Monday, March 29, 2010

USD- another factor in the equation

The USD weakened sharply against the RM today- dropping 1.13% to 3.268. In the process, the USD-RM broke below the support of the expanding triangle at 3.28. It may have some support at the horizontal line 3.27, See Chart 1 below.


Chart 1: USD-RM's daily chart as at March 29, 2010 (Source: Yahoo Finance)

The strengthening of RM could be negative for exporters who price their products in USD, while benefiting importers who will pay less for the same products imported. This may account for the drop in the share price of rubber glove makers as well as a sharp rise in the share price of automotive stocks.

From Chart 2 below, we can see that the correction in our FBM-KLCI in June-July last year & January-February this year coincided with a counter-trend move in the USD-RM. In view of this, we need to watch out for a possible sharp rebound in the USD-RM, which may trigger a correction in our market. After all, we have noted in earlier posts that the underlying trend for USD is up, with the exception of some Asian currencies (such as our RM).


Chart 2: USD-RM & FBM-KLCI's daily chart as at March 29, 2010 (Source: Yahoo Finance & Quickcharts)
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9 comments:

  1. AnonymousTuesday, March 30, 2010 10:48:00 AM

    bro. how u think affin? will it break new high above rm3? it is worth to bet on affin-wc which will expired on july 2010?

    ReplyDelete
  2. Alex LuTuesday, March 30, 2010 1:11:00 PM

    Hi Wong,

    Affin may go higher if it can cross the recent high of RM2.94. I see that some traders have already positioned in Affin-CA & Affin-CB in anticipation of a breakout.

    ReplyDelete
  3. solomonTuesday, March 30, 2010 2:03:00 PM

    Good day Alex,

    What is the upside potential for POS Malaysia?

    Cheers

    ReplyDelete
  4. AnonymousTuesday, March 30, 2010 2:48:00 PM

    pos rise alots after khazanah said will dispose its 32% stakes in pos. bro, pos is short term play or long term play?

    ReplyDelete
  5. PEGGY MethodTuesday, March 30, 2010 11:03:00 PM

    I read your Keck Seng post. I think from fundamental point of view, they have great potential to move up. Like you said, the support is RM5.70. Buy now rather than miss the boat.

    ReplyDelete
  6. AnonymousWednesday, March 31, 2010 10:28:00 AM

    bro. how is eforce fundamental? price already break new high le. still can enter at current price?

    ReplyDelete
  7. Alex LuWednesday, March 31, 2010 5:25:00 PM

    Hi Solomon/Wong,

    POS has horizontal resistance at RM2.30, RM2.40 & RM2.50. Since Khazanah is only divesting a 32.2% stake, there will be no GO. I do not think it will go up just because of the divestment unless the new owner is someone who can add value to the company or can change the business model significantly. As it is, POS is kind of like TM- a company awaiting transformation. Can it transform?

    ReplyDelete
  8. Alex LuWednesday, March 31, 2010 5:26:00 PM

    Hi Polite Market,

    Thanks for sharing.

    ReplyDelete
  9. Alex LuWednesday, March 31, 2010 5:34:00 PM

    Hi Wong,

    You finally brought in something interesting!!!

    EFORCE [or, Excel Force MSC Bhd] is a fairly profitable company. FYE31/12/2009, its net profit increased by 18% from RM5.2 million to RM6.2 million. Turnover increased by 5.5% from RM11.5 million to RM12.1 million. EPS for FY2009 was 5.1 sen. Based on today closing price of RM0.52, it is trading at a PER of 10.2 times.

    This stock rose from a low of 13 sen in March last year. Unfortunately, it has fairly strong horizontal resistance at RM0.55-56. This will limit your upside if you are contemplating buying at the present level. You should wait for the stock to pullback to the uptrend line support at RM0.38-40 before making your entry.

    Good luck.

    ReplyDelete