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Author: tradeview   |   Latest post: Sat, 28 Nov 2020, 2:24 PM

 

(Tradeview 2020) - EPF iSinar Withdrawal Programme & The Stock Market

Author: tradeview   |  Publish date: Sat, 28 Nov 2020, 2:24 PM


 



Dear all, many have emailed me with the concerns on the potential impact of the iSinar programme expansion allowing 8 million members to withdraw RM10,000 from the "sacred EPF Account 1" announced by Tengku Zafrul recently over the week. Largely, I can segregate the gist of questions to these 4 points :

1. Should EPF savers still leave their money in EPF or withdraw to the maximum allowable limit?

2. Will the dividend for EPF next year still be good?

3. If the EPF is financially sound, why did the CEO of EPF said there is a need to liquidate the assets to meet surge in withdrawal demands and shortfall? 

4. If EPF liquidate assets, would the KLCI Bursa stock market be impacted?

I shall answer the questions point by point and try to avoid any comments on politics but solely focus on the economics behind this issue. 

On Question 1 :

I think it comes down to individual financial circumstances to make this decision. For the longest time, I have always held on the belief that EPF money shouldn't be touched until the very last resort. It is the savings for your old age so that you do not need to work in McDonald's when you are 70 or 80 years old when your savings run dry and normal employment opportunities are no longer available to you. Allowing withdrawal now is also in expense of savers, who maintain good discipline and fiscal responsibility over the years to enjoy the fruits of their labour in the twilight years. 

However, the counter argument is the Covid-19 pandemic has brought many households which may suffer from loss of jobs, pay cuts or business closure to their knees. If one cannot survive today, there is no future to talk about. This is especially true for the B40 & M40 segment. Near my office, there used to be only 1 Nasi Lemak seller by the roadside. Today, there are 3 Nasi Lemak and 1 Chee Cheong Fun sellers within 5 mins walking distance. It is such observations that made me understand the plight of others better. 

My view would be to only withdraw if you already have absolutely no where else to turn to as the final resort. If you are intending to withdraw to buy a new car, upgrade your house or spend on a new iPhone, this would be grossly wrong. As for savers, EPF by law is required to give a min 2.5% return per annum to members and at this rate of return, it is still higher than all Fixed Deposit rate given by commercial banks today due to the 100 basis points OPR rate cut through the year by BNM. If look at the chart above of EPF dividend performance for the past 15 years, the worst performance was in 2008 during the Global Financial Crisis. Even then EPF declared 4.5% dividend yield then.

Additionally, I conducted an internal poll with my private group subscribers. 79% would leave their EPF funds in Account 1, 15% would withdraw the maximum allowable limit and 6% would leave half and withdraw half subject to eligibility. 

On Question 2 :

Prior to iSinar initiative, I was still rather confident that the dividend to be declared next year would be quite good, if not better than last year's performance as the stock market did very well this year especially when compared to regional peers. The stock market has rallied from a low of 1208 during the "March Plunge" on 19th March to a high of 1607 as at last Friday. This is despite the strong headwinds of a pandemic driven economic recession. Even domestic bond markets are performing well with large inflow due to attractive yield compared global bond market low yield. After the iLestari and now iSinar initiative, in addition lower EPF contribution inflow as many members has either loss their jobs, suffered pay cut or companies have closed down, the net inflow vs outflow gap widens significantly and likely it will be in negative territory for EPF this year. This would mean the potential dividend return next year would probably be lower than last year. In the event it matches last year's performance, the full impact will be felt in the years down the road. This is in line with what CEO of EPF, Tunku Alizakri Raja Muhammad Alias said "There is no such thing as a free lunch" in reference to the need to sell off assets to make funds available to depositors withdrawing from their EPF Account 1 & 2.

On Question 3 :


I believe many have a misconception when it comes to the CEO statement on liquidation of assets. EPF like any other funds, have to be invested in the equity, bond, real estate or money market instruments. Cash / dry powder cannot be the the bulk of the holdings as EPF mandate is to deliver returns to members. To do so, the cash on hand cannot go stale. However, this does not imply that EPF is lacking in cash allocated for yearly withdrawal. In fact, it is because this year is an exception / anomaly as a result of the pandemic driven economic recession and policies made by the Government which caught EPF asset allocation practice off guard. Hence, it cannot be business as usual as "something's gotta give". 

EPF will need to liquidate assets or some of their existing position in bonds, equities or money market instruments to meet the urgent demand and need for withdrawal of members especially since Account 1 is now accessible. 

A simple example : Imagine you who invest in the stock market actively, suddenly with very short notice, your wife or husband tells you that there is  emergency need for funds, hence you need to pull out money from the equities market now. What will you do? Will you sell your profitable positions which you believe can do better if you continue holding or will you sell the loss making position which you believe can rebound? Either way your investment plan is affected. This is especially bad for long term value investors who makes exponential returns in later stage of the investment horizon. EPF in essence is a long term investor. This would mean EPF will be impacted one way or another from the liquidation of assets / position. 

On Question 4 :


This is the one which most investors in the stock market are concerned about, it is important to understand the vast investment holdings of EPF extends beyond local stock market. EPF would have options to sell foreign equities, bonds in global markets outside of Malaysia equities. If they opt to sell local equities more than the others, it would definitely cause a sell down in the KLCI Bursa. I believe EPF wouldn't do that but only embark on selective profit taking in sectors that have done well this year. Hypothetically, if I am the decision maker, selling foreign stocks which has ran up to record high would be a quicker and better option without causing systemic risk to the local financial markets. Bonds market where yields are less attractive though would be an issue in terms of the price of sale. 

In addition, if members of EPF withdraws funds from Account 1 and put it back into the equities market, spurring another retail rally, there may be some net-off effects. Hence I am of the view the risk of large self off in local markets is not high at this moment although there will be some selling pressure unless foreign funds make a comeback with a bang. We must remember it is local funds that has supported the KLCI Bursa stock market with retail investors filling the void as foreign funds sold stocks in Bursa to the tune of RM 23 billion to date in 2020. 

Conclusion :

The intent of this article is to alleviate some concern of readers and assist one in better understanding the situation with EPF moving forward in the near term. My humble view, if at all, the government should not be asking people to dip into their own future savings to save themselves but should use government internal funds to support these community. Funds allocated for select new infrastructure projects, repairs or upgrading of building work can be postponed as it is not of the utmost priority now compared to the livelihood. The increased allocation for controversial issues such as PMO, JASA departments can also be reduced to compensate for the shortfall. My fear is this allowance for withdrawal will set a precedent for the future and open the floodgates. After all, EPF is one of the last few bastion of our country's esteemed institutions that have yet to be exploited at the expense of the Rakyat.

_______________________________________________________________

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  hhswong likes this.
 

(Tradeview 2020) - Yield Will Protect Gloves Share Price From Falling Further

Author: tradeview   |  Publish date: Sat, 21 Nov 2020, 3:10 PM






In 2019, EPF declared 5.45% Dividend yield for Conventional Deposits and 5% for Shariah Compliant Deposits. The Divided Yield is highly anticipated every year by savers especially retirees who would rely on yearly withdrawal to sustain their livelihood. If the EPF yield declared for that year is bad, there will be huge public backlash. Hence, Government of the day will do whatever they can to ensure dividend payout is good or at least above expectations.

Source : RinggitPlus

In fact, if we compare the pension fund returns for EPF to others around the world, our EPF has one of the best performance in the world. Now, when it comes to EPF savings, savers are very particular about dividend yield given. What I find strange is that majority of investors in the stock market, especially during bull runs is no bothered about Dividend yields. Naturally, these investors believes that the stock they are investing should give better returns in terms of capital gain compared to the miniscule dividend yield. 

Following the vaccine news announcement by Pfizer & Moderna, the vaccine positivity has led funds to rotate away from  high growth stocks to value stocks. A good example in Malaysia would be the shifting of funds from Tech & Glove stocks to Banking and some recovery themed stocks. This has resulted panic selling across growth stocks and panic buying in value stocks. This chart below as a comparison is very telling :








Now the question is whether such movement in the stock market is warranted? I think there are two points to this question.

One, there is a difference between value stocks and recovery stocks. Value stocks are company with strong balance sheet and fundamentals which business were somewhat impacted by the pandemic / MCO. The value stock has enough assets, cash to navigate through the pandemic without the risk of default. These stocks are like the banks, telecommunication, utilities  and insurers.

Two, recovery stocks are referring to companies which are mostly badly affected by the pandemic such as tourism, hospitality, airlines, retail, travel etc. These companies are not equivalent to value stocks because these companies may not have strong fundamentals to begin with. In effect, it means there is default risk to these companies. So I do agree in buying value stocks and always keeping them in your portfolio but I do not agree that one should look at recovery stocks any time in the near future. 

The reason is because even if vaccines are rolled out, it will be done gradually and the lasting impact of Covid-19 is not eradicated overnight. These recovery stocks will take a long time to return to pre-Covid 19 level earnings. Currently, the market investors or speculators are just riding on the optimism of reopening of economy and resolution of the pandemic ahead of time. This brings me to why Glove stocks are still necessary to be kept in your portfolio even after vaccine announcement.






For the longest time, Glove stocks were given many different categorisation by financial analysts. Some called Glove stocks as cyclical, some say defensive, some say growth but which category does Glove stocks truly belong to? 

It is cyclical in nature due to the events of the world (HIV, SARS, H1NI, EBOLA, Covid-19) and fluctuating raw materials cost (Latex Gloves depends on Natural rubber, Nitrile Gloves depends on Nitrile Butadiene Rubber which is linked to oil). Why then some call Glove stocks defensive? The key reason in my view is because of its designation as part of healthcare sector and it is apolitical with continuous demand over the years. 

In my humble view, Glove stocks are quintessentially growth stocks. There is no denying their growth stock nature just by looking at their earnings and share price chart over the past 10 years. But, due to the supernormal profits in FY 2020, 2021 and potentially 2022, Glove stocks are moving from Growth to Yield.






One of the key determinant of whether a share price moves up organically is earnings. Excluding M&A and corporate exercise, the direct correlation between share price uptrend is earnings growth. With earnings growth, the increased in profits / excess cash will be used to lower debts, pay dividends, investments, capital expansion or cash reserves. This is why I say Gloves are moving from Growth to Yield stock especially so within the next 1 year window. Just look at Top Glove as an example, it has in place a 50% Dividend Policy. Which in effect means, 50% of the profits would be used for dividends to reward shareholders every financial year. So let's do a simple back of the envelope calculation to understand the potential dividend that Top Glove will declare in FY 2021. 



Top Glove : 

FY 2020 Profit after Tax = RM 1,867 Billion              50% Dividend Policy = RM 934 Million 

FY 2021 Profit after Tax = RM 10,378 Billion            50% Dividend Policy = RM 5.19 Billion

FY 2022 Profit after Tax = RM 5,295 Billion              50% Dividend Policy = RM 2.65 Billion


The current share price is RM 7.30 as at 20th November :
 
The Dividend per share for FY2020 is 11.8 sens which translates to Dividend Yield of 1.6% 

The Dividend per share for FY2021 is 63.5 sens which translates to Dividend Yield of 8.7% 

The Dividend per share for FY2022 is 32.4 sens which translates to Dividend Yield of 4.4% 

Do you think the current share price of Top Glove is cheap or expensive based on looking at its earnings and yield? Objectively, it is undervalued even looking at FY 2022 where the analyst projects a fall in earnings due to the end of Covid-19 pandemic. Taking a normalise averaged out Dividend Yield across 3 years, Top Glove shareholders at current share price would enjoy 4.9% per annum.





Now, lets turn to Hartalega. It has 60% Dividend Policy where 60% of the net profits every financial year are distributed to reward shareholders. So let's do a simple back of the envelope calculation to understand the potential dividend that Hartalega will declare in FY 2021. 

Hartalega: 

FY 2020 Profit after Tax = RM 435 Million              60% Dividend Policy = RM 261 Million 

FY 2021 Profit after Tax = RM 2.88 Billion               60% Dividend Policy = RM 1.73 Billion

FY 2022 Profit after Tax = RM 5.07 Billion               60% Dividend Policy = RM 3.04 Billion


The current share price is RM 14.40 as at 20th November :
 
The Dividend per share for FY2020 is 7.75 sens which translates to Dividend Yield of 0.55% 

The Dividend per share for FY2021 is 50.5 sens which translates to Dividend Yield of 3.5% 

The Dividend per share for FY2022 is  88.7 sens which translates to Dividend Yield of 6.16% 

Similarly, do you think the current share price of Hartalega is cheap or expensive based on looking at its earnings and yield? Objectively, it is undervalued especially looking at FY 2022 where the analyst projects a continuous growth in earnings despite the end of Covid-19 pandemic. Taking a normalise averaged out Dividend Yield across 3 years, Hartalega  shareholders at current share price would enjoy 3.4% per annum.




You can see that company earnings, growth and yield are all correlated. The most important point to takeaway is this - the company's share price should be determined by its ability to deliver earnings first, grow earnings second and sustain earnings third. This will naturally form the transition phase of a company from growth to value to yield stock. 

With that in mind, do you think that the Glove stocks, both Hartalega (RM14.40) and Top Glove (RM7.30) specifically, would be trading at current price or even lower when the coming years they would be having a Dividend yield of 3.5% & 8.7% in FY 2021, 6.16% & 4.4% in FY 2022? Definitely no as investors and funds who chase for yields will move the share price up. The worst case scenario - you still get to collect dividend at a higher rate than FD.




I understand everyone have their own view and opinion on the glove sector because it is an industry that is relatable, understandable and Malaysia is the world leader. The scrutiny adopted towards the sector is of higher standard compared to other sectors because of the access to information and knowledge. Whether one uses DCF, PER, Dividend Yield or EV/EBTIDA to value glove companies, at the end of the day, valuation is an art, not science. There are many factors to consider and it is hard to say one's valuation method is better than the other.

This was an article I wanted to write a long time ago during the September Glove selloff. I held back from publishing because I was anticipating Glove earnings season would clash with a vaccine newsflow month which may lead to a potential selloff. I was hoping that readers and investors who are rational would be able to see the record earnings and not succumb to headlines news and fear to panic sell. Sadly, many neglected to view the facts & data objectively. Even some (not all) professional analyst were similarly panicking where their judgment was impaired by mainstream view and "herd mentality".


The recent good news shows that what EPF is doing is in line with the key message in my article. EPF was the big buyer on 17th November 2020 (Tuesday) when gloves were still being sold off after Pfizer and Moderna announcement. EPF did not buy small as they bought close to 174 million shares more than RM 2 billion worth bringing them above the 5% substantial shareholding level. Hartelega being my Long Term Value Pick means there is little you need to worry about and EPF being a long term shareholder buying into Hartalega is a strong validation of this investment thesis. It is also a confidence booster to the sector.


My simple conclusion remains :

1. Severe shortage of gloves in the market, 
2. Earnings visibility for at least 1 year minimum for the sector, 
3. The companies will be delivering continuous record earnings in coming quarters 
4. Transition from Growth to Yield or Growth + Yield stock,
5. With the recent selloff, Glove stocks have become very attractive valuation wise. 

If you are wondering whether you should still hold glove stocks in your portfolio, that is a decision you must make on your own. However, the history of the financial markets has taught me that yield is very important to investors and funds, hence it will ultimately form the bottom to protect glove stocks from falling further. When the downside is protected, the upside takes care of itself.

_______________________________________________________________

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Labels: TOPGLOV, HARTA
  3 people like this.
 
sikusiku Something else to consider in your article here.

Top Glove has been aggressively buying back their shares, although aggressive is a somewhat arguable term - depending on which side of the fence you sit on. Their buyback is capped at RM70 million per day, although of course as outside investors, we do not know what the upper limit for the buyback price is set at before buybacks discontinue.

Now whilst our beloved Uncle Koon has of course condemned the buybacks as being counterproductive (since he views it as management trying to support the share price), whilst at the same time throwing in a plug praising his flavour of this time, Supermax - heh, I think there's one other view one should look at.

TG will be issuing a dividend of 50% of their net profit for the quarter. That's their stated policy.

What some investors may not realise is that the their cash flow is far more robust than net profit simply because of the advance payment (deposits/prepayments) paid by buyers, way in advance of delivery. As I understand it, spot order deposits are at around the 50% range, whilst longer term orders (extending up to the 650-660 day backlog) have a deposit of around the 20% range.

Deposits are not counted as profit. Profit is only recognised upon delivery of the goods. Thereafter deposits will then be categorised as revenue, along with any balance of payment.

It is possible for TG to declare the bulk of the prepayments as dividends. They can do so and recognise it as a special dividend issue.

Alternatively though, there is share buybacks. Consider this, there is still another 12 days of trading before the expected release of 1QFY21 results by Top Glove (tentatively set at 9 December).

If you do the math and assuming that TG continues to buyback RM70m worth of shares, up to the end of day of 8 December, and assuming the share price is bought back even at an assumed higher average price of RM8 per share, the amount of treasury shares would then exceed 2.5% of the company's total number of shares.

They could very easily issue a share dividend of 1 for 40 with that amount. Or a higher amount assuming the average buyback price is lower of course.

From the major shareholders perspective (inclusive of the founder), they get to boost their own shareholding by a minimum of 2.5%, without any outlay or activity needed on their own personal trading accounts.

The buybacks then aren't a way of supporting the share price alone, but for the benefit of shareholders (especially the major ones).

How big a dividend are we expecting for the upcoming quarter? Let's put a conservative 10 sen nett per share (high unlikely, since EPS should be MORE than 20 sen for the quarter). At 10 sen against the current RM7.29 price, that's a 1.37% yield for the QUARTER.

What about if a 1 for 40 share dividend is also issued? Using the current share price as a baseline, that's equivalent to another 18.225 sen dividend. Making the QUARTER'S payout equivalent to 3.87%. Pretty good, no?
21/11/2020 5:36 PM
stockraider Of all the newcomers to Gloves...mahsing hold the greatest Prospect loh!
21/11/2020 6:07 PM
emsvsi The writer has a low IQ

There are recovery stocks that have strong balance sheets that are ALSO value stocks because they are very cheap AND that pay dividends

That stock is Genting Malaysia / Genting

In 1 years time we shall see the performance of gaming companies vs the hype of gloves

The stock market is a voting machine in the short term, a weighing machine in the long term

Gaming is forever and eternal and will once again show its enduring quality

Sincerely,
EMSVSI
21/11/2020 6:19 PM
Erudite Excellent write up. Good article. Tqvm 4 d assurance
21/11/2020 6:21 PM
stockraider The problem is the covid19 affected stock can survive b4 covid19 over leh ?
21/11/2020 6:22 PM
Erudite Emsvi, who r u 2 call people low IQ. Who gv u d rights? U can’t even write a proper article. Look in d mirror b4 insulting. Can’t even read accounts talk crap. Low IQ? U can’t even do stock valuation. Super embarrassing.
21/11/2020 6:27 PM
stockraider Simple mah...!!

Look at the logic loh...u r investing in Gloves stock bcos of 1 or 2 years good earnings or R u investing for the long term leh ??

Surely sustainable good share price is not depending on just 1 or 2 yrs good short term earnings mah...!!

If that is true...the conclusion below missed the point loh..!!

My simple conclusion remains :

1. Severe shortage of gloves in the market,
2. Earnings visibility for at least 1 year minimum for the sector,
3. The companies will be delivering continuous record earnings in coming quarters
4. Transition from Growth to Yield or Growth + Yield stock,
5. With the recent selloff, Glove stocks have become very attractive valuation wise.

If you are wondering whether you should still hold glove stocks in your portfolio, that is a decision you must make on your own. However, the history of the financial markets has taught me that yield is very important to investors and funds, hence it will ultimately form the bottom to protect glove stocks from falling further. When the downside is protected, the upside takes care of itself.
21/11/2020 6:28 PM
williamh My view is it starting to go south,dont hesittated to sell
22/11/2020 7:08 AM
Pgraduate123 Genting n genm already Uturn last week, and gloves uptrend... Tomorrow will continue up till 2023
22/11/2020 12:04 PM
Erudite agree with pgraduate123
22/11/2020 12:09 PM
2021money simple buy profit then sell, buy profit then sell, profit money is king. why keep ? buy and sell, easy money......
22/11/2020 12:24 PM
witan Unfortunately market sentiment has changed dramatically since vaccine news have come out. Everyone knows that glove is going to produce stellar result next year but how about in 1-2 years time.

Eventually glove price will go back to its normal. How soon?? We dont know the answer.

I definitely dont want to hold the high price ticket by then.
22/11/2020 12:58 PM
Noned Big boys always at the buy side..rain or shine..bullet proof..
Retail players pls set n monitor your cut loss b4 buy any stock..
22/11/2020 2:27 PM

Tradeview Commentaries - Market Irrationality Swings Both Ways

Author: tradeview   |  Publish date: Fri, 20 Nov 2020, 12:44 PM


         




Dear all, I hope my constant writing is not becoming a nuisance. I have been receiving many emails over the glove stock selloff by readers. Most are panicking as they see their portfolio profits evaporating since Pfizer announcement last week followed by Moderna last night. 

Investing requires knowledge, competence, strategy and importantly qualitative aspects that help you navigate the troubling times. It is easy to be a "hero" when the market is rallying, but the true test of your aptitude & character is during a selloff. One requires a calm and collected composure coupled with the nerve of steel to do well in the stock market continuously. You must be able to handle an irrational selloff of epic proportion to sustain, otherwise it is possible to be wiped out entirely. 

This morning, during the huge selloff for gloves, how many actually went against the flow to catch the bottom? Remember I have always said the best time to buy is when the fear is in your gut? Did you have that feeling this morning? If so, and you acted on it, you would be making good returns by the close of trade today. I am delighted to see the market closed strongly for gloves after the series of bad news on Top Glove factories, Moderna announcement and negative comments in the media by certain fund managers / research houses which impacted the gloves stock price further. But what I find the biggest irony is how certain individuals can flip their view overnight. I remember some were in fact big glove bulls just few weeks back. If a columnist or professional, keep switching his opinions based on the herd mentality, would you value his opinion? I am not saying that such opinion is wrong but there must be justification to backup an opinion. Investors, unlike politicians, we do not need to play to the gallery hence what we express should always be objective.  

As what I shared to my subscribers, this is how I view Top Glove negative news on Covid-19 cases - if  Top Glove production is hampered, it will only worsen the glove shortage as Top Glove supplies 26% of world market share. Clients have no choice but to buy from others even at a higher ASP to the address immediate demand. Having gloves at high price is better than no gloves due to the need to fulfill contracts with hospitals and end consumers. This will in turn benefit the other glovemakers unaffected. Why should the other glovemakers share price plunge irrationally? For Top Glove, they will need to draw on all their inventories during this closure and by the time their affected factory can resume operations, they will need to catch up with their new capacity. Failing which, the shortage persist and will drive the ASP even higher. 

Of course today's reversal may be just a technical rebound due to oversold position in gloves. But from the huge movement in the afternoon session, I believe it is the foreign funds who bought in. Maybe EPF. Some share buyback as well possibly. But retailers would be the smaller portion. If you believe in the glove story, it is not because you are irrational, after all irrationality swings both ways. Those who are advising you to buy O&G, Hospitality, Tourism, Airline stocks are the ones who are being irrational. The fact remains even if the pandemic blows over, will you resume travelling immediately, will you start flying again, will oil price suddenly spike without OPEC controlling supply? It will take 1-2 years maybe more before earnings recover to pre-covid levels. Glove stocks on the other hand are giving you great record earnings visibility for the next 1 year. So you have a bird on one hand, but decided to go for two in the bush?   

If I have to choose one metric to guide me in selecting stocks for investment, I would choose earnings. Apart from share buyback & corporate exercise, earnings is probably the only factor that have direct correlation to pushing share price upwards. Good luck.



_______________________________________________________________

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  3 people like this.
 
CCCL MFCB better bet.
20/11/2020 3:17 PM

Tradeview Commentaries - Learn To Separate Wheat from Chaff

Author: tradeview   |  Publish date: Wed, 18 Nov 2020, 10:45 AM


        




Do not waste your time, effort and money on goreng penny stocks which promises the future potential earnings which likely does not exist. Those who talks about venturing into various new businesses such as gloves etc are often relying on sunshine and rainbows to attract naive new investors especially retailers. 

There is no way new entrants like them can compete with existing players with clientele, scale, technology know how and certification. While it is true that some select few new venture may be legitimate due to ex-management with experience being involved, majority are fluffy and dubious. If you want to put your investments into penny stocks that promises earnings, it would be wise to put your funds into the big established players which have shown you the actual earnings and continuous record high earnings yet to come. Many of the big boys like Hartalega, Top Glove, Kossan, Supermax, Riverstone are all at attractive prices again.

Do not let your hard earned money be taken away from you. Remember the saying - the market never fails to punish the greedy, the egomaniacs and the ignorant. Just because prominent investors or blogs promote it, does not mean it is true. Times are very tough, business is very hard to build and establish, making money isn't an overnight effort. Do not be caught up by wishful get rich quick promises. All the best and stay safe.

_______________________________________________________________

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  Be the first to like this.
 
tylee81 The windfall tax news come back again,syed saddid re-proposed it at budget21 today,what do u think?will it implement?
18/11/2020 10:14 PM
tradeview Hi there, politics will always be politics. Playing to the gallery, issuing populist statement without considering repercussions are normal SOP for them. But I dont blame the politician, I think this is the fault of the research houses who plant such ludicrous policy thoughts in the minds of politicians. My view remains the same, I have said it before many times even though research houses like Maybank and Public Bank repeatedly brought the topic up, windfall tax cannot happen because the implementation is the issue. Ask any tax experts or legal experts, they will be able to share the the implementation of windfall tax are on commodities sector like palm oil or Oil & gas where it is a singular product. For gloves there are many classes & types of gloves which is hard to slap a blanket windfall tax across. Hence it is important to be technically sound before making public comments. Furthermore, unlike commodities sector like palm oil and oil and gas, glove makers do not receive direct subsidy from government. Hence it would be unconscionable to impose windfall tax. The budget 2021 tabled which highlighted donation to Covid-19 fund is the best approach to address the implementation issue of windfall tax.
18/11/2020 11:35 PM

Tradeview Commentaries - Unwavering Confidence In Glove Makers In Spite of Vaccine Newsflow

Author: tradeview   |  Publish date: Mon, 16 Nov 2020, 7:00 PM


       




The market sentiment over the week was a mixture of anxiety and joy. Joy for those who believed in value stocks and blue chips, whereby it surged tremendously. Anxiety however, are for investors of glove, PPE and related stocks which reacted adversely due to the news of Pfizer vaccine. 

On a positive note, following US elections and Pfizer vaccine news, foreign funds have been flowing back to Malaysia for 3 consecutive days and even exceeded 20% overall market participation level. 

In the coming weeks, there will be more vaccine news. It will likely be Moderna and Astra Zeneca to follow. Potentially, China vaccines will also come through with their phase 3 safety data. 

In this case, it will bode well for Value stocks (Banks, select blue chips) and Legitimate Vaccine related companies 

How about glove, is it all over?

Through the year, I have done many site visits personally and met with management of key industry players, even spoke with established distributors. Whatever I have shared are not information pluck from the sky based on airy fairy hopes but on objective facts. I will update all my latest view post-Pfizer announcement. 

1. Earnings visibility for gloves are still at least 12 month / 1 full year through 2021. (This is not a disputed fact even by the most bearish analyst for the sector. )

2. Vaccine or no vaccine, ASP and demand won't fall off the cliff. (Again not disputed fact even by the most bearish analyst)

3. Mass vaccination will take time, and implementation for the world even longer. At the very least 1 year. (This is a fact stated by WHO & Dr. Fauci.)

4. Glove strong demand due to severe shortage will last through to 2022. New hygiene practice and structural step up, increased healthcare budget for governments around the world and stockpiling requirements contributes to this. (This is a fact)

5. Potential future oversupply concern. (Two camps arguing with 1 side arguing due to new entrants there will be oversupply but I don't believe this as new entrants can't compete with established players due to certification, safety standards, economies of scale and technical know how)

6. Eventual decline in mid 2022/2023 for ASP and demand (strongest argument for glove bears. My view - I can't tell what happens in 18 / 24 months. No one can. As the time progresses, more visibility comes through. But I believe ASP will plateau later than sooner, definitely not this year) 

7. Glove stocks are overvalued. These are noises by naysayers and bears. No matter which method I adopted, PER multiples against past year Standard Deviation, DCF or the most accurate EV/EBITDA (EV ratio), dividend yield forecast, gloves stocks are undervalued and a mile from being overvalued. This is a fact. If analysts are objective and fair in their assessment for all companies in Bursa using the same stringent assessment scrutinising glove stocks, there will be absolutely no companies that we can buy or invest anymore. Tech stocks are by far grossly overvalued, recovery stocks like airlines / tourism are taking into account future earnings which does not exist, local vaccine related stocks with MOU has no proof of ability to deliver as the best vaccines are taken up.

In a nutshell, I think some investors and select funds are overly conservative in valuing glove stocks. They are worried being caught as the last one holding the stocks choosing to forego 1 full years of record Profits and potential bumper dividend.

Use this opportunity to buy on weakness. When value emerges ignore the noises. I think Riverstone, Hartalega, Top Glove, Supermax, Sri Trang, Kossan are good fundamental companies worth a place in your portfolio regardless of the "overnight vaccine experts" who think otherwise. 



_______________________________________________________________

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Food for thought: 



















  hhswong likes this.
 
Fabien "The Efficient Capital Allocater" Since last week, we have witnessed massive rotation into value stocks. funds rebalanced their portfolio from stay at home stocks into stocks that linked to economic recovery, the airlines, banks, etc.

Treasury yields have rallied to multi-month highs. the 10YR is approaching 1%.

While positive vaccine news a boost to sentiment, clearly we are in a mini upcycle, I am more wary on the workings of mean reversion.

The path to recovery is much clearer since the onset of the pandemic, the pace is still very much dependent on the successful containment and commercialization of vaccine.

Short term fluctuations aside, I still believe glove stocks a must have in your portfolio, especially so given its prevailing valuations. Post-covid, glove demand is expected to expand at least 20-25% from the usual 8-10% annual growth rate.

Of course, diversification is one free lunch available. When the global economy does recover next year, consumption to eventually normalise, my portfolio of energy stocks would benefit from the rebound in oil price.
16/11/2020 8:14 PM
CCCL Gloves stocks aka No-Brainer stocks. Any Ah Kau or Ah Mau can trade now. So any sensitive news, they run helter-skelter...
16/11/2020 9:30 PM
cngi fund direction now is towards covid recovery related stock. Glove undoubtedly is good stock to hold, but short term not to against the flow of fund..
16/11/2020 9:42 PM
CCCL Don’t falls into a die-hard fan syndrome..narrowing your investment horizon.
16/11/2020 9:52 PM

Tradeview Commentaries 2020 - Pfizer's Vaccine Is Not Distributed Via The Rain (Importance of Diversified All Weather Portfolio)

Author: tradeview   |  Publish date: Tue, 10 Nov 2020, 10:08 PM


      




KLCI Bursa has not rallied in such record quantum in a long time (3.3% for the day). The vaccine positivity truly spread across global markets with huge funds rotation away from Glove and Tech stocks into recovery, laggards and beat up stocks. 

Today by far, I received the most questions from readers who are panicking over the selloff in glove stocks. The common 2 questions : Should I sell / cut loss now then buy back later? & Should I buy O&G, Tourism, Recovery stocks? I will be blunt - both are wrong questions to ask.

In my Principles of Investing article series, Rule 4 - Diversification Is the Best Defence written in my blog April 2020 shortly after the "March Plunge", I emphasised the importance of having a diversified portfolio and techniques of doing so. Often when the stock market or particular sector is doing well, investors forget about this important rule. Only when something bad happens, the "what ifs" comes in. 


Most readers know I am one of financial writers who is very confident with the prospects of Glove stocks. I have publicly written on 5 of those. Am I still holding gloves in my portfolio, the answer is yes. Am I still confident? The answer is yes. Do I intend to buy more glove stocks? The answer is yes but on weakness. Where does my confidence stem from despite the announcement of Pfizer's "Great News for Mankind" yesterday? The answer is fundamentals. 

As a fundamental investors, I look at the earnings, yield, balance sheet, prospect, management and various factors assessing the company before deciding to buy. If there is no structural change to a stock, my view remains valid. However, if there is structural change to the company, I will make an objective decision whether to buy or sell. So the fact remains - glove stocks will have earnings visibility for the next 12 months, minimum. Vaccines cannot reach most of the population in the next 12 months. Remember, Pfizer's vaccine even if proven 90% effective, it is not distributed via the rain, where it pours over the globe to vaccinate everyone and eradicate Covid-19 overnight. 

I do not deny the risk for the investment thesis of gloves have risen. But it also does not mean the investment thesis for recovery / laggard stocks automatically becomes viable. Many are loss making and will continue to suffer, the worst being tourism related and oil & gas. The Pfizer vaccine or others to follow reduces the default risk / bankruptcy risk of these companies. That is the important truth. 

Coming back to my topic. Diversification is a form of risk management in investing. When one falls, another rises. Then it covers the losses and ensure your position is hedge against any form of potential "black swan event". This is why I am confident to buy and hold gloves stocks as well. I am not a thematic investor, I do not look short term. I invest to build a portfolio for a sustainable returns over a long duration in time. This means I invest whenever I see value, not when the news reports something. 

Do you all remember in my last week commentaries I shared publicly some of the stocks I have advocated to my private subscribers to buy on weakness before the US elections? In the list, there was only 1 glove stock amongst all. You can refer to the picture again above. All of it today, has rallied and cover the fall in gloves stocks. It negates the potential impact if I were to only hold a single sector stock. 

This brings me to my key message. Avoid chasing stocks that has rallied, always buy on weakness and you will have the margin of safety to protect you. Avoid rushing to buy on dips, exercise patience, let it settle and buy when you feel the fear in your gut. Lastly, headlines creates gyrations. Market is never rational, that is why it moves up and down. Often the sways are very violent in one direction or another, but at the end of the day, it will normalise and find an equilibrium. This too is a fact.





_______________________________________________________________

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Food for thought: 















  hhswong likes this.
 

Tradeview Commentaries 2020 - Budget 2021 Preview & US Election Conclusion (No Windfall Tax for Gloves, Expansionary Budget 2021, Biden Wins)

Author: tradeview   |  Publish date: Thu, 5 Nov 2020, 10:53 PM


      



Dear all, this is my 3rd commentary in 1 week. The last time I wrote so many commentaries in a span of a week was during the panic / massive selloff of Glove stocks between end August - September. This time is because this past week is probably the biggest week of the year packed with all major events globally and domestically. 

I am not a Guru, not a Sifu, but I am an objective financial writer. I believe readers who have read my writings would agree I share my opinions on matters from a macro view down to the specific stocks with integrity. The most important trait of being a writer is to be responsible for what you write. What you write must be consistent and can be validated. Also you must walk the talk. With that your reputation will be one that is honest, accountable and transparent. 

I have written many times in the past year that I do not believe Glove stocks should be subjected to windfall tax, as it is not a commodity like Palm Oil and Oil & Gas. The mechanics will not work because glove companies manufacture various kinds of products and gloves with different classification across. In addition, Glove companies DO NOT receive subsidies unlike commodities. Furthermore, the Government through corporate income tax would benefit greatly from any supernormal profits. That would make the most sense in terms of revenue collection. Otherwise, being selectively arbitrary to target private sector companies that are doing well is anti-capitalistic / interfering with free market economics. This would attract negative repercussions as it does not instil confidence of investors in your financial markets. Ant Financial's IPO last minute suspension by Chinese regulators should serve as a stark reminder. Therefore, I will reiterate here that Glove stocks should not and will not be subjected to windfall tax in Budget 2021. Any irrational selloff should be a window of collection. If indeed it happens, it would be morally unconscionable as government around the world are supporting and giving incentive to the healthcare sector in the fight against Covid-19, not otherwise. 


With regards to the overall Budget 2021, it will be one of the most expansionary budget (fiscally) as the government have been given the mandate to resuscitate the economy at all cost due to Covid-19 pandemic. Politics aside, all parliamentarians would want a budget that can help the people and the economy.The Government also have the approval from earlier August 24th Parliamentary session to raise debt ceiling to 60% for this fiscal policies. If the Budget 2021 meets or exceeds expectations, it will spur a broad based relief rally across all sectors, not only glove stocks. 

Lastly, after 2 days since US Election day, the final results are still in tabulation due to record voting and mail in ballots. As per my earlier forecast, Biden will win and squeak past Trump. A Biden win is the return to normalcy / normalisation of global politics, economics and rebuilding of foreign diplomatic relationships between nations. If Trump concedes and dont drag it out with court case, it will be best for everyone. Otherwise, any irrational selloff is  a buying opportunity. I have said this as well through the week. My screen shot below shows my recent buy call for my private subscribers during the irrational selloff through the week.



I am human and subjected to fallacy as well. Mistakes are common but I believe what I have written so far is unlikely to be wrong. All the best. 

_______________________________________________________________

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Food for thought: 










  2 people like this.
 

(Tradeview 2020) - Flash Crashes Come & Go, Do Not Fear. Ride It Out.

Author: tradeview   |  Publish date: Mon, 26 Oct 2020, 12:19 PM


     


Major events are catalyst for the stock market. Depending on the outcome, more often than not, a knee jerk reaction is triggered. For those who have position in the stock market, the dilemma of holding or selling becomes the million dollar question. 

2020 is a truly extraordinary year. It is extraordinarily worrying and uncertain. For Malaysia, the people's mandated government fell due to Sheraton Move. Then the Covid-19 pandemic exploded globally. Yet in the middle of all this, the stock market went through an extraordinary period of boom due to the reactionary monetary policies from the federal government. 

From the lows of March 2020, the stock market went through a V shape recovery before hovering around 1500 levels. It is now end October. In another 1 week, US will be having their election. Globally, it is the most important macro political event as it impacts the global economy especially after 4 years of Trump's rule. Under Trump's Presidency, trade wars between nations commenced, trade agreements & international accords were abandoned, multilateralism & globalisation were replaced with unilateralism and nationalism. Again, all these happened whilst a global pandemic swept the world. 




Coming back to the domestic front, it would now appear that Malaysia is going through its own major political event. With the incumbent PN Government seeking to stay in power via "Emergency Declaration", that was a risk of triggering a huge selloff for the stock markets. Foreign investors be it in the stock, bond or FOREX market do not like uncertainty. What they dislike even more is the erosion of democracy and free markets. In the event this "Emergency Declaration" is allowed in whatever name or form, it would be tantamount to a subversion of democracy and in turn the free market as an authoritarian government doesn't require Parliament endorsement for its action allowing executive branch of the Government a free hand to enact an laws, policies and orders they deem fit. Thankful, this democracy crisis was averted yesterday when the King rejected the proposal by the Prime Minister. 


My biggest concern however has always been the US Elections 2020 as its the major political event for the world. The outcome will either roil or rally the markets globally, including KLCI. It will also determine if the stock market recovery of Bursa is L shape or W shape. In my view, most funds be it foreign or local have been selling off to raise cash and stay sidelines. In the event of a steep selloff, their position is protected and they have cash to manoeuvre.



 



This is one of the rare video interview of Warren Buffet when he was only 31 years old and his views on the 1962 flash crash. I think its apt for me to share this as I believe the potential selloff in the coming 1-2 weeks is temporary in nature and not caused by structural or fundamental change to the economy. 





Majority of retail investors loses money. From my experience, even many professionals / experts loses money from investing. This is because investing based on sentiment and herd mentality doesn't give you an edge over others. The stock market is a zero sum game where when someone wins another loses. Most who are successful in the stock market or in life for that matter definitely would have extraordinary traits that the majority doesn't possess. One may be extremely intelligent, prudent, brave, patient or lucky. Any of the traits mentioned, if you have one over the others that means you have an edge. 

My readers would know by now I am a contrarian investor. I do not go with the common view. This is because I am objective. Just because select media, analysts or funds thinks in a way doesn't mean I will follow. Being objective and impartial in my view allows me to make the best decision based on the circumstances. However, as a believer in buying on weakness, selling on strength, potential flash crashes in the coming weeks will provides good  opportunity for me to enter the market. 

KLCI apart from the healthcare and tech stocks, majority especially traditionally strong blue chips companies has been whacked down terribly. I have not seen Tenaga below RM 9, Genting below RM3, Axiata below RM3 etc for a long time. However, these Foreign fund favourite stocks are being punished for a reason. It is also in line with the fact that foreign fund have been ditching out share market for a long period now. I believe strongly this is related also to our unstable political situation. 

In my article last week, I stated "if the healthcare index do not perform and continued being sold off, nothing else will do well. Possibly tech sector may still sustain (but bear in mind if anyone thinks Gloves are overvalued, tech is 3 times overvalued). This means, no other sector will generate returns and yields to the funds in the next 1 year if the healthcare sector is dismissed as game over." 


There are only 2 courses of action for investors in the event of a market selloff. 

1. Either you stay sidelines and observe (wait & see); or
2. You buy on weakness in batches (scale your entry)

This is on the assumption that you have cash on hand. Panic selling, which most retail investors do during a market selloff , is the sure way to lose money. This is because panic selling leads to even more vicious selloff and you neither benefit by selling at low price or when the market rebounds, you have no position on hand to capitalise on the uptrend.

No one knows what will happen in the next few weeks. Whether current incumbent government would still be in power, whether a new leader will emerge, whether Trump or Biden will win and so on. But I know the pandemic would still be around and vaccine which may or may not be approved by November would not eradicate Covid-19 in the next few months. This means if you adopt either of the 2 choices above, your best bet for buying on weakness would only be the glove sector and select blue chips. This is a foolproof playbook. 

_______________________________________________________________

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Food for thought: 












  2 people like this.
 
SureWin1Woh I always find your article sensible and provide good view from another perspective. Keep it up!!
26/10/2020 1:34 PM
Erudite gud one! nice
26/10/2020 5:54 PM
CCCL Not only gloves, tech and blue chips..look for underdog sectors when others overlooked.
26/10/2020 9:23 PM
tylee81 https://www.theedgemarkets.com/article/asian-rubber-prices-soar-supply-woes-covid-glove-shortage-and-china-tyre-demand
01/11/2020 11:35 AM
stockraider Beware of this sohai dishonest 3iii loh...!!

He always ask u to chase expensive & overvalue loh...!!

Warren Buffett looks at three character traits in people who surround him: integrity, energy and intelligence. He says, if you don't have the first, the last two will kill you. In fact, if they don't have integrity, he would rather his managers be lazy and dumb.

"Integrity is like oxygen. If you don't have it, nothing else matters."

"Be honest. Never lie under any circumstances. Just basically lay it out as you see it. Simply speak openly and frankly."

Integrity is also about principles, full disclosure and openness.

Integrity is a choice, and the lack of it most often leads to self destruction.

The above lead Raider think of sohai dishonest 3iii of double standard below loh..!!

This sohai 3iii really talk like sohai loh...!!

What about Dlady fallen from Rm 66 to Rm 34.58 leh ??
What about Padini From Rm 6.00 to Rm 2.08 leh ??
What about Petdag from Rm 32.00 to Rm 17.20 leh ??

This what invest all about value & margin of safety loh...!!

U NEED TO UNDERSTAND RAIDER BREAKEVEN COST ON NETX IS 11.5 SEN, BUT AS AT NOW THE PRICE is 10.5 sen...RAIDER LOST MORE THAN 10% OR COST OF MYV LOH...!!
BUT THIS IS A TEMPORARY FLUCTUATION LOSS DUE TO MR MARKET MAH...DO REMEMBER THAT THE NET CASH PER SHARE of netx IS 15 SEN PER SHARE CERTAINTLY U SHOULD FEEL HIGH COMFORTABLE BASED ON THIS HIGH MARGIN OF SAFETY LOH..!

COME TO SOHAI 3iii LOOKING AT his PORTFOLIO ABOVE...U WILL NOTICE OVER 2 YEARS THIS SOHAI LOST MORE THAN 50% MARK TO MARKET VALUE OF HIS BLUECHIP PORTFOLIO LOH..!!
IF SOHAI 3iii CLAIM HE HAS RM 60M MARK MKT HIS PORTFOLIO 2 YRS AGO..TODAY IT IS WORTH ONLY RM 30M TODAY LOH...!!

HAVING SEEN THIS SOHAI 3iii STAGGERING LOSSES, DO U NOT THINK..THIS SOHAI IS NOT VERY SORE WITH SIFU CALVIN & GENERAL RAIDER LEH ??

BY RIGHT THIS SOHAI 3iii SHOULD LEARN FROM REFRAINING KEEPING OVERVALUE STOCK EVEN IT IS BLUECHIP LOH..!!
AS ADVOCATED BY SIFU CALVIN & GENERAL RAIDER U SHOULD SELL TO MR MARKET WHEN OVERVALUE LOH...!!


Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > Nov 1, 2020 8:50 AM | Report Abuse

conman calvin, dishonest raider and their whiners, groaners and moaners should be remorseful for deleting all the sincere honest truthful posts of their purported "naysayers". These deleted posts have saved many from losses in Netx.

Well done to the naysayers for their intelligence, diligence and hardwork in fundamental research on Netx.
01/11/2020 12:08 PM
stockraider correctloh...!!

Netx has gone thru development stage already spend Rm 200m loh...!!

The netx stage of commercialization more exciting towards making monies loh...!!

With cash hoard over Rm 126m....Netx has financial muscle loh...!!

U need to allow time for it to bear fruits loh..!

Posted by Good123 > Oct 28, 2020 5:26 PM | Report Abuse

Think long term

“The big money is not in the buying and selling, but the waiting” - Charlie Munger

Finally, patience. If you’ve been you’ll know that we’re long-term investors at heart.

As humans we generally have a tendency for activity, we always want to be doing something. In financial markets, that can take the form of buying and selling frequently.

However, if we buy and sell, we unnecessarily interrupt the 8th wonder of the world from working its magic: compound interest.

To illustrate, if you start with $1 and it increases by 1% each day and is compounded daily for a year, it grows to $37. That’s a 37 fold increase.

After 5 years, that initial dollar becomes $77,002,912.

So long term investing is where the big money is made.
01/11/2020 12:13 PM

(Tradeview Commentaries) - When Healthcare Sneezes, KLCI Catches A Cold

Author: tradeview   |  Publish date: Fri, 23 Oct 2020, 5:43 PM


     



I was driving on the road past few days and with the CMCO reimposition in the economic heart of Malaysia, I realised everyone is suffering. Big business or SME, this Covid-19 pandemic has delivered its second blow towards the country's economic health. The haste and lack of clarity by the Government in re-imposing this CMCO has caught many off guard once again. Around the commercial square near my office, I saw many roller shutters which were closed in March never to open again. Those survivors from the first lockdown, would likely not survive this second round. Unlike the first time, there were still moratorium for loans, this time, most would have exhausted their reserves. 

It is extremely unfortunate but this pandemic truly taught me the important of cash reserve. Having cash reserve isn't enough. The usual practice is 3-6 months of cash in hand. This pandemic is coming to a full year. If indeed a company has only 3-6 months of cash in hand, technically, they would have gone under by now. This further highlights the importance of being net cash with minimal debt.

This economic downturn will have lasting effects as well. It will take time to recover and the impact will change the old ways of doing things including adoption of technology be it for delivery, connectivity infrastructure, working from home, ecommerce etc. From a hygiene practice angle, the importance of PPE stockpiles & R&D or biopharma technology will take precedent in the the progress of society. 

If we are to look at investing in be it in our local market or foreign markets, there are only very select few sectors that one can safely put their funds. I remembered few months ago, many of my readers asked me about Disney. They told me this is the best time to buy Disney stocks because 1. Disney+ streaming service 2. Marvel & Star Wars series 3. Theme park will return once Covid-19 is over. Disney is the prime candidate for recovery play. Sadly, Disney announced it is laying off 28,000 employees on 30th September August. Such a strong blue chip company with solid balance sheet also have to resort to cost cutting measures to stay operational, what more the others? 




This brings me to my topic. I am a believer in buying on weakness, selling on strength. I am also a strong contrarian. I bought heavily during the 2020 March plunge. I would say almost 90% of my cash were ploughed into the market in March. Reason I am sharing this is to show you evidence that I am a strong believer in recovery ahead of time. But I do not see signs of recovery anytime soon. They always say share price moves 6 months ahead of time. Hence I can understand why there are strong arguments from certain media commentators, analysts, funds industry experts who says gloves stocks are over, its time to rotate to recovery. They said that in July, August, Sept, October. We are heading into November now. Those who started buying then, have lost money heavily. They moved too soon believing the "market talks" of Vaccine by October and miracle disappearance of the pandemic. This wishful thinking is similar to that of Trump. It is nice but wishful. 

I would put it bluntly, if the healthcare index do not perform and continued being sold off, nothing else will do well. Possibly tech sector may still sustain (but bear in mind if anyone thinks Gloves are overvalued, tech is 3 times overvalued). This means, no other sector will generate returns and yields to the funds in the next 1 year if the healthcare sector is dismissed as game over. I believe strongly that only glove stocks have the earning visibility minimum 1 year ahead. As of now, even Hartalega, Top Glove, Supermax, has come out to say their capacity is fully booked till end 2021. No longer 1H 2021. Its end 2021. 

Do not be afraid of mini sell offs or profit taking by funds. Gyrations are normal. Be objective in your analysis and you will do fine. Similarly, be prudent but buy low sell high.

_______________________________________________________________

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Food for thought: 










  hhswong likes this.
 

(Tradeview Commentaries) - Best Time To Buy, Is When The Fear Is In Your Gut.

Author: tradeview   |  Publish date: Mon, 19 Oct 2020, 10:41 PM


    



    

Dear fellow readers, 


Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

Website / Blog : http://www.tradeview.my/
or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com
__________________________________________________________

Since 12th August until 17th October 2020, I have written : 
  • 17 commentaries (more than 10 on Gloves)
  • 10 articles (more than half on Gloves and vaccines)
I wrote increasingly frequent as the market plunge and less so when the market rebounded. This was the same back in March plunge 2020. I believed readers and retail investors needs the most guidance and assurance during the selloff instead of good times. It's presumptuous to assume my writings can calm the market but there were many other good financial writers who wrote sensible, wonderful and powerful articles which helped our investment community stay calm in the face of extreme panic selling back in August / September. 

I remembered one of my long time subscriber asked me during the height of the selloff "Why is the market ignoring stellar results and although earnings defies expectations, analysts still downgraded the Glove stocks as though it's overvalued penny stock? What should I do now?" My answer was simple : "Now is the best time to buy because you feel the fear in your gut. Others would too." He bought then. And he sold today. 
 
My sharing today focuses only on one key message to investors and readers of mine. You all know I have been writing for many years now, long before all these FB live "Gurus", "webinars coaches" etc became normal. All my past writings are in my blog and channel. So you all know, I am easily one of the most transparent, honest and accountable financial writer in the investment community. I am not promotional and definitely put my readers interest at heart as I know majority of retail investors use hard earned savings to invest in the market. If you really want to achieve financial independence or consistent supplemental income, digest the message I am trying to convey - the only way you can survive and excel in the share market is to be :

1. knowledgeable (overcome ignorance) 

2. humble (overcome ego)

3. patient (overcome greed)

4. committed (overcome laziness)

5. courageous (overcome fear)

6. convicted (overcome indecisiveness)

Do not waste time with penny stocks based on tips, do not be swayed by noises / negativity. Use logical deduction, common sense and reasonableness whilst focusing on fundamentals and earnings as well as balance sheet of a company. 

This entire saga of Glove sector is an evident testament of it. It is in fact one of the most memorable investment experience of my life and a defining moment in my investment journey. 

Most of you who are still holding glove stocks, I am sure you understand what I mean. Those who are no longer holding or refuse to invest in glove stocks, if you let down your ego, you will comprehend what I am saying. 

Riverstone, Hartalega, Top Glove, Supermax, Comfort, UG Healthcare, Sri Trang share price are all driven by fundamentals. Essentially, fundamental earnings will always dictate share price movement regardless of the criticisms, negativity and adversity. Those are just noises and gyrations. Those who called recovery play asking others to rotate out of gloves to oil & gas, retail and tourism stocks are now being punished by the market for moving too soon. Ego and ignorance are being punished, losing money is just a byproduct. 

And those who were sensible and held on probably made even more than the first round they invested in gloves stock this year. We, as Malaysian investors are very lucky because we have an entire glove industry that is supporting the KLCI Bursa and delivering strong earnings which translates to income for many households including my own. We have the access to the opportunity of a lifetime for investment which other financial markets don't simply because Malaysia control 65% of gloves market share. 

I decided to take this opportunity early in the year, more so during middle of the year and again during August & September selloff. I will be the first to admit publicly, it is not easy going contrarian against the market sentiment & momentum but this is one investment experience of a lifetime which I do not regret one bit. 

_______________________________________________________________

Telegram channel : https://telegram.me/tradeview101


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Food for thought: 









  2 people like this.
 

(Tradeview 2020) - "Principles of Investing - Rule 5 : "Be Cynical, Be Skeptical & Always Avoid Tips"

Author: tradeview   |  Publish date: Sat, 17 Oct 2020, 11:30 AM


   


    

Dear fellow readers, 


Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

Website / Blog : http://www.tradeview.my/
or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com
__________________________________________________________

With CMCO being reimposed for the next 2 weeks in the economic heart of Malaysia, many have re-started the previous work arrangement of working from home or at least alternate rotations. I believe this would once again attract retail investors back to the market due to the flexibility in work schedule. Hence, it is timely for me to share this article. 



This year in fact is a record year for retail investing in Malaysia. Due to the lockdown as a result of the pandemic, retail investors flooded into the share market. However this is not a phenomenon unique to us. India, South Korea, US, China and many other countries experience the same thing. There is a good article by CNBC on Malaysia retail investing, you can check it out here :











This reminds of an incident from few years ago when a subscriber told me he invested in Sumatec. I asked him "why did you buy Sumatec? He said because the volume is big, everyone is talking about it, share price went up a lot and rumour is Halim Saad driving share price up as he is going to inject Kazakstan oil & gas business into the vehicle". Today, Sumatec is worthless. The rumour never materialised and many retail investors got burnt. 




Whenever this happens, I feel very helpless. Majority of the retail investors are either new investors, retirees, working or middle class with insufficient exposure or in-depth knowledge of the financial world's inner workings. Many worked hard to make a living and with the savings, invest in equities hoping to get extra income to supplement their living expenses or put their children through college. Majority end up losing more money than they actually invested. This leads to vicious cycle. Very few successfully invest their way out of the low or middle income trap. It pains me to see this and it has happened to even close friends and family of mine. We must understand that the share market is a ruthless place where it punishes those who are ignorant, greedy and stubborn. Let me share the example of XOX Bhd.



Few months back, the forum was hot with news on XOX grand revival due to the entrance of a man with the name Daniel Tam. Even the local mainstream news reported this as shown in the above picture with this headline. I am not sure if it was an error by NST or it was a collusion between the reporter and the syndicate. This Daniel Tam was actually an executive / shareholder in We Solutions Ltd. A jewellery company  which was transformed to an electric vehicle company. It was renamed today to Apollo Futures Mobility. Li Ka Shing and his foundation invested in We Solutions Ltd some years back. This Daniel Tam is not a director or shareholder of Li Ka Shing's Cheung Kong Holdings. The news report by NST totally confused between Cheung Kong Holdings belonging to Li Ka Shing & Chong Kin Group Holdings Ltd belonging to Daniel Tam's own private vehicle. So basically whoever that is trying to play up this wrong / poor reporting - was trying to manipulate (goreng) the stock. My advice back then to my readers and subscribers was definitely to stay away from XOX. What is the price today? It went to a high of 30+ sens and plunged to 12 sens today. I wonder how many retail investors are still trapped in XOX today?





This is but only one company I am highlighting. Definitely, what is done by XOX and the operators / syndicates behind are grossly unethical, morally wrong and bordering on criminal. However did our authorities like SC act on it? Recently, The Edge also did very good investigative journalism on the Hidden Hand behind Penny Stocks surge. They have done a similar reporting in 2016 as well. By right, retail investors, as long as you google and do your simple research, you would have come across the syndicate operated companies which you should stay away and avoid.

2020 : 


2016 :








These are not new names. Maybe some are even the same company but names has been changed. With evolution of time, probably now with different modus operandi such as using social media and apps or fake gurus using facebook live. Of course, the argument at large is willing buyer willing seller or greater fool theory. Some even argue speculations indicates a healthy and vibrant market. My view is different - a healthy and vibrant market does not equate allowing operators the free hand to cheat, lie, misrepresent or mislead. Indeed, today's investors are more astute then years ago. However it doesn't mean that using fake MOUs or  announcing questionable deals with no facts & figures to back up which subsequently doesn't materialize should be allowed. Those with basic legal knowledge would know that MOUs are not legally binding but merely an expression of intent / interest. It is not the same as signing an agreement with actual transactions / consideration made. Looking at the list of stocks above, I would say majority of these names should be avoided at all cost.




This year, the returns from FBM Ace exceeded 120% and FBM Small Cap exceeded 60% from the March lows. FBM KLCI however only rebounded 20%. This essentially means if you put you investment capital in the Ace market in March, the chances are you would have doubled your money compared to KLCI stocks. Realistically speaking, are small cap or penny stock earnings doing much better than big caps? If anything, blue chip companies have sufficient cash reserves or borrowings to ride out compare to smaller companies. Hence, this disjunct between reality and expectation has widened significantly due to in flow of retail investing.



Before Jho Low, there was John Soh. One of the biggest market manipulators in his heydays with many "disciples", he is currently implicated as the mastermind in the SGX penny stock scandal. His pump and dump operations evolved and grew bigger over the years and many of his stocks that were manipulated trap and burnt retailers badly. Should we pity those whose money was trapped because they speculated on the penny stocks related to John Soh? Some say no. For me, I still feel sad knowing retail investors lose money to syndicates or operators unless of course the retail investors keep making the same mistake or driven by greed and stubbornness.

To be a survivor in the share market, it is of utmost important for fellow investors in the market to Be Cynical, Be Skeptical & Avoid Tips. Simply because :

  1. Hearsays are often truth mixed with fiction
  2. When the "tips" arrive to you, it must have gone through many channels which means more often than not, the good news have been priced in.
  3. Not being in the operators' inner circle, you will never know when is the bottom to enter and when is the peak to sell. If you are lucky, you get out before the dumping starts otherwise you are caught.
  4. Even insiders make mistakes and have incomplete information flow. So unless you have the full picture, there is no way of knowing what is actually happening.
  5. The saying "Buy on Rumours, Sell on News" is overrated. Truth is when the news is out, its usually too late.

I would encourage all readers to focus your energy and effort on understanding a business of the company you are considering to invest than to seek out rumours / hearsays / "tips". Stay tune for my next article "Principles of Investing - Rule 6 :  "Comprendo, Invest Only In What You Understand."
_______________________________________________________________

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Food for thought: 











Labels: XOX
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(Tradeview 2020) - Malaysia's Gloves are like Swiss Watch. Simple Purpose, Intricate Process.

Author: tradeview   |  Publish date: Wed, 7 Oct 2020, 3:52 PM


        



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Fellow readers who follow my articles would by now know I am a strong believer in the Glove sector and absolutely find the investment thesis for Glove stocks attractive even at this juncture. The recent end August-September sell off (the longest sell off and recovery, almost 6 weeks to return to earlier levels) was like a lightning bolt that jolt investors and the market. It was swift, strong and scary. I believe most retail investors would have either panic sell or seek to pray to almighty for some reprise. 




This was made worst by the naysayers reports, comments on media and string of news cycle that punished the glove stocks further. The apparent "nail on the coffin" was when a major local fund sold down the stock desperately for income recognition purposes. In my prudent estimation, I think billions worth of glove stocks was sold off by this major local fund alone in that duration. I may be wrong on the figures but ready to be corrected if proven otherwise. 




If not for the massive corporate share buy backs from Top Glove, Supermax and insider buy backs by Hartalega, Kossan and Riverstone, I believe investors' confidence would be further eroded. Then came EPF charging with guns blazing across all Glove stocks even UG Healthcare (Sg Listed) becoming substantial shareholders in most which was a true sign of confidence to the market. We must also note that President Trump who was infected by Covid-19 further heightened the awareness of this frightening pandemic where the most powerful leader of the free world is not spared. Then our own local Covid-19 second wave begun which started emptying malls and keeping people indoors again. The culmination of factors led to a strong rebound in the sector for the past week. 



This series of events led to a very obvious conclusion - many retailers, investors, authors, professional managers are driven by sentiments rather than facts / objectivity in their investment decisions or opinions. The innate nature of man is to seek solace and comfort in consensus. A simpler word - herd mentality, following the flow. Few and far between can take a contrarian view and act on it. And this is why majority of the people loses money when investing. If you can overcome this - you will be the minority that makes great investment decisions.




Looking back at all my articles, commentaries on my blog and telegram channel, you all can see every time the market sells off, I would write profusely in a bid to highlight to readers to remain calm, steady and take this opportunity to buy on weakness. When that feeling in your gut is at its max, that is the best time to buy. I for one knows it is very hard to execute. It took me years to do it and up until today, both myself and my subscribers are learning to adapt to new situations everyday. During this recent selloff and with the market rebounding, we are seeing the value of patience, objectivity and staying calm being rewarded. 


So why am I confident with the glove sector? I am not sure how many investors or professional managers have personally done a site visit with management of a glove company. I am fortunate to be able to do it multiple times over the course of past 1 year. As an outsider of the industry, I would describe well run glove companies are like classic watchmakers such as Rolex, Patek or Audemars Piguet. The function of a watch is to tell time. Simple purpose. But the process and machineries behind is a culmination of years of R&D, design and precision engineering. 




Glove is the same right? Its just something you wear on the hand. Simple. But each process of glove making from the boilers, dipping lines, packaging, testing, delivery have to be seamless and precise. Especially now, with constrained capacity and factories running at close to 100% operational capacity, the margin of error is so small that any slightest mistake would be immensely costly. Why is Rolex sports model selling at crazy price in the second hand / grey market? It is so ridiculous to a point that when you buy select models from a official retail store, the moment you walk out, the watch doubles in value. Think Submariner, Nautilus, Royal Oak and those in the same class. 




The reasoning for Rolex sports model watches being in demand is really quite simple : 

Demand has risen due to rising class of affluence, social media and appreciation for the finer things in life. 

Supply on the other hand is constrained. Rumours are Rolex only manufactures 1 million watches per annum and of these only a small allocations are sports model watches. 

Hence, when demand far outpaces supply met with constrained supply capacity, the price will just keep on rising. Even if it hits a plateau, it will remain elevated provided demand tapers or supply rises. Rolex keeps supply tight.  

Now apply the same reasoning for Rolex sports model watches to Nitrile Gloves : 

Demand has risen due to unprecedented pandemic sweeping across the globe for a prolonged period of time (almost 1 year now) 

Supply on the other hand is constrained. Medically certified grade or FDA approved Nitrile Gloves are wildly in demand compared to Latex, Vinyl and others. 

Hence, when demand far outpaces supply met with constrained supply capacity, the price will just keep on rising. Even if it hits a plateau, it will remain elevated provided demand tapers or supply rises.   




Just like watches, there are many brands and tier 1 brands are Patek, AP and Rolex. Some would argue Vacheron Constantin, A. Lange Sohne should belong up there too. Then of course you have your other brands like IWC, Breitling, Hublot, Panerai etc. (Note that I am excluding Richard Mille and the likes as those are out of the norm.) For Gloves, especially Nitrile Gloves, the Tier 1 gloves manufacturers are Hartalega, Riverstone and YTY. Therefore, like how Swiss watches commands the respect of the world buyers, when it comes to gloves especially Nitrile Gloves, Malaysia's glove makers have the same status as Swiss watchmakers.

These Glove makers have proven time and again they deserve to be where they are today. Ignore the noises, stay objective and take this opportunity of a lifetime to make a great investment decision where most investors in the world do not have the same access. 

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Food for thought: 








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(Tradeview Commentaries) - Looking Ahead to A Volatile October Election Month

Author: tradeview   |  Publish date: Wed, 30 Sep 2020, 10:54 PM


       




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Today's Q3 window dressing ended with a whimper. It appears that there is not much push upwards and plenty of profit taking especially in the glove sectors. It is my view the closing is directionless and may be a signal for the October market direction - either sideways or downward bias. I would like to be wrong. From the macro perspective there is an overwhelming pressure to stay sidelines or hold cash, but from a valuation or bottom picking view point, the market currently gives many opportunities. 

Of course many would like to wait and see the outcome of US election, impact from end of moratorium, Covid-19 vaccine approval prior election, and Covid-19 situation. In Malaysia itself the cases are on the rise. I believe most who were bullish about vaccines are now questioning the timeline and potential efficacy. This would mean Glove sector has longevity in terms of the investment horizon. At Tradeview, we are still very confident with the Glove stocks especially after tonight's news confirmation indicated to us the earlier sell off of the glove sectors was likely due to a particular Local Funds need for income recognition to declare dividend for their unit holders.


  
In terms of price movement, I think this recent retracement is healthy if it can stay above these levels to form a support for higher price rise. Do remember, those who can sit tight are usually the one most rewarded. 

As we enter US final campaign period, the volatility heightened as expected. Domestically, the political risk subsided following Sabah election. 

How should we move forward? 

Maintain healthy cash position and don't be too concerned with gyrations. If you are holding a fundamental value stocks with good earnings prospect, all is well. But if you are still holding penny stocks based solely on rumours and news with unproven earnings visibility, it may be a good time to be afraid.




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(Tradeview 2020) - Long Term Value Pick 5 : Hartalega Holdings Berhad (5168) The King of Nitrile Gloves

Author: tradeview   |  Publish date: Sat, 19 Sep 2020, 12:44 PM


       


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Hartalega came out very strong during the recent AGM. What I like about Hartalega's message is the confidence it gives to the shareholders and market including their statement when asked on analyst earnings forecast : 

KUALA LUMPUR (Sept 16): Hartalega Holdings Bhd, which expects an additional demand for 120 billion pieces of disposable gloves in the next three years, does not foresee any sharp earnings contraction after 2021 as some analysts anticipate.

"The analysts are correct [on the earnings forecasts]. But when it comes to the third year, after 2021, they start to give us [earnings] contraction... and [it's] a very sharp contraction.

"I mean this is an opinion, right? They can be right at the end of the day. I do not know. But by my guidance, what the analysts have said cannot be right," Hartalega's executive chairman Kuan Kam Hon told the media after the group's annual general meeting yesterday when asked to comment on analysts' earnings forecasts.

"We are on the ground. We have been in the business for the last 30 years and analysts are not able to see what we are able to see," he added.

This has been a strong point of contention in the markets between two camps - those who believe in the glove story and those who don't. Particularly, this is especially poignant when this concern was highlighted by 3 research houses namely JF Apex, Ambank and Macquarie. The 3 of this relied on this fact to give justification for their bleak outlook of the sector. So which is which? Is Mr Kuan, the industry titan correct or the analysts?

Lets have a look at this 3 minutes long video below from the AGM which gives a very good flavour :





As mentioned before, for a stock to go up and share price to rally, the majority of market participants must believe in the story in order for the buying momentum to outweigh the selling momentum. I have written extensively on glove stock and the sector so I wont repeat what was shared earlier. 




I would like to take the opportunity to zoom in and focus on Hartalega following the AGM. The few key takeaways which convinced me to consider Hartalega to be my 5th Long Term Value Pick are as below :

1. The visibility of earnings for the next 2-3 years minimum. Please note I am not citing the lock in committed order of 18-20 months. But potentially 3 years - 36 months. The issue here is no longer about ASP and deposit paid for locked in order. It is the issue of structural change in demand due to hygiene practice resulting in continuous shortage of supply against demand. 

2. Management years of experience as pioneer and market leader carries more weight than analyst. Some owners of companies' are promotional and lack credibility. Not the Kuan family. They are known to be hardworking, humble and ethical in their conduct of business. This is the market reputation and street credentials. This is what I value most in a business. Strong management running a quality business.

3. The expansion and succession plan are all in place. By his side, Mr Kuan junior demonstrate eloquence, stability and knowledge. Furthermore, with NGC 2.0, by 2027, the group's total annual installed capacity shall increase to 95 billion pieces per annum. As shareholders what we like to see is both expansion for growth and succession for stability. This will allow us to decide the investment horizon to longer term.

4. Premium valuation. Don't get me wrong, I am not recommending to buy stocks at expensive valuation. What I meant is, the market will always accord premium valuation to companies which are fantastic. Paying a fair price for a wonderful business is more important than paying a cheap price for a good business. Currently, if we compare to others, Hartalega is no longer trading at a huge premium unlike before Covid-19. In fact, if you were to consider Hartalega now, you are investing in this good business at a fair price with strong outlook and growth prospects. Top Glove and Supermax are the earliest to hike their ASP significantly. Hartalega, Kossan and Riverstone hiked the ASP much later as they value long term business relationship and committed to earlier pre-Covid 19 ASP. Hartalega and Kossan both has recently indicated that for future quarters, they will be hiking ASP significantly in the range of 30-50%. This leaves room for imagination on their potential upside.






5. Prominent substantial shareholders including their major client Medline Industries Inc. As per the latest list of 30 largest shareholders in the 2020 annual report, we can spot big names like Great Eastern, AIA, GIC, EPF, Norges Bank, Vanguard Emerging Market Index Fund, Australia Employees Superannuation Trust, Prudential amongst others. Big names aside, what impressed me most, is the fact that Medline Industries Inc from US which is one of the biggest privately held manufacturer and distributor of medical supplies is the 7th largest shareholder of Hartalega. Just imagine, if your major client have so much faith in you that they want to take a stake in your company. That not only signifies confidence the company but also rightly guarantees continuous order flow. Your client essentially ties his interest with the company and believe in growing hand in hand for the long term.






6. Hartalega is steadfast to remain the world leader along with other Malaysian glove makers. Be it China or the new entrants recently announced in the news, in my view, will not be a substantial threat to the Big 6 players. This is because of their ability to deliver, capacity, R&D & technology innovation. 

Let me cite this example, Hartalega came up with the Anti-microbial gloves which is the first in the world. It is now pending approval with the FDA and in our view, it is a game changer that cements their leadership position in Nitrile Gloves. We must remember, to be a leader, capacity is not the only metric. Technology and innovation are key to ensuring you maintain your pole position. From a 2018 news report, Hartalega spent US$10 million in R&D on this gloves with Chemical Intelligence UK. This is before the pandemic. With heightened awareness, this product of Hartalega will differentiate them from other industry players.


Comparing to my past writing on Long Term Value Picks, this time it is slightly different. The reason is because I have covered extensively on glove stocks and sectors which you can read from my earlier posts. For me, when all is said and done, when choosing a long term stock to be in your portfolio for many years, it must meet my 5 metrics :

1. Strong, honest and capable management team / owner
2. Consistent Growth, Earnings & Dividend payout
3. Strong balance sheet & cash position / cash flow
4.Can hold across decades / generations without risk of delisting or bankruptcy
5. Undervalued & lack of appreciation from investors

At this juncture, Hartalega meets all the metrics. 

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Food for thought: 





Labels: HARTA
  4 people like this.
 
Erudite Tq gud read
19/09/2020 4:39 PM
newbie8080 Refer to last quarter press release(May2020) from Topglove.
Topglove is now world largest nitrile glove producer.
21/09/2020 5:19 PM
tradeview We must remember, to be a leader, capacity is not the only metric. Technology and innovation are key to ensuring you maintain your pole position. As mentioned in the article above. Hartalega is the pioneer for Nitrile along with Riverstone.

Top Glove was traditionally Latex heavy with recent years stepping up Nitrile. In terms of % of capacity, Hartalega is the highest in overall percentage ratio out of total capacity.
22/09/2020 10:09 AM
enigmatic [control your emotions, discipline your mind] @tradeview,
How do you define long-term? 1 year? 5 years? 10 years?
10/10/2020 7:30 PM
tradeview Long term picks are stocks which I am prepared to hold for years. Not for trading but for building a portfolio of stocks.
10/10/2020 11:08 PM
enigmatic [control your emotions, discipline your mind] Understood. Thanks for the prompt reply!
11/10/2020 1:20 PM

(Tradeview Commentaries) - Buy Malaysia. I am.

Author: tradeview   |  Publish date: Mon, 14 Sep 2020, 11:20 PM


      


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Congrats all on the strong rebound of the Glove sector. For those who held  through the selloff last week, you deserve the pat on the back.

This week is a very important week for the Glove sector. Whatever the outcome, I think it's important to know everything in life there is always going to be different voices & opinions. We cannot expect everyone to think like us and that's why humans are all unique and different. 

I think how the investment community views the Glove sector is diverse. But for the stock to go up and share price to rally, the majority must believe in it for the buying momentum to outweigh the selling momentum. 

I do not know what will happen in future but my view is strongly in favour of gloves for many reasons including but not limited to :

1. Strong earnings visibility for the next 12 months (min) with / without vaccine 

2. Shortage is acute especially for nitrile Gloves 

3. ASP price increased has been and will remain elevated for some time

4. Structural change in demand and hygiene habits  

5. Monopolistic position of Malaysia supply to the Global markets 

6. Valuation is still lagging actual earnings growth and it will be reflected in coming quarters 

7. Huge cash inflow for Glove players. Cash is king especially during weak economic environment. 

8. No other better sector / industry / stocks for alternative investment opportunities in the near term.

9. Some local funds / local investors may not believe in the Glove sector. But I believe in it strongly. My belief is objective based on data, facts and numbers. Not emotions. There is deep value in Glove sector especially those with strong quality management like Hartalega, Riverstone, Kossan, Top Glove. 

10. Lastly, the Glove sector is very relatable to retail investors who can touch, feel or understand the nature of the business due to usage in daily life. 

I remembered in 2008, during the Global Financial Crisis, before Lehman Brothers collapsed, they went to Warren Buffet for help to save them from bankruptcy. Warren Buffet didn't save Lehman Brothers after assessing their books which contained too many toxic assets. But he did go in big to others like Bank of America, Citigroup, Goldman Sachs etc. He advocated "Buy America". He believe in US's resiliency and ability for the US financial markets to remain world leader despite the mess they caused.

I am going by the same playbook. I advocate "Buy Malaysia". The Glove sector is one of the few things as a Malaysian we should be proud of. I believe this sector has shown its ability to defy adversity, rise against odds to become a global leader. This is one of the few sectors that Malaysia will remain a global leader post Covid-19 and for many years to come.

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Food for thought: 






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(Tradeview Commentaries) - A Message to Local Funds Especially Macquarie Bank - Don't Be A Joke

Author: tradeview   |  Publish date: Fri, 11 Sep 2020, 10:12 AM


     



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When the Glove Sector was killed off by certain Local Funds since the start of last week, coupled with some incompetent reports from select "professionals", you might be asking, since the funds have left Gloves. Where would they go next? What is the next thematic / rotation play? 

I can with great certainty share with you, regardless of which sector they move to, it wont move up and these Local Funds wont be able to make money from that sector. The Glove Sector is the one supporting the KLCI index, it is also the one that is supporting the other ancillary sector (be it healthcare or indirectly linked such as Bursa due to high volume). Gosh, even the water, electricity, natural gas consumption by these Glove Manufacturers are supporting the utilities sector for the government when other industries have slowed down as a result of the pandemic. I like this message by Principal Asset: 

Her views were echoed by Principal Asset chief investment officer Patrick Chang, who said that the FBM KLCI has largely been driven by the healthcare sector, which has seen medical glove manufacturers, in particular, raking in bumper profits amid the Covid-19 pandemic.

Compared with its regional peers, he said the KLCI has been the biggest outperformer in ASEAN year-to-date, having only been down by about 6% compared with Thailand (down 22%), Singapore (down 22%) and Indonesia (down 25%).

These countries, he noted, do not have a massive glove sector like Malaysia does.

"Glove makers are making historic amount of profits as we speak - this tells you at the end of the day that it is backed by fundamentals. 


Hence when select Local Funds  try to kill the KLCI market's only bright spot, you effectively kill other sectors. Simply because, if a company with strong fundamental earnings are ignored and dismissed with such impunity, what does it make of other sectors which are loss making or delivering only a fraction of the Glove's sectors earnings? 

- Tech ? Down 
- Banking ? Down
- Plantation ? Down
- Wood? Down
- Consumer? Down
- Utilities ? Down
- Telco ? Down

The list goes on. Banks don't even give Local Funds the yield anymore. So where are the Funds going to park your funds in search of yields? Your best bet is for the Glove players to be generous with their dividend this year and fill in the gap left by other Blue Chip stocks. Hence, if Funds continue selling down and creating nonsense justifications to play down the sector, trust me, even the Glove Sector cant save the Fund's performance this year. Why? Glove Players would probably need to use their cash holdings to support their share price.  

So, now where else do you turn to? Sure, one can artificially prop up some of these sectors last minute to try to beautify your Index. However, the market will not respond to your nonsense. In fact, the market always punishes greed, pride & laziness. You may want to rotate out and switch to other sectors, but no one is following you. So you are just playing with yourself. And if you are playing with yourself, the share price will not go up. This is because all market participants need to be on the same page for a company share price to rise. Its as simple as that. 

This is my message to Macquarie's unbelievably incompetent and questionable Research Report Downgrade of Top Glove yesterday. This has caused such a reputation dent to your Bank that if I am senior management or the CEO of the Bank, I would summon the head of research to reprimand how his action brought disgrace to the organisation. Why am I saying this? Just look at what Macquarie send to my mailbox this morning. 

My message to Macquarie - After adding salt to injury in the market yesterday, you have the nerves to reiterate outperformance on Bursa stock to promote your call warrants on Bursa. How dare you email me with his garbage? Bursa's share price and volume has been reaching record high because of Gloves sector. If you want to say Gloves sector's supernormal profit in 2021 will never repeat itself and its a one off, hence justifying pegged to 2022/2023 normalised ASP earnings, do the same for Bursa. Downgrade to underperform as well and pegged it to 2022/2023 normalised Average Daily Volume. Be Consistent in your message - Macquarie. Dont be joke.


Ps: McQ, just bring back the previous Glove Analyst - Denise Soon

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80 Best Quotes On Stock Market Investment And Financial Management

Labels: TOPGLOV
  11 people like this.
 
gloveharicut Agree. Please bring back the SMART Denise Soon
11/09/2020 11:29 AM
Erudite Another gr8 one by Tradeview tq 4 d confidence
11/09/2020 12:05 PM
DLGF This analyst from Macquarie is called Prem, head some more ... really hopeless.
11/09/2020 12:38 PM
Targeted MCqueer's golden boy Prem, better get KY jelly ready............
11/09/2020 1:45 PM
Kanna111 CREDIBILITY ..... is LOST !! Period !!
Mac Quarie.
11/09/2020 1:52 PM
gladiator Macquarie joker
11/09/2020 2:27 PM
Vairocana9999 Well said. To all investors,since these big guys' research teams are so reckless and lack of integrity, they are not reliable anymore. Their analysis and research reports are just trash. So, don't bother to read them. They can downgrade, upgrade, overweight or underweight, and all kind of bullshit,just keep it to themselves or share it with fund managers who depend on their reports to invest in the market. We will just stop buying these IB'sbig guys' warrants from today onward,let the fund managers buy and play among themselves. We only buy the mother shares.Let these big guys eat shits.
11/09/2020 2:38 PM
zhangliang gud sharing my fren
11/09/2020 3:17 PM
Fabien "The Efficient Capital Allocater" It take years to build reputation. But it only takes one moment of foolish act to lose credibility
11/09/2020 10:56 PM
amirez217 Great commentaries. Tq for enlightening us
11/09/2020 11:59 PM
DickyMe MacQuarie is the best! The analyst should be promoted.
12/09/2020 12:04 AM
GiantPanda FULLY AGREE with tradeview !!!

https://klse.i3investor.com/blogs/gloveharicut/2020-09-10-story-h15134...

https://klse.i3investor.com/blogs/glovesvsvaccine/2020-09-10-story-h15...


BURSA MALAYSIA REPRIMANDS AND FINES MACQUARIE AND TWO FORMER HEADS OF DEALING
https://www.bursamalaysia.com/about_bursa/media_centre/bursa-malaysia-...

Bursa Malaysia rebukes Macquarie for market manipulation
https://www.thetradenews.com/bursa-malaysia-rebukes-macquarie-for-mark...


That’s how crook evil IBs con cheat retail investors, twist and spin Buy and Sell calls to benefit their big clients only

Boycott all MACQUARIE call warrants!!!

Ban all Call Warrants!!!

How could useless Bursa and SC let evil IBs issue call warrants on other companies to encourage gambling??

KARMA WILL HIT THOSE EVIL ONES VERY HARD
12/09/2020 12:07 AM
patrico8 MacQ should put the money where the mouth Is. Give a bloody reply on this article by Tradeview.
12/09/2020 12:18 AM
DickyMe LOL!! Posting 2011 article to shame MACQ?

It shows your stupidity and that is why many are crying now!

Baseless articles need no reply.
12/09/2020 12:21 AM
1901 mekquarie is a joker

giantpanda: That’s how crook evil IBs con cheat retail investors, twist and spin Buy and Sell calls to benefit their big clients only

In my my not so professional opinion(no CFA la), panda u comel la.

I found this....
https://ekkamai-simplelife.blogspot.com/2015/10/reality-check-lapuran-penganalisa-saham.html
12/09/2020 12:59 PM

(Tradeview 2020) - The Argument For & Against Glove Sector. Pick Your Side. But Choose Wisely.

Author: tradeview   |  Publish date: Thu, 10 Sep 2020, 12:29 PM


    

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