Special Alert: Budget 2009 Wish List

After a spate of people and business "unfriendly" initiatives announced by the government in the first half of 2008, we think the Malaysian government is more likely to dish out some "goodies" in the up-coming Budget 2009 (next month - August08).

Let's do a count down on these less "unfriendly" news:

1. Petrol price hike from RM1.92 to RM2.70 (+41%) in June, led general consumers to dampen spending. General prices of goods and services (including food) rose significantly. Your nasi campur or mixed rice, is more expensive??? That's why.
   
2. June08 inflation touched 7.7%, meaning that everybody living in Malaysia are 7.7% poorer in real RM-value terms.
   
3. Plantations and electricity generators (Independent Power Producers) are slapped by wind-fall taxes. Hence, affecting profitability of investors, business owners and lenders of such industries.
   
4. As many as 200 Malaysian contractors have returned their letter of award to the Government due to escalating building material prices. Traditionally, such government tender jobs gives very, very lucrative margins. Well, this piece of information says a lot in our opinion. Think about it, if these contractors had already pulled away from these contract, what about the ordinary construction & development projects by the private sector?? To us, may even be loss-making. :(

Putting on our political analyst (not the most shout-about job in town) cap, we think the most appropriate thing for the government to do in order to:

1. Restore confidence in the rakyat.


2. Lessen rakyat's burden.


3. Feed the much deprived rakyat (who suffered 4.5 years of growth hunger) with some tangible goodies.


4. Position a "good" exit for the current prime minister who announced to hand over the helm in the middle of 2010 and pave a "good entrance" for his deputy.

is to (by the very least) announce some "people and business friendly" initiatives in the up-coming budget.

YouInvest Budget 2009 Wish-List.

1. Reduction in personal income taxes in the form of more relief and/or tax rate.
   
2. Reduction in EPF contribution by employees but maintain the rate of employers contribution.
   
3. EPF to allow contributors more allocation for repayment of home loans and unit trust investment.
   
4. No interest rate hike, until end of year. (We think that interest rate hike is unavoidable to control high inflation.)
   
5. Some tax relief to professionals across the board to plug the current brain-drain in the country.
   
6. Extra prudent government spending, especially on big value projects like the undersea electricity cable project (linking Bakun Dam to Peninsular Malaysia), and the 5 economic corridors. If the rakyat is going to tighten their belt and reduce unnecessary spending so should the government. We should do it all together since we are living under one roof and the government's money is the people's money. What more, the essence of a democratic government is only a mere representation of its people voices and opinions. So, in the case of misrepresentation, then the rulers are no longer relevant. In a democratic country, we do not need elite domination over the silence and the weak. Rent seeking and cronyism are definitely not welcome in any country let alone a beautiful democratic country like Malaysia.

Conclusion. Again, to sum it all up, we are turning bullish on the Malaysian stock market as we see some signs of improvement. Comparatively, the Malaysian market was extremely weak from March to July, and in our opinion, the turnaround could come in August and should be able to carry through to December 2009 when the UMNO election kicks in. So we are building our position now to take advantage for this relief rally.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

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Malaysia Stock Market Review for Week Ending 25-July-2008

Well, this week we had not been too correct about predicting market direction, the KLCI moved up by +36.7pts closing 1,141.75 just now. This week we had also turn bullish on the market for the first time since we had started this blog. Although many people that we spoke to did not agree with our view but we are still sticking to our opinion for the mean time. Concurrent with our change of mode, we are putting some investment in equities unit trust to set things in motion so that we have a position in equities if and when the stock market rebounds. We've chose a slightly more aggressive fund (Public Equity Fund) which focuses on KLCI blue chips and growth stocks. From our selection, one can tell that we are not entirely ultra bullish or super conservative, we neither chose a small cap fund/sector funds nor balanced funds. Our selection of stock is purely to gain exposure on the stock market with slight biasness to growth and KLCI-following.

So what went wrong with our prediction? Mainly, the easing of global oil prices. Oil prices are now trading US$135/barrel (-10%) from the high of US$150/barrel in early July 2008. Of the reason given for the easing of oil pressures were [1] higher US$ vs other major currencies, [2] expected global slow down which could soften oil demand [3] no supply disruptions as hurricane Dolly misses the refineries in the Gulf of Mexico (YouInvest feels sorry for those hit by Dolly). [4] US law-makers are setting in more requirements for crude oil futures trading to curb over-speculation.

On the domestic front, although corporate results weren't the brightest of all, but the re-negotiation of IPP (Independent Power Producers) on their power-purchasing agreement has put in glimpse of hope in the power producing industry. Recall that previously IPPs were required to pay wind-fall taxes beginning this month, we believe some profitability will be restored within the power sector following the changes in the new power-purchasing agreement.

Most probably when you read this article, you would have already known the outcome of Malaysian interest rate. However in our opinion, there should be NO rate hike because:

1. The government need to do some "politically-correct measures" to ease burden on general public.


2. Oil prices has receeded from its high by almost 12% and potentially could go down even more if US puts additional restrictions to trading activities of oil futures.


3. Latest interest rate on mortgages have already priced in the 25-50bps increment, that is to say that the market has already priced inflation ahead of the central bank rates, hence, no point doing it.


4. Leaving the interest rate unchanged could be the prelude for potential goodies in the up-coming Budget 2009 announcement in August.
   

If you read point number 1,2,4 again, that would also give you the reason why we had turn bullish this week. Fingers crossed on Budget 2009 [we are expecting a people friendly budget this time around, fingers ] :) (check out our wish list in the next posting)

Recommendations: For first time investors, we are recommending to allocate 10% of the funds into pure equities unit trust. For those who have already invested and still making losses, we would advise to average down bit by bit.

Strategy: We will be increasing our portfolio in equities if there are any dips. Any dips of -50pts and below will be a good opportunity to buy. We are still waiting for even stronger buy signals and recoveries in the political scene to invest in equities even further than present level.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Special Alert: Is It Time to Turn Bullish on Stock Market?

Contrary to last friday's recommendation, we are beginning to turn bullish on the market again. However, this time it could short term and for trading and positioning purposes. Unit trust investors should take opportunity to slowly accumulate or build positions in anticipation of any potential rallies. Investing all at one go (lump-sum) should be avoided as doubts on political stability and inflation scares are still not iron out yet.

Malaysian stocks rallied today as global oil price retreated from US$150/barrel to US$135/barrel (-US$15/barrel) due to the recent strenght of the US$ against other currencies and slower demand for oil globally. This week in the US also staged a series of heavy corporate performance reporting. Generally investors in the US stock market felt more bullish in the financial sectors than before as several banks like Bank of America, JP Morgan, Wells Fargo and Citigroup reported results that were better (less poor) than earlier expected by analysts.

The KLCI was up by +29.84pts, closing at 1,139.4 today. Stocks that led the KLCI to moved up were Bumiputra-Commerce (+50sen), Tanjong (+50sen), Genting (+40sen) and Resorts (+13sen). Sign of recoveries in the Malaysian stock market was defintely in sight, as volume expanded to 656mn shares traded vs average of 250-300mn level in the last 2 months. However, we understand that most of the buying is done by foreign hedge funds, so we have to be cautious not to be trapped. Hedge funds traditionally have short investment horizon and usually very gutsy with their buying and selling pattern, so markets are expected to be volatile when they buy or sell.

RECOMMENDATIONS: Since we are beginning to turn bullish, we recommend investors to take a small position at current market in order not to miss out on any potential market rallies.

Our bullishness is prompted by:
1. Increase participation in the stock market (shown by higher trading volume)
2. Lower oil prices.
3. US banks reported results better than expected.
4. Investors thinks that political risk at current market level is all in the price. So, limited downside to political risk (for the mean time).

Model Portfolio Strategy: We are releasing 10% (amounting RM10,000) of our model portfolio to Public Equity Fund to gain exposure in the Malaysian equities market.

General Strategy: Investors might want to take position at current level with some exposure in equities through your unit trust investment. The more equities exposure your unit trust fund has the higher the potential returns, however, you should always understand that if you want higher return than you need to expect higher risk.

If you need help or advise on selecting which type of unit trust to buy, please email us.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 18-July-2008

As we had predicted in last Friday's market review, we expect Malaysia market to have a 70% chance of heading downwards this week and it did. KLCI this week lost -3.4% (39 pts) to 1,105.04 after heavy selling on plantation stocks. For the last 3 days, IOI Corp lost -95sen (-14.5%), KL Kepong lost -RM1.40 (-9.2%) Sime Darby lost -35sen (-4.3%), Asiatic -65sen (-9.3%) & IJM Plant lost -59sen. (-16.7%).

This week was also the first week for some companies reporting their Q2 (Apr08 - Apr08) performance results. Among the notable ones are Public Bank, British American Tobacco and Bursa Malaysia.

Public Bank was basically in-line with analyst expectations, and the results were generally good. However, stock price of Public Bank was relatively unchanged, -10sen from RM10.30 to RM10.20.

British American Tobacco - Results were also generally OK with some worries of cigarette tax hike in the upcoming budget this coming August. The government's "TAK NAK" anti-smoking campaign is also taking a toll on cigarette manufacturers. Upcoming efforts are pictorial health warning, higher taxes & restriction on smoking areas and the somewhat profileration of non-smoking zones. (If you still do not know, Ministry of Sound Euphoria the new club in Sunway Resort has a designated smoking room, you can't smoke in the club.) :( Sorry guys, but some of us in YouInvest are smokers. hehehe... The stock is down -25sen from RM41.50 to RM41.25.

Bursa Malaysia - Bursa reported a set of really, really poor set of results due to poor stock market sentiment and participation in Jan to Jun and it is still heading downwards. The stock was down -15sen from RM6.60 to RM6.45.

RECOMMENDATIONS: Unfortunately, the buy indicators had not appeared yet, so for the mean time we are still pretty much grounded on the sideline not doing much but keeping ourselves alert for any turn around news in terms of political stability in the domestic scene. For those who wants to know the market direction for the next coming week, we think there is again 70% chance of heading downwards, 25% chance for staying mutely unchanged and now even lesser chance of 5% of going up. Why? Cause we think selling of plantations stocks will persist this week by foreigners and local investors as they unwind their position for profits made from 2 years ago. Indeed plantation stocks had performed very well in the last couple of years and general long-term investors are sitting on decent profits, hence amidst difficult times, stocks that made money previously will be the ones to be sold first.

STRATEGY: For fresh and existing investment positions, we advise to buy on any market dips when the KLCI falls -50pts or more during a day. If the market does not drop as much then we will hold on to our investment with no actions taken.


YouInvest - Malaysian Investing Made Easy


For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

YouInvest Malaysia Investment Portfolio Update 16-July-2008

The YouInvest model portfolio had started since 15 days ago although this is the first time we are updating our readers. Given the poor performance in the stock market, we are still adopting a "wait and see" approach in our investment.

Just a brief run down on what we had done so far:

1. Parked RM90,000 (90% of our initial capital of RM100,000) in the 1Mth-YouInvest $-Mkt which gives us interest earning of 3.53% per annum. (Note that this product is higher than any FD rates available in the market and only exclusive to YouInvest clients only; if you are interested, kindly email us).
   
2. Whilst the benchmark KLCI has gone down by -4.7% since the beginning of July 2008, our portfolio is making tiny sums of money everyday through the fixed deposit-like product. In other words, we are still beating the market performance.
   
3. Total net profit to date is: +RM108.23

Strategy:

1. Cash is still king for us at the mean time, so we will continue to keep money in our FD-like investment.
   
2. We are keeping poist for any sharp downfall in the stock market so that we can start buying on large dips or when the stock market finds its bottom, but our biggest concern is still the political stability in the country.
   

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 11-July-2008

Finding market driving news to write these days had been a fairly difficult task especially when political topics tend to dominate most of the content in local daily newspaper. So bad that even the business section has dedicated 1 whole page on political bickering and how the investment community is getting tired of things. On the corporate front news flow on corporate events had been dry and boring to say the least. Malaysian corporates are now in hibernation mode with almost no sensational news. Good news are kept in the closet waiting for improved sentiments whilst bad news seems to be largely created for the purpose of selling off, we expect.

KLCI this week is pretty much disconnected with other stock markets (regional, US and Europe) . Whilst most of them were down, Malaysia's KLCI was up by +23.33 (+2.0%). Some might ask: So, is it a rebound (stock market to go up)?? In actual fact, we can't really tell .... perhaps what held us back from investing is perhaps the razor thin volume. To put things in perspective, we are most delighted the stock market closed surpassed the 1,080 pts (good sign) but we are not entirely convinced given the poor volume of market participation rate (bad sign). So the next question is: Would it come down or go up next week?????

Our best guess is that it has 70% chance of going down, with 25% chance of remaining flat and 5% chance of going up. We think it might go up on the basis that regional markets could rebound after heavy selling this week and KLCI will just take lead from regional momentum. So, overall this week is still not a window week for us to buy, in fact we are adopting a wait and see approach at the mean time.

Recommendations: It is time to look at the market now, but remain on the sideline to wait for any buy indicators, Oppotunities might come or it might not. Be careful of false start, we advise to keep your ears on the ground for good political developments.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 4-July-2008

We guess there is nothing much to write this week as we had sent out 2 special alerts [1] Dated: 30-June 2008 Special Alert: Political Risk Move Up Another Notch & [2] Dated: 3-July 2008 Special Alert: Blue Moon Shun Upon Bursa Malaysia Today. (If you would like to know more, you can always refer to these articles on the same week).

As for the review this week, KLCI dropped -52pts, erasing -2.8% settling at 1,134.14pts. Despite continuous political mudslinging, Malaysian stocks were also affected by external influences from regional stock market trends spurred by high oil prices and high inflation expected to be announced in the coming months. Regional market also showed weaknesses in terms of investor sentiments in expectation of inflation led by higher cost of basic materials (like metal, oil and food commodities).

Since we are already in the summer months (June-August), activities in the stock market will remain sluggish as investors in the West kick back and relax, enjoying, basking in the sun sipping cool magaritas and martinis. Well, seasonality like these are common, so don't alarm your friends and scare them to sell all their shares. It's an annual event. :)

Recommendations: The YouInvest team thinks in the next few months leading to August, investors should keep cool and stay on the sideline before more indicators unfolds in the economy, especially the aspects of politics and policy making. So, do like what the Western investors are doing, KICK BACK n RELAX. Go meet up with friends, catch up on old times, go for a holiday somewhere interesting to learn about things, get different view and broaden your perspectives. Anyways with all the political uncertainties surrounding the Malaysian stock market, its better to stay out than facing potential falling daggers of the stock market. With that note, YouInvest is going to yum char (have a cup of tea) with their friends catching up good times. :)

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

YouInvest Malaysia Investment Model Portfolio - Introduction

Dear investors & readers, this is our newly launched YouInvest Model Portfolio which shows you how's our performance in terms of giving investment advise and how effective it is comparing to Malaysian stock market performance. We will be switching strategies from time to time to gain the best possible return. To the YouInvest team, the portfolio serve as a test to our professionalism in investment consulting and advisory role. Lastly we want to highlight that the model portfolio may not be suitable for all investors and should only be used as a guide.

Basic Feature of the YouInvest Malaysia Investment Portfolio:

1. Initial Statup Capital: RM100,000.00

2. Type of Instruments: 5-Types (a) 1-Mth & 3Mth YouInvest FD (b) Local Bond Funds (d) Local Equities Funds (e) Foreign Equities Fund (f) Idle Cash

Note: All Funds are Public Mutual Funds and YouInvest FDs are special fixed deposit exclusively available for YouInvest clients (YouInvest FD is higher than ordinary bank FDs - if you want to know more, please email us)

3. Benchmark comparison: KLCI

4. Start Date: 01-July-2008

5. End Date: undetermined (but surely long term)

6. Frequency of reporting: Weekly (at least) or whenever there are changes in the portfolio.

If you require further help on unit trust portfolio set-ups, you can drop us an email.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Special Alert: Blue Moon Shun Upon Bursa Malaysia Today 3-July-2008

Today was definitely a bomber ... Bursa was not able to trade the entire day claiming fault on technical glitches on the trading system. So all brokers can't key in any trade orders. We at YouInvest think today was most probably a day when the blue moon shun upon Bursa and no other day had been more conincidental than today's trading. Let us lay it out for you guys.

1. 9.00am. Market open but Bursa's trading system had their "technical glitch" so no brokers were allowed to key in any trade orders. When we saw the official Bursa announcement it was already 9.15am, and Bursa informs that the system glitch could be ractified and possibly investors can start trading in the second half session (2.30pm to 5.00pm). Concurrently, Asian stock markets were mostly down in between (-1.0% to -2.5%) due to heavy selling triggered by weak closing on Dow Jones & S&P Index in the US the night before (The Dow was down -1.6%). Obviously, if the Bursa was open today, KLCI would most probably trended downwards in-line with the market having taken queue from US lead.

2. 11.00am. Rumour began to surface in the stock market on possible "significant" announcement by Datuk Seri Anwar Ibrahim. However, not many people knew what it was.

3. 2.30pm. Trading in Bursa Malaysia still stood still with no favourable announcements on the rectified technical glitch and opening of trade session.

4. 3.00pm. Bursa again made announcement saying if things were not rectified by 3.30pm then stock market trading will be closed for the whole day.

5. 3.30pm. News about the "significant announcement" by Anwar started to surface on the internet and finally trickled down to Malaysian investors.

How Ironic.....

We are starting our Unit Trust Model Portfolio with some explanatory notes this weekend to help you make the best out of your investment in unit trust.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/