Quickcharts)



Chart 3: Ranhill's daily chart as at September 17 (courtesy of Quickcharts)



Chart 4: Sapcres' daily chart as at September 17 (courtesy of Quickcharts)

Thursday, September 13, 2007

CWs over KLCI & HSI as at September 12, 2007

On Monday (10th September), a new CW over KLCI was listed. It is called KLCI-CC. It is a European-style Cash-settled CW over the Kuala Lumpur Composite Index (‘KLCI’). This adds to the 2 existing CWs over market indices, i.e. KLCI-CA & HIS-C1, which are European-style Cash-settled CWs over the Kuala Lumpur Composite Index (‘KLCI’) & the Hang Seng Index (‘HSI’), respectively.



Based on lower premium & longer maturity period, I prefer KLCI-CC over KLCI-CA.

CWs for HK stocks as at September 12, 2007

The updated CWs valuation table for Hong Kong stocks is appended below. CWs, which traded at premium of less than 4%, are highlighted in green.



With the Hang Seng Index ('HSI') making a new high yesterday, I expect the above CWs to rise further. Nevertheless, it is noted that the sharp rise of HSI has been propelled by gains in share prices of Chinese-owned companies listed on the Hong Kong Exchange. The rise of these stocks is akin to a bubble and one must exercise caution in buying into derivatives (such as the above CWs), which is a highly leverage trade. In a bullish market, the gain can be very handsome. On the other hand, the losses can be very substantial in the event of any correction.

Wednesday, September 12, 2007

UMcca's latest results did not disappoint

Background

In March, I have posted on UMcca being a laggard amongst the plantation stocks (go here). The stock did not rise very much; just about 30% from RM3.50/60 to RM5.90 as at yesterday.

Yesterday, the company announced its results for QE31/7/2007, which shows a healthy jump in both topline & bottomline. Net profit has increased by 34% q-o-q or 160% y-o-y to RM17.1 million while turnover has jumped by 54% q-o-q or 80% y-o-y to RM46.6 million. While the company has attributed some of the improvement to higher investment income & higher contribution from associates, I believe the bulk of the improved net profit flowed directly from higher contribution from its plantation business. In a recent report, TA Securities opined that UMcca "had entered a virtuous cycle of multi-year double-digit earnings growth... due to a significant increase of landbank reaching maturity as well as progressive rise in FFB yield, thanks to a favorable palm tree age profile".



TA Securities has selected UMcca as its top pick for the plantation sector with a target price of RM6.78. This target is the sum of the value assigned to UMcca's plantation business (about RM6.78 per share) and the value of its stake in the listed Pacmas as well as its cash in hand. S&P, which used the same method of valuation, has assigned a much lower value of RM3.66 per share for the plantation business & thus arrived a target price of RM5.70 for the same stock.

Technical Outlook

The stock is still in an uptrend line, with support at RM4.90-5.00. Its horizontal supports are at RM5.30 & RM5.55 while its resistances are at RM5.90 & RM6.15.

Chart : UMcca's weekly chart as at September 11 (courtesy of Quickcharts)

Conclusion

Based on its good financial performance, UMcca is still a good buy for the medium-term. Good entry level will be about RM5.50-60.

Monday, September 10, 2007

Dow is poised to do a "Test of the Low"

After last Friday sharp fall of 250 points, Dow appears poised to do a "Test of the Low". I think a revisit of the August low just below 12500 is possible but fairly slim. It is more likely that the upcoming test may see the index testing the psychological support of 13000 and even the strong horizontal support of 12800.

How do we know whether the market is likely to "pass" this test & recover? You can look out for 2 indicators, i.e. the MACD & the Slow Stochastic for signs of possible recovery. In the June-July 2006 correction, we can see these 2 indicators had shown a bullish divergence before the index did a recovery. Maybe, we can see the same signs again. Otherwise, the index is deemed to have recovered from this test when it surpasses the 13500 level recorded on September 4.


Chart: DJIA's daily chart as at September 7 (courtesy of Yahoo Finance)

Friday, September 07, 2007

Gold's uptrend to accelerate

During the recent turmoil in the stock & bond market, some investment managers talked about the advantages of investing in gold as safe haven asset. Looking at the 5-year chart of gold/USD, one would be pretty surprised by how well this safe haven asset has been performing in the past 5 years. In fact, gold is in a medium-term uptrend (5 years' timeframe), with support at USD665. In the intermediate term (1-2 years' timeframe), it has been consolidating its sharp price run-up from October 2005 to May 2006, when it hit a high of USD730 per troy oz. The consolidation pattern exhibited is the three fan lines pattern. On September 4, gold has broken above the third fan line at the USD680 level, which confirms this bullish setup and signaling the beginning of the next price run-up for gold.



Chart: Gold's 5-year weekly chart as at September 6 (courtesy of Bullionvault.com)

I do not wish to speculate on why gold is rising again. There are as many possible reasons as there are conspiracy theories on why gold should or should not be out-performing other assets. I believe that the buying of gold by central banks in order to diversify their reserves holding could be the main driver for the performance of gold. The buying could come from the Chinese central bank as well as central banks from the Middle East & other oil-producing countries (such as Russia), which are sitting uncomfortably on too much USD.

There are two ways of buying gold in Malaysia. You can buy them physically (such as gold coins) or invest via gold saving passbook. The latter method would dispense with the need to hold the physical gold but the mark-up by the selling institution would be higher. From Maybank2U, we can see that the mark-up for buying & selling of gold coin is about 3.33% while for investing in gold via the passbook is 7.87% (go here).

Tranmil may have bottomed but...

When I posted on Tranmil in August (go here), I have recommended that we do not jump the gun in buying this stock until the confusion regarding the company's accounting irregularities has been resolved. In line with the mantra "Let the market tell us when it is safe to buy", I shall now re-examine the outlook for Tranmil from the technical perspective.

From the chart below, we can see that the selling has slowly dried up in the past few weeks. In the last 3 days, the stock has experienced a sharp price run-up accompanied by huge volume. Its share price rose from the low of RM3.34 on September 3 to a high of RM5.40 recorded yesterday (September 6). The share price tested the upper channel resistance of RM5.30, but was unable to stay above that level. It closed at RM5.20 yesterday. As at 10.00 am this morning, the share price has pulled back to RM4.90. Is it a good time to buy Tranmil?


Chart : Tranmil's daily chart as at September 6 (courtesy of Quickcharts)

To be safe, we should buy only when the stock's current downtrend is clearly over. That would be when the share price has surpassed the upper channel, currently at RM5.30. Some may have formed their opinion that the worst is over for Tranmil & wish to buy on weakness. In this case, you may buy on a pullback of 33-50% of the recent advance (from RM3.34 to RM5.40) at about the RM4.38-5.06 level. Technically speaking, that is not advisable. A stock in a trending mode is likely to stay in that mode, notwithstanding what the company's management or market analysts may have said about its potential.

Wednesday, September 05, 2007

Market Outlook as at September 4

Looking at the chart below, I come to the conclusion that our market is poised to commence on its upward movement very soon. This is based on the following observations:
  1. The MACD indicator, which had done a positive crossover earlier, has now crossed above the 'zero' line, where uptrend would normally pick up the pace;
  2. The stochastic indicator has entered the 80 level, where again uptrend would normally pick up the pace; and
  3. The index has broken to the upside of the short-term downtrend line (marked as 'a1-a1').
Two more signals may be needed to confirm the beginning of the next uptrend. There maybe provided by the end of today's trading. These would be the surpassing of the current rebound reaction high of 1292 recorded on August 27 (marked as 'A1') as well as the crossover of the slower 20-day SMA by the faster 10-day SMA. At the time of posting this piece (about 10.50 am), the KLCI is at 1293 level. Today could be a very interesting day.

Chart : KLCI's daily chart as at September 4 (courtesy of Quickcharts)

Tuesday, September 04, 2007

CWs over KLCI & HSI (error noted)

I have made a mistake in the computation of the conversion premium for HSI-C1. The error is due to the non-conversion of the RM price of the CW to the HK$ equivalent. After adjusting for this error, you can see that the HSI-C1 is actually trading at a premium of 5% (as compared to a slight discount of 0.4%). The table below gives the mid-day prices for today and the premium of the 2 CWs for indices [i.e. Hang Seng Index ('HSI') & KLCI] currently listed on our exchange.



I like to apologize for any inconvenience caused by this error.

Asiafle's net profit increased in QE30/6/2007

Background

Asiafile Corporation Bhd ('Asiafle') is involved essentially in the manufacture & trading of stationery products.

Recent Financial Results

The company has just announced its results for QE30/6/2007. Its net profit increased by 40.7% q-o-q or 12.4% y-o-y to RM10.3 million while turnover has increased by 26.7% q-o-q or 34.8% y-o-y to RM43.6 million. The increased turnover was attributable to big increase in its sale to oversea markets such as the US & Europe.



The company's financial condition is very healthy as its overall operation is essentially financed by Shareholders' Funds. As at 30/6/2007, its Total Assets stood at RM218 million while its Shareholders' Funds amounted to RM194 million. Borrowing was very negligible.

Valuation

Based on its closing price of RM5.60 as at Sep 3 & last 4 quarters' EPS of 48.2 sen, Asiafle is now trading at a PE of 11.6 times. This PE will go down if the company continue to grow its export markets.

Technical Outlook

From the monthly chart below, we can see that Asiafle is in a long term uptrend with support at RM5.50 level. Horizontal support can be seen at the RM5.00 level as well.

Chart 1: Asiafle's monthly chart as at September 3 (courtesy of Quickcharts)

Conclusion

Based on good financial performance & condition as well as nice technical set-up, Asiafle is a good stock to buy for the long-term.

Monday, September 03, 2007

CWs for HK stocks as at August 31, 2007

You can see my updated list of CWs of Hong Kong stocks below. Due to the closure of our market on Friday, the CWs has not accounted for the gain in many of the underlying stocks. As such, you would notice that a few of the CWs' closing prices are a discount to their fair value (highlighted in green) and might see a healthy jump on opening bell this morning.

Hang Seng Index surpassed its July high

As noted in my earlier post (go here), the Hang Seng Index (‘HSI’) might go higher due to the influx of funds from Mainland China after the Chinese authority has allowed locals to invest in the Hong Kong stock market. On August 31, the HSI has even surpassed its July high after its first attempt failed on August 28. I believe that there is a good chance that the HSI may go higher despite what looks like a near vertival climb since the index made its recent low of 19387 on August 17.


Chart: HSI's daily chart as at August 31 (courtesy of Yahoo Finance)

One way of gaining exposure to the HSI is to buy HSI-C1. From the table below, we can see that the HSI-C1 , which closed at RM0.335 on August 30 & did not trade on August 31 due to the public holiday, is now valued at a discount to the underlying index. As such, the HSI-C1 will likely to open today with a big jump.