Last Friday, USD index broke below its 3 years old uptrend line at 76. Unless a quick recovery happened soon, USD index is likely to decline further. The drop in the USD index is somewhat surprising given the heightened geopolitical risks which had normally been favorable to the USD as it's viewed as a safe haven currency. I guess the USD's safe haven status has lost much of its shine since the Fed engaged in easy moneys policy in the past 2 years in its effort to revive the US economy.
Chart 1: USD index's daily chart as at March 18, 2011 (Source: Stockcharts)
We should be tracking the movement of the USD index closely as many stock markets in Asia are inversely correlated to the USD index. A sustained decline in USD index could lead to a recovery in our market. However, not all sectors will benefit from a weaker USD. Exporters in particular will suffer.
Chart 2: AAXJ & USD index's daily chart as at March 18, 2011 (Source: Stockcharts)
4 comments:
Hi bro Alex. Please comment on WCT-WC which listed on last friday. It is worth to buy at current price 70sen. What is its fair value ?? Thx.
To choose supermx or topglove is better choice now ?
Hi cheer
The two stocks- Supermx or Topglove- have the same technical profile, which is neutral. However, Supermx is trading at a PE of about 9.3 times (based on latest results for QE31/12/2010) while Topglove is trading at a a PE of 19.4 times (based on latest results for QE28/2/2011). On that score, Supermx is preferred to Topglove.
Hi wong
WCT-WC was issued at a price of RM0.34. It is a 5-year warrant with an exercise price of RM2.75. At the current price of RM0.72 & its mother share price at RM2.97, the WCT-WC has a premium of 17%. That's a bit high since the share is still in a downtrend until it has traded above RM3.00. I would prefer the warrant to be priced at 10% or lower.
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