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Friday, March 31, 2017

Ecowld-WA: Fool's Gold?

Next Monday, we will see the listing of Eco World International Bhd on Bursa (here). The fair value given by a number of stock-broking firms is around RM1.30 (here).

I like to highlight the amazing "excitement" about this event by retail players, and this is seen by the huge premium placed on the warrant of its substantial shareholder, Ecowld. Just look at the chart of Ecowld-WA via-a-vis Ecowld!! (Note: Ecowld-WA is currently trading at a premium of 76%. Its exercise price is at RM2.08 & expiry date is at Mar 26, 2022.)


Chart 1: Ecowld-WA's weekly chart as at Mar 31, 2017_4.16 (Source: MalaysiaStock.biz)


Chart 2: Ecowld's weekly chart as at Mar 31, 2017_4.16 (Source: MalaysiaStock.biz)

This is not a totally unusual occurrence in the present market these days. We have seen retail players chasing "cheap" shares & warrants regardless of their fair value or fundamentals or how much the shares or warrants had run up in the preceding few days!! The way they are buying in the market is mind-boggling!! To the syndicates or major shareholders who are looking to sell, this kind of reckless buying is like manna from heaven. It takes the sport out of investing when you are practically stealing candies from the babies!! Thus I call on my fellow remisiers, please advise your customers not to lose their heads and go where angels dare not tread!!

3 comments:

bl said...

a truthful remisier giving word of caution in sea of shark...

Alex Lu said...

Hi bl,
To be fair, some remisiers did attempt to forewarn their customers of the danger. Maybe they should try harder! Maybe their customers were just too stubborn! At the end of the day, a fool and his money are soon parted. That's the way of the world!

ronnie said...

Caveat emptor. Buyer beware.

Time will tell.