Monday, 28 September 2015

KL: MYEG proposed bonus issue, again?

On 18-9-2015 MYEG upped with huge volume. There was no sign at all before that, until last Friday: MYEG proposed a 1:1 bonus issue, AgainAnd the fact that the price will soar one week before the announcement clearly shows that somebody does know the news well beforehand, and individual investor like me is always the last to know.


A 1:1 bonus issue means that if you have 1000 shares of MYEG, you will get 1000 bonus shares. In this case, MYEG currently has a total of 1.2B shares. Hence a total of bonus share of 1.2B will be issued, making the total share to be 2.4B after the change. As the net profit remains the same, the EPS will be halved, i.e., MYEG share price will be halved after adjustment.

In short, since your total share x2 and the share price x0.5, the portfolio value remains unchanged. But the term "bonus issue" conjures up the idea of free, that the company is rewarding shareholders with free shares. As a consequence, share price will usually go up after a company announcing bonus issue. Technically, it increases the liquidity of the security so that more people can buy the share. The drawback is that the shareholding will generally be more widespread and diluted.

Back in 2012 I have always been eyeing on MYEG, but I was too naive to think that the security has high PE (60), without considering it as a fast growing company. I lost chances after chances for not buying it. That is why I always seek opportunity to earn from MYEG. Has the opportunity arrived now?

Thursday, 24 September 2015

KL: A mistake on SIGN

I bought in SIGN in early July based on a friend's recommendation. During August (when KLCI was dropping everyday, literally), I did learn from the past to take profit on 7 Aug @ RM3.00 -- the second day of big drop. This is an exceptional decision -- the selling price is within 10% from the high of RM 3.27.

I was very happy at first. But then seeing the stock continue to go down, I tried to "catch low", hoping that the stock would rebound soon. This is a common error people make: catching low. Another reason is the thought of betting on the August financial report. I was thinking that by benefiting from the depreciation of MYR, export counters should be doing well.

I bought back on 12 Aug (it was just 3 trading days after I sold!), wishing to earn for a second round. Although suffering from unrealized losses straight after buying, I hold on to the optimistic side of a beautiful fiscal report -- another common error people make: take chances. The financial report was released on 27 Aug and it was bad. SIGN dropped 15% on the next trading day. Not only I "vomit out" all profit in the first round of trading, I incurred a further loss.


Buying back just after 3 days of selling is really unnecessary.  This decision has cost me an arm and a leg this time. I took one step forward (took profit), but then I took another step backward (bought back) to the origin. Perhaps  I should never look back to stock after selling.

Sunday, 13 September 2015

KL: the rise of put warrants in KLSE

Index call and put warrants (FBMKLCI-CX and FBMKLCI-HX) have been a hot topic for discussion lately. Opening the trading platform, you see that FBMKLCI-H and FBMKLCI-C warrants are trading in the top volume, literally everyday.

This is something that has never happened before in KLSE. Usually you only see penny stocks appearing in the top volume section. Now the game has clearly changed. It has already gone insane until the stage that when KLCI rises, you will even see put warrant to go up and call warrant to go down; and vice versa.

As far as I could remember, call warrants started to gain public acceptance around 2006. Back then, put warrant does not exist in KLSE. According to this website, it wasn't until 2010-2011 that the first index put warrant FBMKLCI-HA was issued (apparently by OSK?). But this put warrant was born in unlucky time of bull period and ended up worthless.

Then, FBMKLCI-HB was issued by CIMB in July 2014. It became the spotlight in KLSE during the big drop in Oct 2014. And because of that, put warrants are mushroomed by investment banks. To date, the latest put warrant is FBMKLCI-H9: more than 30 index put warrants were issued in less than 1 year. This is unprecedented and extraordinary

After all this time, I would say that the late 2014 to 2015 is where put warrants have gained the public awareness.  This is good, investors know that now they can trade the index or stocks in both ways. However, I do doubt if now is a good time to trade put warrants: everyday in the top volume has already made me lost interest, what more to say when these warrants are extremely overvalued now?

Sunday, 6 September 2015

KL: PRIVA price soared after selling

The unwillingness to sell a share is the worry that the share price will soar right after selling.

I sold the rebound-catching PRIVA on 2-9-2015, and the next day it shot up 30% with volume. This is probably the first time I have such a farcical experience: my previous target of 50% was completely forgotten at the time of selling due to fear. The rebound-catching timing is not bad, but the selling time is bad, resulting in a loss.  This is certainly not a good feeling, but blaming and regretting is futile because at the time of selling, I must have already used my discretion to come to the decision. I do not have the prescience for the movement of a stock, so even if the price soars after selling, there is really nothing I could do, let alone that the worry is purely based on a (negative) projection into the future.

Becoming conscious of the unconscious worry marks another advancement in my investment journey (on the mental level), that selling is nothing more than a transaction. Hopefully next time I have less mental obstacles when taking profit, which is crucial especially when trading call warrant.

Wednesday, 19 August 2015

KL: PRIVA rebound catching

Catching a rebound requires more than bravery. It requires the correct timing, the confidence to buy, the calmness to hold and the resolution to cut loss should the stock keep falling down.

I queued PRIVA @ 0.195 early in the morning, when the queue was 0.200 best buy and 0.205 best sell. Soon after the market opened, I saw KLCI "waterfall-ed" again and immediately wanted to cancel my order. But before I clicked on the "cancel order" button, the transaction was matched.

PRIVA rebound

Soon after that, the best sell became 0.195 in no time.

Soon after that, the last done price was 0.190.

Soon after that, the best sell become 0.190 and the best buy was 0.185.

This implies an immediately loss and is not a good feeling at all. It was tough to hold the counter in that situation, especially when KLCI has been plunging continuously. My confidence is certainly shaken right after buying. I decided to observe first and closed my trading platform. Until now, so far so good.

While PRIVA is not a 5-star stock (my basic requirement to catch a rebound), being a technology stock and a price of < 0.200 makes me irresistible. I target a return of at least 50% in short time.

Sunday, 16 August 2015

Currency talk 3.0

In Currency talk (1.0) I made a bold statement that the day of AUD:MYR = 1:3 is over, with a "however":

If you really want 1:3 back in the days of 2012, you will have to hope for a quicker depreciation of MYR than AUD. But even if that happens, how worthless is MYR at that time? And how much you could do with it?

Back then, the currency was trading at about 2.80. According to BNM rate as at 14-8-2015 17:00, AUD:MYR is buying at 3.0112. Unbelievably, something that I wrote without much contemplation has become true in less than 6 months.

And NO, this is not due to the appreciation of AUD but a quick depreciation of MYR since July.

And NO, even the ratio of 1:3 is back does not mean that the MYR you converted back has the same value. The 1:3 today is completely different from the 1:3 back in 2012.

And NO, I do not want to see this coming as this means that MYR is getting worse. It looks like there is no signal that could stop the depreciation of MYR.

Human's brain is hardwired to survive. At the critical moment, protecting own interest is always the top priority. This is really no different from politics where it is all about self interest. Therefore, believing that the government could somehow help the currency is unrealistic. Because of this, I have to be responsible to my wealth. I thought that it is now a bit late to change currency, but whatever it takes, I have to come up with a Plan B.

Sunday, 9 August 2015

Currency talk 2.0

In currency talk, I mentioned that MYR has no cure but insidious depreciation. Unfortunately, the prophecy has become a reality. The chart below shows the trend of USD:MYR in the last 2 months:

(Figure obtained from Yahoo finance)

Point A:  30th - 1st July. The credit rating of Malaysia remains unchanged and the outlook was upgraded to become stable. MYR has rebounded strongly in the following day. Shockingly, this rebound only last for 1 day! And because of this conspiracy theory arises...

Point B: 7th July. USD:MYR broke 3.80 for the first time since 1998. I thought that 3.80 will be a strong psychological support since it was the rate pegged 17 years ago. But it did not look as "strong" as it should be. The slope of that day is relatively steep, showing that it breaks the support "just like that":

Point C: 22nd July. After breaking 3.80, I was looking for a rebound -- to at least 3.70. The rebound did happen, but to a much lesser extent and a much shorter period than I expected. This scares me a lot.

Point D: 7th Aug. USD:MYR was trading at 3.92. Why does it depreciate so fast? Perhaps political issues has lower the confidence of foreign investors?

Seeing the rate of MYR depreciation, Many Malaysians stocking up on Singapore dollars, US dollars as ringgit weakens. This basically tells me that now is not a good time to change money.

In 1997, the damage on Malaysia was relatively "mild" as compared to its neighbouring countries (except Singapore). Looking back, it was definitely a right decision to peg USD. But the current situation in Malaysia seems to be developing another financial crisis. Keeping in mind that US has still yet to increase the interest rate and MYR already like that scares me a lot. What if US really increases the interest rate this September? It is also possible that BNM may raise the interest rate in September meeting in trying to stabilize MYR. Interesting things might happen in a few months time.