Thursday, March 08, 2012

FBM70- the first index to break its uptrend line!

If you visit Bursa Malaysia's website and look under FTSE BM Indices, you will find the various indices in our exchange. Lately, we have been exposed to the second & third liners which are represented by FBMACE or FBMSCAP or FBMFLG. Of course, we are all familiar with FBMKLCI which is made up of the top 30 stocks on our exchange. We may not be familiar with FBMEMAS, FBM100 & FBM70.

From the table below, we can see that the Main Board is divided firstly into the healthier stocks that made up the FBMEMAS & the not-so-healthy stocks that made up the FBMFLG. The FBMEMAS can then be divided further into the top 100 stocks, which are grouped under FBM100 & the smaller stocks that are grouped under FBMSCAP. Finally, FBM100 can be divided into FBMKLCI & FBM70.

Table: FTSE Bursa Malaysia Indices

If you look through the few charts below, you will find that FBMEMAS is barely hanging onto its uptrend line. It is slightly below the uptrend line, SS but marginally above the uptrend line, S1-S1.

Chart 1: FBMEMAS's daily chart as at Mar 8, 2012 (Source: Quickcharts)

On the other hand, we can see that FBMKLCI & FBMSCAP are above their respective uptrend line. The same cannot be said above FBM70, which has broken below its uptrend line (be it uptrend line, SS or uptrend line, S1-S1).

Unlike FBMKLCI, which has benefited from steady buying support from the fund managers, or FBMSCAP, which has benefited from enthusiastic buying by retail players, FBM70 must find its way into investors' radar. In that sense, FBM70- like a canary in a coal mine- may give a better picture of the true state of our market. If so, you can expect the broad market to eventually follow suit & consolidate some of its recent gain. As such, we may be better served by reducing our exposure to the market in the near term.

Chart 2: FBMKLCI's daily chart as at Mar 8, 2012 (Source: Quickcharts)

Chart 3: FBMSCAP's daily chart as at Mar 8, 2012 (Source: Quickcharts)

Chart 4: FBM70's daily chart as at Mar 8, 2012 (Source: Quickcharts)


fuyong said...

can you please advice me on mas-pa, thks

power said...

Hi Alex
what do u think about MHB?

Alex Lu said...

Hi fuyong

This is my take on the MAS-RCPS. As the conversion price is at RM3.09 (revised from RM4.05), nobody is going for conversion since the ordinary share is trading at RM1.30-1.40.

Anyone who are buying this security is going for redemption. The par value is stated as RM0.10 and so we can expect a redemption at RM0.10. However, I have checked with the Registrar & he told me that the redemption will be at RM1.00 (consisting of par value of RM0.10 & share premium of RM0.90). I have asked him to send the prospectus for the Rights Issue to me. When I received it, I will comment further if that is not the case. If in doubt, please call the Registrar, Symphoney at 03-78418000.

This may explain why investors are still keen to buy the MAS-PA at RM0.93 because they will be paid RM1.00 by Oct 30, 2012. This gives a return of 7.527% for a holding period of 8 months (or a 10% per annum).

Alex Lu said...

Hi power

The fundamental picture for MHB is not very exciting. It will be overshadowed by the Sapcres/Kencana combination or even Dialog. However, it seems to have found a floor at RM5.30 level. I think it is relatively safe to buy at this level. However, we must be patient with this stock given the fundamental picture as stated above.