Monday, March 05, 2018

PMetal: Hit By Trump Tantrum

Donald Trump announced trade tariff on steel & aluminium import to the US last week after a meeting with business leaders and his Commerce Secretary. Trump's announcement surprised many, including his economic team. The impact on the stock market was swift as many markets dropped sharply on fear that the world may go into a trade war.

If you follow US politics, you will learn to expect the unexpected when it comes Donald Trump. The other thing that you should be aware of is that many of the decisions made by Donald Trump & his White House are either never implemented or were quietly dropped. I suspect the tariff decision may turn out to be another example of this category of decisions from this administration.

Meanwhile we can see PMetal dropping sharply today. The share price is now trading near the psychological RM5.00 mark, after it dropped to an intra-day low of RM4.91. If the psychological RM5.00 mark were to be violated, the stock may still find support at the 30-week SMA line at RM4.80.

Chart: PMetal's weekly chart as at Mar 5, 2018_11.45 (Source:

In FY2017, PMetal's exported about RM143 million of products to the American region (presumably America). This represents about 1.75% of its total sales valued at RM8.17 billion. Thus, the impact of a US tariff, if implemented, is likely to be minimal.

Table: PMetal's segmental results for FY2017

Based on the above, Trump's poor record of follow through on his decisions and PMetal's small exposure to the US market, I believe the selldown for PMetal is overdone. You should consider not selling your shares in PMetal, if you have any, or even nibbling into this stock at the current price. Good luck!

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

1 comment:

Chong BK said...

Hi Alex,

Based on my P&F chart count...minimum downside target is 4.42...