S&P on recent situation

S&P (Standard and Poors) said majority of the Asia economy is able to withstand the US economy slow down impact. Only export dependant economy like Taiwan, Thailand and Sri Lanka could be affected. Asia country's credit rating is in no danger of down grading.

China demand and individual country domestic demand should buffer the US slow down impact. The major risks to Asia economy are energy and food prices, credit squeeze and possible Euro zone slow down.

MIDAS JV Nanjing SR Puzhen win

MIDAS announced another piece of good news today. JV company wins a RMB 1.05 billion contract to supply 21 train set. The repeated and frequent contract win is a major endorsement on the company capability and further enhance the company status as key train/aluminium product company in China.

The recent incident of heavy snow delaying CNY return home crowd, has again highlighted the need for more investment to move the people efficiently. They are planning for more high speed track and more connectivity.

I remain invested in the company provided the strong fundamental. I have also mentioned before that the China railway play is a strong and long running theme which could be less affected by the economy cycle. Follow the recent market downturn, the share has held up relatively well. At the current price of 1.4, it still trade at forward 08 PE of 18. This has somewhat proves that given the strong fundamental, market still willing to pay more.

Compare to other battered china play which trade at 5 or 6 PE, this stock is some what a different class. Time for accumulation, maybe, depends on your view. All I can say is the more price fall, the lesser risk you have on a stock.

Stock beginner guide – Fundamental or technical analysis

Part 3

Generally, there are two ways of analyzing stock. Some buy stock base on fundamental analysis and some uses technical analysis.

In fundamental analysis, investor would study the company business, strategy, macro environment and perform some financial ratio analysis to decide on the value of stock. They would then buy if the stock is undervalued or meet the investment objective.

Fundamental analysis could be further broken down into macro economy analysis, sector analysis and company analysis.

Macro economy analysis – Study the macro economy environment and its impact on stocks. E.g. Singapore economy is going to do well in next few years, so buy Singapore shares.

Sector analysis – Perform analysis on a particular industry/sector outlook and pick the company that could benefit from it. E.g. healthcare and oil & gas sector etc.

Company analysis – Analyse the company management, business strategy, industry/market and financial ratio to decide whether to purchase the stock.

In technical analysis, investor would plot company’s share price chart. Base on the daily movement or even hourly movement of the stock, they would buy and sell depends on the technical signal. Technical analyst believes that share price fluctuation would form a pattern that is likely to repeat itself. One is able to profit from this recognized historical pattern.

It is hard to say which style would produce better return and some investor actually combines both of them. I would say just pick a style that suits you.

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Is monopoly a good business?

Recently, follow the transport policy change, the spotlight are on ComfortDelgro and SMRT. Both of the companies have a duopoly on the local transport market. They are natural monopoly who operate certain concession and have stable business.

Generally, this type of business is defensive in nature. That means during good time or bad time, the earning is quite stable. Depends on the industry nature, some monopoly might have better prospect than others. Compare a toll road operator to a bus company, I would think that toll road is better, at least the fixed cost does not increase so fast. Well, but it all depends on individual situation. Look at the local market which is pretty small, obviously the monopoly has little room for growth.

That's why I was never impressed with the transport stock. The room for growth is limited. Key risk to monopoly is always the regulation change. Unfortunately, this is what is going to happen to them in the coming years.

More competition would always cause falling margin and reduced profit. Only the more efficient operator would survive.

Stock beginner guide – Learn the fundamental

Part 2

Stock is one of the most common forms of investment that people do. However, before you ever start, keep this in mind. Use only the money that you can afford to lose. Even you lose the money completely, it won't affect your life.

Next, if you are a beginner in stock, what do you do? Learn the fundamental and basic of stock investing!

You can start by doing research in the library. Get a couple of beginner’s book which teach you the basic concept of buying stock. Alternatively, you can go to the bookshop investment section and try to find a suitable book. Start at basic level and slowly progress up.

You can also turn to internet for the learning. But, it is usually more convenient to read a book than to read from computer screen. Once you have learned the basic concept, you can start to practice it. Take a few thousand dollars for try run. This would be your tuition fee. As your confidence and experience grow, most probably you would know what to do next. Investing is a continuous learning process.

After much reading, if individual stock picking is not your cup of tea, there is still another option. That is by buying unit trust. Many found that individual stock investing is too time consuming and tiring. By buying unit trust/mutual fund, you don’t have to do intensive research. Just pick a fund that is suitable for your investment objective and let the fund manager help you to invest.

You can buy unit trust from bank, financial adviser or online portal. Read up more on the basic of unit trust before you start.

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Stock beginner guide – Why buy stock

Part 1

Most people know the existence of stock market and know that they could make money from the stock market. When we talk about making money, many are interested. However, before you plunge into buying stock, have you ask yourself “why buy stock”? In general, buying stock should be part of your financial plan, and you should not treat it as a form of gamble.

Let’s start with the very basic concept - personal financial plan. As a start, you will need to have a stable job and prudent spending habit. Preferably, every month you should have some residual money left after all the bills. First, keep a few months of living expense as rainy days fund. Second, engage insurance agent or financial planner to get sufficient insurance coverage. This is to prevent any unfortunate event that could derail your financial plan.

After that is done, the next stage is wealth accumulation. In simple word, how to grow your money. Some would say I only have few thousand dollars and it is impossible for me to get rich. That means you haven’t hear about the magic of compounding.

For example, let’s say you have 1000 dollars and a bank is willing to give you 10% interest. How much is your money after 20 years?

1000 x 1.1^20 = 6727.5

A thousand dollars actually grow to over six thousand dollars after 20 years. That’s the magic of compounding which your interest would also earn interest. Given 20,000 of saving and investment return of 20% a year for 20 years. You would get

20,000 x 1.2^20 = 766,752

This sound a bit tempting. To grow the money, many turn to stock market.

What is stock? In simple term, stock is a share of business. When you buy a stock, you are not just buying a piece of paper but a share of a business. Behind every stock is a company and behind a company is a business. Business is out to make money and grow. When business grow, that means you earn return.

Typically, company makes money and the yearly earning could be channel back to the company for future growth. Your investment return could come in the form of share price appreciation or yearly dividend. Depends on how well the company is doing, the company share price would react accordingly.

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Stock beginner guide - Preamble

The purpose of this series of articles is to help the stock market beginner to know the basic of stock investing. This is not meant to be a complete guide, but a summary to guide the newbies on what to do.

Content

Part 1 - Why buy stock

Part 2 - Learn the fundamental

Part 3 - Fundamental or technical analysis

Part 4 - Open a broker account

Part 5 - Buy and sell stock

Part 6 - IPO

Part 7 - Final word

I hope this would be helpful to those just started.

Singapore stock recovering

Singapore stock market has staged a come back follow by the heavy sell down. This should be a temporary relief to all the market players. Those who shorted or index warrant players should have been making big bucks from the recent rout.

I think the worst is not over yet. I am holding back my desire to add more stocks, since I have a high percentage of holding. I intend to purchase in different batch when I see good value of stock I liked.

Meanwhile, I would just do some reflection on my investment strategy last year and what strategy to use in the coming year.

As requested by a friend, I shall start a series - stock beginner guide for those who knew nothing about stock investment. Stay tuned...

QDII come or no come?

In general, market rebounded following US interest cut news and from the oversold position. One bright spot is China share. Follow by the news of allowing China bank to invest in Singapore as QDII fund, market player take this opportunity to push up the china stock.

CIMB's top picks are China Energy, China Hongxing, China Sky, China Sports,
Ferrochina and Synear.

It is an old news already. We know they are coming, and it is just a matter of time. The dangerous thing now is to act on this small piece of news. Imagine I bought synear at 2+ just a few months ago. As long as the general market direction is down and the bad news is not exhausted yet, the rally could be short lived. Be in mind that, the US reporting season is not over yet.

Having said that, I feel maybe there is no better time to buy stock than the current one. Buy in different batch and continue to hold for long term are key to do well in this kind of environment.

In recent time, the REIT good run has ended by the global credit crisis. I was amazed by how REIT has kept growing in the recent years. Investors forgot they are primary for yield purpose, and keep chasing it for its expansion strategy. Since the easy funding era has ended or temporary paused, it is no surprise that REIT took a beating. But, good time would return, we just need patience.

Beside that.

Sino Env has secured the desulphurisation contract, CIMB has an outperform rating and target price of 2.62. This is sort of providing a level of comfort to the existing share holder that the expansion is still on track.