Thursday, March 28, 2013

Since there is frequent news from the U.S. and UK, is it better to trade fundamentals rather than only candlesticks?

Traders all have different styles. Some like to trade news and others don’t; it all depends on trading style. If you’re a scalper, trading lower time frames multiple times a day, you would avoid trading during major news announcements. This is because major news may create unwanted volatility in the market and affect strategy.

On the other hand, if you trade longer terms (like a few days, weeks or months), you wouldn’t look at daily news since its effects are mostly short-term.

If you’re a day trader, you would account for daily news. A day trader normally enters and exits trades within a day. This is why certain news announcements are important since they may affect your trading decisions on a particular day.

Therefore, there is no “best” way to trade. Trading with news or candlesticks does not matter as long as you know your personal trading style. 

Tuesday, March 26, 2013

What does “buy the rumor, sell the fact” mean?

The phrase “buy the rumor, sell the fact” is an old investing rule that applied to the stock market. In the past, if a person wanted to invest or trade stocks, he or she could only Buy or go Long on a company’s shares; there was no Sell side. Investors would “buy the rumor” when it had bullish connotations, and “sell the fact” if the rumor turned out untrue or bullish sentiment was less than perceived. The key to this rule is that the rumor must be bullish. If the rumor does not contain bearish connotations, I am certain you would not buy the company’s shares.

“Buy the rumor, sell the fact” does not quite apply to present financial markets, especially the Forex market. In Forex, you can Buy and you can Sell. So if you go Short (sell) on a currency pair, the rule would be “sell the rumor, buy the fact” on the basis that the rumor has bearish sentiment.

However, I always say “we do not predict, we react.” When you buy or sell a rumor, you predict what the market will do. After trading for many years, my experience is that the market can and will very often go against what you predict. We cannot control the market so why should we predict its movement? I prefer to let the market show me what it wants to do before deciding on when to enter and exit my trades. 

Thursday, March 21, 2013

Singapore Post Tops Study

Singapore Post (SingPost) emerged as the top postal agency in the world, according to a study by global management consulting company Accenture.
It heads the list in the study “Achieving High Performance in the Postal Industry: Accenture Research and Insights 2013″, which covered postal agencies in 24 countries.
United Parcel Service (UPS) takes the second spot on the list, followed by Austria Post, Poste Italiane (Italy), Australia Post and FedEx (USA).
SingPost successfully diversified, with profitable new businesses that are vastly different from its traditional business to increase revenues. It launched new products, expanded its financial services offerings, and took advantage of maturing eCommerce trends, according to the study.
At a time when the majority of the world’s postal agencies are facing decline in global mail volume and rising employee pension costs, SingPost is thriving, Accenture said.
SingPost have also acquired portions of logistics companies to take advantage of cross-border delivery and found a way to provide a viable digital mail service, it added.


Wednesday, March 20, 2013

Moody’s Takes Multiple Rating Actions on Singapore REITs

Moody’s Investors Service has taken multiple rating actions on some of its rated Singapore Real Estate Investment Trusts (S-REITs) following reductions in secured debt levels over recent years, thus mitigating the need for notching of several S-REITs’ issuer ratings from their corporate family ratings.

Moody’s rating actions follow a sizeable reduction in secured over unsecured debt among many rated S-REIT’s over recent years, which no longer necessitates unsecured debt ratings and issuer ratings to be notched down from the corporate family ratings.

Moody’s said it believes that this trend is sustainable, as REIT’s are expected to continue to opt predominantly for unsecured debt financing going forward.
“The secured debt to total deposited assets (sum of investment properties value and cash) ratio of our investment-grade S-REITs has declined to 11 per cent at end-2012 from 21 per cent in 2007, and we expect this to drop to 9 per cent by the end of 2013,” said Jacintha Poh, a Moody’s analyst.
S-REIT’s whose issuer ratings were upgraded, such as CapitaMall Trust (CMT), Ascendas REIT (A-REIT) and CapitaCommercial Trust (CCT), have all successfully reduced secured debt to levels which no longer put unsecured creditors in a significantly weaker position within the overall debt structure.
CMT’s secured debt to total deposited assets ratio currently stands at 7.5 per cent, A-REIT’s at 11.7 per cent and CCT’s at 11.5 per cent which is well below the threshold at which legal subordination of unsecured creditors starts to weigh on ratings.
“We see this move to be credit positive for the S-REITs, as it improves their financial flexibility and diversifies their funding sources. The key reasons for this ability to acquire unsecured funding include supportive liquidity and low interest rate environments, which are expected, in turn, to continue for the next 12-18 months,” added Poh.
Debt held by Singapore property trusts make up 31 per cent of total assets, higher than the ratios for Hong Kong, Taiwan and South Korea, according to data compiled by Bloomberg. Still, it is lower than the 39 per cent for debt held by Australian REITs, or 44 per cent for Japanese trusts, the data showed.
Singapore REITs posted a one-year total return of 45 per cent, trailing Japan’s 63 per cent in Asia, according to data compiled by Bloomberg. The measure tracking REITs in Singapore climbed 29 per cent in the past year, compared with the 8.2 per cent increase in the Singapore benchmark Straits Times Index.
A total of 30 REITs and property trusts were listed in the citystate with a combined value of S$56.0 billion, making up 6 per cent of the total market capitalisation of stocks traded, Lawrence Wong, head of listings at the Singapore Exchange, said in a statement on February 27, adding that Singapore has the highest number of cross-border asset REITs in Asia.
More REITs are expected. Singapore Press Holdings said a week ago it is exploring a real estate investment trust. Bank Julius Baer & Co estimates the trust may have S$3.1 billion of assets.
The REITs raised S$3.4 billion or 68 per cent of the S$5.0 billion of stock sold in Singapore IPOs in the past 12 months, according to data compiled by Bloomberg.
The biggest share sale was the S$1.6 billion raised by Mapletree Greater China Commercial Trust, a REIT that owns assets including the Festival Walk shopping mall in Hong Kong and an office complex in Beijing. The trust, which was also Asia’s biggest share sale this year, surged 13 per cent since its trading debut on March 7.

Thursday, March 14, 2013

IHH Healthcare - Taking its healing touch to HK

IHH is adding Hong Kong to its extensive global network. We are not surprised by its winning bid to acquire a site on which it will construct, develop and operate a private hospital in Hong Kong. This reinforces IHH’s status of a premier Asian healthcare play. This development does not alter our numbers as we have factored in various landmark hospitals in its pipeline for the next few years. We retain our Outperform rating and SOP target price. Potential catalysts are a ramp-up of Novena Hospital's operation and revenue intensity in all its three markets, and possible asset recycling to fund this new HK hospital.

Friday, March 08, 2013

Mapletree Greater China REIT Shines on Debut

Mapletree Greater China Commercial Trust (MGCCT) debuted on the Singapore Exchange Thursday at S$1.02 apiece, nearly 10 per cent over its initial public offering (IPO) price of 93 S-cents per unit.
More than 36 million units changed hands when it started trading at 2 pm, landing it among the top 20 most active counters. On its first day, the REIT closed 10.75 per cent higher than its IPO price at S$1.03 each.
“Being listed on SGX is a milestone for us, and we are especially pleased to be the largest Singapore REIT IPO to-date,” said Cindy Chow, Chief Executive Officer of Mapletree Greater China Commercial Trust Management Ltd, the manager of MGCCT.
According to the trust manager, 2.63 billion units have been issued, including 776.6 million through the initial public offering, as well as 931.6 million to subsidiaries of the sponsor Mapletree Investments, and 953.5 million more to cornerstone investors.
The cornerstone investors are AIA Group, Morgan Stanley, Henderson Global Investors, Myriad Asset Management Ltd and Norges Bank Investment Management, which runs Norway’s sovereign wealth fund.
Altogether about S$2.43 billion in net proceeds were raised.
The REIT is expected to pay a distribution yield of 5.6 per cent to 6.0 per cent in the first full financial year from 1 April 2013 to 31 March 2014 based on the offering price range.
Travis Seah, investment analyst Phillip Securities, said in a note that Mapletree Greater China’s projected yield is “a tad higher” than those of Fortune REIT and CapitaRetail China Trust, which has a forward yield of 5.3 per cent.
“The management fee structure is based on distributable income and DPU growth which will greatly align investors’ interest especially when acquiring good quality property assets,” he said.
MGCCT invests in a diversified portfolio of commercial real estate in Greater China, including Hong Kong, Beijing, Shanghai, Guangzhou and Shenzhen. Its initial portfolio comprises two commercial properties, namely, Festival Walk in Kowloon, Hong Kong and Gateway Plaza in Beijing.
With an estimated market capitalisation of S$2.5 billion, MGCCT brings the total number of SGX REITs and property trusts to 31 with a combined market capitalisation of S$58.0 billion.
Singapore is a regional hub for REIT listings, and Mapletree Greater China Commercial Trust is Mapletree Investments’ fourth REIT.
Mapletree Investments, the real estate arm of Temasek Investments, owns and manages a S$19.9 billion portfolio that includes office, logistics, industrial, residential and retail assets across Asia. It also manages three private real-estate funds.
The IPO pipeline in the citystate is expected to be healthy in 2013 after it slumped to around S$4.5 billion last year, less than half of the S$9.4 billion raised in 2011.