The buying interest in penny stocks is driven by growing retail confidence and investors who shift their focus away from blue chips, says a head of research
Retail investors are flocking back to the market, boosting interest in penny stocks, said brokers and analysts.
Penny stocks are quoted securities, trading below the RM1.00 mark. They are seen as studs in a bull market, as retailers clamour for action, at the lowest possible cost.
"I think the buying interest in penny stocks are driven by various factors, but the two main ones would be growing retail confidence and investors who shift their focus away from blue chips," said Jupiter Securities' head of research Pong Teng Siew.
Interest in penny stocks are mainly driven by retail investors' confidence, added participation of day traders, speculators and willingness by brokerages to provide margins.
Pong added that frequent sharp upward swings in prices of many penny stocks are providing the main thrust for retailers at the moment,
OSK Investment Bank head of research Chris Eng said some of the gains made by penny stocks could be explained.
"We have a few companies that were out of the PN17 list, so that have sparked some buying interest," said Eng.
Eng also noticed a trend among traders zeroing on small consumer stocks, mostly companies in the food and retail business.
"You can see buying interest in companies like Farms Best Bhd, Spritzer Bhd, Hwa Tai Bhd and Hup Seng Bhd," he added.
Indeed, for the past six trading days, penny stocks have dominated the most actively traded securities list, with 14 of them being on the top 20.
On the converse, there was only an average of 11.8 stocks on the list in the first two weeks of this month.
"Business has been improving lately," said a remisier from a local stock broking firm, attributing it to the rise in orders made by retail investors.
Retail participation, as a percentage of the total trades done, has been declining, falling to 27 per cent in the first half of the year compared with 37 per cen in the same period a year ago.
Pong sees the rise of retail participation as a positive sign for a sustained market uptrend.
"I believe we can see the market touching a new high soon, probably as soon as next week," he said.
CIMB Investment Bank Bhd said early this week that the benchmark stock index may surpass levels before the start of the global financial meltdown in 2008, to climb to 1,450 by the year-end.
However, some analysts are not biting the bait just yet, pointing to a Bloomberg data this week, which showed that "buy" calls on Malaysian stocks slumped to a decade-low of 39.38 per cent this month.
Read more: Retail investors chase penny stocks http://www.btimes.com.my/Current_News/BTIMES/articles/pennt22a/Article/index_html#ixzz0ucLBAbxl
My comment:
Best time to sell your speculative socks is when retailers are bullish
Saturday, July 24, 2010
Wednesday, July 21, 2010
How to Front-run the Chinese, Legally By Brian Hicks | Wednesday, July 21st, 2010
"The 19th century was the century of the UK, the 20th century was the century of the US, the 21st century is going to be the century of China." — Jim Rogers
"China is going to be an enormous force that will make the Japanese threats of the seventies and eighties look like a water pistol." — former CE CEO, Jack Welch, 2001
Dear reader:
According to British author and soldier Sir John Bagot Glubb’s book The Fate of Empires, the seven stages of an empire’s life cycle are as follows:
1. The age of outburst (or pioneers)
2. The age of conquests
3. The age of commerce
4. The age of affluence
5. The age of intellect
6. The age of decadence
7. The age of decline and collapse
It’s not hard to figure out where the United States stands in this life cycle.
We just experienced the greatest housing and credit bubble in history… when homeless people were given mortgages.
We’re also experiencing epidemics in obesity, heart disease, and debt.
The U.S. finds itself in stage #6: decadence.
That’s right, we’re in decadence. At what phase of decadence, I’m not sure...
But decadence will soon turn to decline… if we haven’t already fallen off the cliff.
Nothing proves this point more than the following chart from the International Energy Agency (IEA) that shows that China now consumes more energy than America:
You can draw a circle around where the two lines intersect and write “Historic!”
This chart represents an epic shift in global power, both economically and politically.
Wall Street Journal broke the story on July 18th:
China's ascent marks "a new age in the history of energy," IEA chief economist Fatih Birol said in an interview. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for U.S. energy security.
The Paris-based IEA, energy adviser to most of the world's biggest economies, said China consumed 2.252 billion tons of oil equivalent last year, about 4% more than the U.S., which burned through 2.170 billion tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear power, coal, natural gas and renewable sources such as hydropower.
For many energy and China observers, this wasn’t a surprise — although it occurred much sooner than expected.
But, dear reader, this is a mega-trend that will continue for decades.
And the investment potential is mind-blowing.
You see, later in the WSJ piece…
Mr. Birol, previously an economist at the Organization of Petroleum Exporting Countries, said China is expected to build over the next 15 years some 1,000 gigawatts of new power-generation capacity. That is about the total amount of electricity-generation capacity in the U.S. currently, and the construction of all those gigawatts occurred over several decades. "This demonstrates the major growth we are talking about" in energy demand and capacity growth in China.
Now, China has been all over the world inking deals with oil sand firms in Canada, resource rights in Africa, Australia… and Mongolia.
They’ve been doing this for years. This is not new.
They’ve also been hoarding resources to supply their infrastructure build-out for years to come.
This brings me to the point of this article.
If you know what resources the Chinese will need to maintain their rising energy consumption, you can buy now, sit on the investment… and let the Chinese buy you out.
Chris DeHaemer has already shown you how to front-run the Chinese. He’s done this with a Mongolian gold stock and Mongolian oil.
In fact his latest home run — a Mongolian oil stock — has rallied over 700% this year alone. His readers are making money hand-over-fist.
And that’s just the beginning...
Imagine buying Suncor Energy (one of Canada’s largest oil sands companies) when it went public in 1993 for just a $1.08 per share!
Today Suncor trades for $33… a gain of 2,900%.
That’s what you’re looking at with Chris’s Mongolian oil play.
Mongolia is in an ideal situation. It borders a nation with a voracious appetite for resources… coal, oil, natural gas, etc.
Think about it like this...
Canada is a resource-based economy. Its GDP for 2009 was $1.287 trillion. Canada is in an ideal position because its neighbor to the south still has the #1 economy in the world. So, Canada essentially ships all of its resource production to the U.S.
Now look at Mongolia. It’s also a resource-rich nation. It too has a huge neighbor that needs its resources — China.
And the thing about China is that it appears to be in stages 2 to 4 in the empire life cycle.
China has more millionaires now than the UK and France.
And like energy, it’s only a matter of time before China’s overtakes America in that economic category as well.
Profitably yours,
Brian Hicks
"China is going to be an enormous force that will make the Japanese threats of the seventies and eighties look like a water pistol." — former CE CEO, Jack Welch, 2001
Dear reader:
According to British author and soldier Sir John Bagot Glubb’s book The Fate of Empires, the seven stages of an empire’s life cycle are as follows:
1. The age of outburst (or pioneers)
2. The age of conquests
3. The age of commerce
4. The age of affluence
5. The age of intellect
6. The age of decadence
7. The age of decline and collapse
It’s not hard to figure out where the United States stands in this life cycle.
We just experienced the greatest housing and credit bubble in history… when homeless people were given mortgages.
We’re also experiencing epidemics in obesity, heart disease, and debt.
The U.S. finds itself in stage #6: decadence.
That’s right, we’re in decadence. At what phase of decadence, I’m not sure...
But decadence will soon turn to decline… if we haven’t already fallen off the cliff.
Nothing proves this point more than the following chart from the International Energy Agency (IEA) that shows that China now consumes more energy than America:
You can draw a circle around where the two lines intersect and write “Historic!”
This chart represents an epic shift in global power, both economically and politically.
Wall Street Journal broke the story on July 18th:
China's ascent marks "a new age in the history of energy," IEA chief economist Fatih Birol said in an interview. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for U.S. energy security.
The Paris-based IEA, energy adviser to most of the world's biggest economies, said China consumed 2.252 billion tons of oil equivalent last year, about 4% more than the U.S., which burned through 2.170 billion tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear power, coal, natural gas and renewable sources such as hydropower.
For many energy and China observers, this wasn’t a surprise — although it occurred much sooner than expected.
But, dear reader, this is a mega-trend that will continue for decades.
And the investment potential is mind-blowing.
You see, later in the WSJ piece…
Mr. Birol, previously an economist at the Organization of Petroleum Exporting Countries, said China is expected to build over the next 15 years some 1,000 gigawatts of new power-generation capacity. That is about the total amount of electricity-generation capacity in the U.S. currently, and the construction of all those gigawatts occurred over several decades. "This demonstrates the major growth we are talking about" in energy demand and capacity growth in China.
Now, China has been all over the world inking deals with oil sand firms in Canada, resource rights in Africa, Australia… and Mongolia.
They’ve been doing this for years. This is not new.
They’ve also been hoarding resources to supply their infrastructure build-out for years to come.
This brings me to the point of this article.
If you know what resources the Chinese will need to maintain their rising energy consumption, you can buy now, sit on the investment… and let the Chinese buy you out.
Chris DeHaemer has already shown you how to front-run the Chinese. He’s done this with a Mongolian gold stock and Mongolian oil.
In fact his latest home run — a Mongolian oil stock — has rallied over 700% this year alone. His readers are making money hand-over-fist.
And that’s just the beginning...
Imagine buying Suncor Energy (one of Canada’s largest oil sands companies) when it went public in 1993 for just a $1.08 per share!
Today Suncor trades for $33… a gain of 2,900%.
That’s what you’re looking at with Chris’s Mongolian oil play.
Mongolia is in an ideal situation. It borders a nation with a voracious appetite for resources… coal, oil, natural gas, etc.
Think about it like this...
Canada is a resource-based economy. Its GDP for 2009 was $1.287 trillion. Canada is in an ideal position because its neighbor to the south still has the #1 economy in the world. So, Canada essentially ships all of its resource production to the U.S.
Now look at Mongolia. It’s also a resource-rich nation. It too has a huge neighbor that needs its resources — China.
And the thing about China is that it appears to be in stages 2 to 4 in the empire life cycle.
China has more millionaires now than the UK and France.
And like energy, it’s only a matter of time before China’s overtakes America in that economic category as well.
Profitably yours,
Brian Hicks
Bernanke slams U.S. economy!
Bernanke on jobs:
"This is the worst labor market since the Great Depression."
Bernanke on housing:
"The market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction."
Bernanke on fears about the future:
"Most ... viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside."
Bernanke on tight credit for small businesses:
"Bank loans outstanding have continued to contract. Small businesses, which depend importantly on bank credit, have been particularly hard hit."
And never forget: All this is coming from a man whose job invariably makes him extremely reluctant to admit to negative trends in any sector at any time — if Bernanke is saying things are bad, you can bet your bottom dollar they're actually far worse.
"This is the worst labor market since the Great Depression."
Bernanke on housing:
"The market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction."
Bernanke on fears about the future:
"Most ... viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside."
Bernanke on tight credit for small businesses:
"Bank loans outstanding have continued to contract. Small businesses, which depend importantly on bank credit, have been particularly hard hit."
And never forget: All this is coming from a man whose job invariably makes him extremely reluctant to admit to negative trends in any sector at any time — if Bernanke is saying things are bad, you can bet your bottom dollar they're actually far worse.
Thursday, July 8, 2010
Tanjong: Bidding for new power projects
Tanjong plc (RM17.50) is hoping that some of its bids for new power projects will come to fruition over the next few quarters. In the meantime, earnings from its existing power assets are expected to remain relatively resilient, although overseas earnings, donominated mostly in US dollars, are hurt by the stronger ringgit.
Thursday, July 1, 2010
Gaming sector / betting duty increase
§ NFOs Pool Betting Duty (PBD) increased from 6% to 8%.
§ Genting Malaysia acquires UK casino operations from Genting Singapore for £340m cash.
§ Depending on whether the NFOs are allowed to transfer the higher cost via lower prize payout, impact could be directly on margin (additional PBD costs) or turnover (transfer additional cost to lower prize money resulting in loss of market share to illegals as the latter has no precedence in reducing prize money).
§ In either case, consensus net profit of NFOs will be adversely impacted, ranging from 3-13%. Among the NFOs, Tanjong will be least affected (3-4.5%) while the impact on B-Toto and MPHB could be at least doubled Tanjong’s impact.
§ The hike in PBD may raise concerns about potential hike in casino gaming tax. For every 1%-point hike, Genting Malaysia and Genting’s consensus net profit would be eroded by 2.7-2.9% and 1% respectively.
§ Previous hike (2003) in casino gaming tax was 5%-point. Assuming the same magnitude, Genting Malaysia and Genting’s consensus net profit would be eroded by 14% and 5% respectively.
§ Will reduce competitiveness to attract high rollers or foreign fund inflows.
§ As for Genting Malaysia’s acquisition, it would erode consensus earnings by circa 3% due to the low level of profitability of the UK casino operations. Marginal impact on Genting as it holds circa similar stake in both the purchaser and vendor.
§ To mitigate the impact of the PBD hike and assuming NFOs are allowed to transfer the higher cost via lower prize money. The best way to mitigate competition from illegals is to reduce prize monies except for the top prize.
§ NFOs will suffer from lower earnings and uncertainties above potentially more hikes.
§ Genting Malaysia – Investors likely to prefer better cash utilization or higher dividend. Untimely deal given expectations of adverse impact on earnings arising from increased competition by the two newly operational integrated resorts in Singapore.
§ Genting Malaysia acquires UK casino operations from Genting Singapore for £340m cash.
§ Depending on whether the NFOs are allowed to transfer the higher cost via lower prize payout, impact could be directly on margin (additional PBD costs) or turnover (transfer additional cost to lower prize money resulting in loss of market share to illegals as the latter has no precedence in reducing prize money).
§ In either case, consensus net profit of NFOs will be adversely impacted, ranging from 3-13%. Among the NFOs, Tanjong will be least affected (3-4.5%) while the impact on B-Toto and MPHB could be at least doubled Tanjong’s impact.
§ The hike in PBD may raise concerns about potential hike in casino gaming tax. For every 1%-point hike, Genting Malaysia and Genting’s consensus net profit would be eroded by 2.7-2.9% and 1% respectively.
§ Previous hike (2003) in casino gaming tax was 5%-point. Assuming the same magnitude, Genting Malaysia and Genting’s consensus net profit would be eroded by 14% and 5% respectively.
§ Will reduce competitiveness to attract high rollers or foreign fund inflows.
§ As for Genting Malaysia’s acquisition, it would erode consensus earnings by circa 3% due to the low level of profitability of the UK casino operations. Marginal impact on Genting as it holds circa similar stake in both the purchaser and vendor.
§ To mitigate the impact of the PBD hike and assuming NFOs are allowed to transfer the higher cost via lower prize money. The best way to mitigate competition from illegals is to reduce prize monies except for the top prize.
§ NFOs will suffer from lower earnings and uncertainties above potentially more hikes.
§ Genting Malaysia – Investors likely to prefer better cash utilization or higher dividend. Untimely deal given expectations of adverse impact on earnings arising from increased competition by the two newly operational integrated resorts in Singapore.
Six reasons why I’m convinced that the U.S. economy is even now falling into a rare double-dip recession ...
1.# The economy is quickly running out of gas: The recovery that followed the bear market was bought and paid for with $2 trillion in government stimulus and bailout money. Now, that money is running out. The economy and stock market are running on fumes. And with no new stimulus on the horizon, there’s nothing left to keep stocks from plunging.
2.# Jobs, jobs, JOBS: Despite everything Washington
3.# 70% of the economy is shutting down: Consumers are responsible for 70% of all economic activity — and consumer confidence is cratering. Worse: Retail sales are already plunging.
4.# The housing slump has returned with a vengeance: New home sales just cratered by 33%, the biggest decline on record. Foreclosures are increasing again, creating new nightmares for our largest banks.
5.# Most U.S. New York , California U.S.
6.# Sovereign debt crisis is leaving investors gun-shy: More and more investors are viewing Europe ’s sovereign debt crisis as a sneak preview of our own future here in the United States Portugal Greece
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