Showing posts with label IOICORP. Show all posts
Showing posts with label IOICORP. Show all posts

Wednesday, 11 May 2016

So a good financial report does not mean a jump in share price

This is subtly related to a previous article the consequence of betting on quarterly reportIn the article, I talked about the lesson learnt from betting on financial reports. Now the market seems to "evolve" to another higher standard.

Malaysia International Shipping Corporation (KL: MISC) announced its quarter report on last Friday, 6/5/2016. The company's profit rises 17% quarter-over-quarter. Despite a good quarter report, out of a sudden, MISC plunged 13% on Monday 9/5/2016, with no apparent reasons.

This reminds me of the opposite example, IOICORP. On 16/11/2015, IOICORP posted a loss of 719M, downed 500%+ quarter-over-quarter. For a blue chip stock to incur a loss, people were expecting a big drop in the share price. However, nothing happened on the next trading day and the stock was performing just like normal.

What does this imply? The financial world is changing at all time. So the stock market changes pattern too. The "correlation" between financial results and short term stock price movement seems to disappear. While fundamentals are still important, my view is that its importance and significance has diminished to a lower "weighting". If this is true, then the old way of "long term investment" may no longer work. The big question is: what is the more important factor now? This is a question worth contemplating.