Chart 1: DJIA's daily chart as at 21/1/2010 (Source: Stockcharts.com)
This morning, SSECI & HSI dropped sharply to their low of 3062 & 20250, respectively. As at 1.35 am ET, SSECI & HSI have rebounded to 3140 & 20538, respectively. As noted previously, SSECI's uptrend line support is at 3150 & it is important that it should recover back above that level. Similar, it is also important that HSI should recover above its strong horizontal support of 21000.
What may have prompted the current weaknesses in global equity markets? Other than the monetary & administrative tightening in China, I believe most financial assets are now reacting to a possible upswing in USD which could lead to the unwinding of the USD carry trade. See Chart 2 below.
Chart 2: USD's weekly chart as at 21/1/2010 (Source: Stockcharts.com)
Our market is now in a very precarious position. Our market was trying to break above the strong horizontal resistance of 1280-1330. We have seen two previous cyclical tops (1993 & 1997) that failed at this level (denoted as 'A' & 'B') as well as the April-May 2008 bear rally that failed to overcome this level (denoted as 'C'). A failure to break through this level now could led to a sharp reversal, which could be the top for the uptrend that dated back to March 2008. Indeed, the next few days could be a very critical & nerve-racking time for all investors.
Chart 3: FBM-KLCI's weekly chart as at Jan 21, 2010 (Source: Tradesignum)
5 comments:
Good day Alex,
Yesterday HLB anounced to buy EONCAP at 7.10 cash a piece for EONCAP shares.
Do u think we should accept the offer or bargain to get better price?
I personally think the price has not fairly valueing EONCAP.
According the announcement, 7.10 is arised from premium of 31.5% to the 180-day volume weighted average price ("VWAP") of EON Capital shares as at 16 December 2009.
This is no fair because they use 180VWAP instead of 30VWAP,because the past 6 months is the tough time for financial sector dampened by economy crisis. And secondly, calculation are as at 16 DEC, which is a month ago, they ignore the current performance by EON bank and those bought its share recently.
7.10 is just merely 1.4times Price to Book value of EONCAP as EONCAP has more than RM5 book value per share.
In comparison when CIMB bought the Southern Bank, CIMB paid 2.1times PBV.
Alex, I need your professinal opinions regarding this.
Thanks
well... kenny... actually to be frank from my point of view... i don't think that by comparing others will make this goes better in this scenario... since u have to see who r u dealing with... as u see... last time southern bank is dealing with CIMB... now EON bank is dealing with MR.Kuok... where i read from the news paper that this person wont pay high for thing that he want.. but for CIMB is different, i personally think CIMB is more generous... if u wnted to compare, then it will b more unfair when u compare this case to the Maybank BII stake acquisition and some others bank is abroad... where i think they are more generous in paying... Anyway... personaaly opinion, i think that this purchasing will need u to evaluate whether how many years will it take for the investment to pay u this money... and this "term" is it worth... in the other hand, i dont think this is a great deal.. well.. pls correct me if im wrong ya... i just meant to discuss this issue with u guys...
Hi Guys,
I agree with Kenny that the price offered by HLBank to acquire EON Bank is on the low side. HLBank is probably taking advantage of the conflict between the main shareholders of EONCap. An offer that is deemed to be too low may not secure the acceptance of the main shareholders- conflict or no conflict. This may in turn lead to counteroffer from other parties, may be RHBCap. I think the lowball offer is just an opening gimmick to gauge the willing of the main parties to play ball.
Supermx has shown inverted hammer on last Friday and today it shows white candle.
What is ur advice?
Hi Cheer,
Supermx did close with a hammer on a daily chart last Friday. From the 60-min intra-day chart (up to 4.45pm today), it looks like it has surpassed a very short-term downtrend line at RM5.35-40. This may however be a small rebound within a longer time-frame and unless you are trading for short-term, you could be entering into a stock that is "correcting" upward as it is sliding lower.
Given the uncertainty in the overall market, I would be a bit cautious on accumulating stocks now. If your equity position is fairly negligible, you may do so slowly. We can never be too sure about our market call...
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