Direction for Stock Market in 2H 2007
The 2H 07 started off very well and a record intra-day high was reached on 16 Jul 07 at 3,688.58 although the day closed was 3,653.23.
Oil & Gas, Construction, Properties and Marine were in plays and speculative penny stocks like Baker, Banjoo, Equation Jade & Informatics were on the run. Oh gosh, I was tempted (UNFORNATELY)!!
Suddenly, without any warning, speculative penny stocks took a turn in the afternoon of 17/7/07after hitting record volumes and prices. The properties counters got hit by the announcement of the increase in the Development Charges, and later, both banks and property shares were hammered by the statement from MAS on its concerns on the property prices.
Then, the BIG Bang came, Dow Jones dropped >500 points on 26 & 27 Jul 07 although it was attempting to test 14,000 level just on 19 Jul 07. STI was not sparred and it fell a sharp 173 points for 3 days from 25 to 27 Jul 07 or 4.7% from the previous close. The sentiment became negative on US housing woes and sub-prime loans problems and slow down in US economy.
My portfolio suffered some drops. The core holdings are ok, as they were picked based on fundamentals. However, due to the earlier europia in stock market and the constant discussion on speculative plays among my colleagues, I got tempted and jumped into doing speculative buying (IPCO & Swing Media) without doing my dues on the margin-of-safety. I also followed the ShareOwl investments calls and bought into Guthrie & China Milk warrant (ops, I bought the WARRANT). Hmm... I think I'm going to get stucked in IPCO & Swing Media for quite sometime.
No wonder one of the investment advice given is NEVER talk about stocks, and this is what the world's greatest investor, Warren Buffret has been practising. I have to admit my fault and blame myself for falling into the trap of greed and emotions. I probably have to reassess these choices and make a decision to hold or to cut loss.
The marco view of the fundamentals look intact and in fact, the GDP growth for Singapore and the whole world is expected to be higher this year. Analysts are still looking at higher STI of 3800 to 4300 by year end. The property prices should continue to climb at fast pace for at least until Q1 of FY08 and the multiplier effect of the IR investments is expected to boast the local market until 2009.
For the current quarter, I believe the stock market will consolidate and should move side ways. If the STI falls to 3300 level, it will be a good chance to accumulate. I'm still positive for a bull to come back by late November and should last into Jan 08. This time, I will seriously consider whether to reduce my holdings on properties REITS having observed its huge run-up and then the subsequent correct down.
AREIT 3.32 (17 Jul 07)
CMT 4.30 (21 Jun 07)
The yields at these levels are at ridiculously low of 3-4% compare to 3% on 10-year bond. One strategy adopt could be selling them out at high level and buy back at lower levels (done for CMT, but the low was not low enough). Another strategy is simply by switching other higher yield REITs. The high prices are probably due to asset inflation from the good sentiment, high liquidity and bouyant property market, which will utimately come down to the realistic levels after the europia is gone.
Oil & Gas, Construction, Properties and Marine were in plays and speculative penny stocks like Baker, Banjoo, Equation Jade & Informatics were on the run. Oh gosh, I was tempted (UNFORNATELY)!!
Suddenly, without any warning, speculative penny stocks took a turn in the afternoon of 17/7/07after hitting record volumes and prices. The properties counters got hit by the announcement of the increase in the Development Charges, and later, both banks and property shares were hammered by the statement from MAS on its concerns on the property prices.
Then, the BIG Bang came, Dow Jones dropped >500 points on 26 & 27 Jul 07 although it was attempting to test 14,000 level just on 19 Jul 07. STI was not sparred and it fell a sharp 173 points for 3 days from 25 to 27 Jul 07 or 4.7% from the previous close. The sentiment became negative on US housing woes and sub-prime loans problems and slow down in US economy.
My portfolio suffered some drops. The core holdings are ok, as they were picked based on fundamentals. However, due to the earlier europia in stock market and the constant discussion on speculative plays among my colleagues, I got tempted and jumped into doing speculative buying (IPCO & Swing Media) without doing my dues on the margin-of-safety. I also followed the ShareOwl investments calls and bought into Guthrie & China Milk warrant (ops, I bought the WARRANT). Hmm... I think I'm going to get stucked in IPCO & Swing Media for quite sometime.
No wonder one of the investment advice given is NEVER talk about stocks, and this is what the world's greatest investor, Warren Buffret has been practising. I have to admit my fault and blame myself for falling into the trap of greed and emotions. I probably have to reassess these choices and make a decision to hold or to cut loss.
The marco view of the fundamentals look intact and in fact, the GDP growth for Singapore and the whole world is expected to be higher this year. Analysts are still looking at higher STI of 3800 to 4300 by year end. The property prices should continue to climb at fast pace for at least until Q1 of FY08 and the multiplier effect of the IR investments is expected to boast the local market until 2009.
For the current quarter, I believe the stock market will consolidate and should move side ways. If the STI falls to 3300 level, it will be a good chance to accumulate. I'm still positive for a bull to come back by late November and should last into Jan 08. This time, I will seriously consider whether to reduce my holdings on properties REITS having observed its huge run-up and then the subsequent correct down.
AREIT 3.32 (17 Jul 07)
CMT 4.30 (21 Jun 07)
The yields at these levels are at ridiculously low of 3-4% compare to 3% on 10-year bond. One strategy adopt could be selling them out at high level and buy back at lower levels (done for CMT, but the low was not low enough). Another strategy is simply by switching other higher yield REITs. The high prices are probably due to asset inflation from the good sentiment, high liquidity and bouyant property market, which will utimately come down to the realistic levels after the europia is gone.
posted by mrmoon at 5:27 PM
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