Aspellian's Garden

[winston]

TOL: Buying growth stocks with high PE
when growth stocks keep on rising, PE keep on rising - it becomes too obvious to everyone that this is a growth stock. sometimes need to let the stock take a breather and consolidate its price. usually it will be better when it announce its full year results whereby historical PE are reset from 70 to 15... if good quarterly results and positive news continue to flow. then the stock have chance to go up further.

One particular Mutual Fund always visit the companies before the black out period before earnings announcement. They would then pump the company for information. Basically, they are trying to gauge whether the results would come out above or below expectations. From the body language, they would either buy or sell the stock before the earnings announcement.

Sorry, I cant mention the name as they are a household name

[Aspellian]

In another sign of China’s move away from dependence on the dollar, it announced Tuesday that it will sell $880 million worth of renminbi-denominated bonds in Hong Kong. That marks the first time Beijing will offer renminbi bonds to foreign investors.

My personal view
- USD overvalued - no one knows it better than China who is holding so much USD foreign reserves.

- China refused to revalue RMB to FAIR VALUE. to do so, it will crash USD, and China's foreign reserves will bleed profusely. But long term, USA will suffer more if China revalue RMB. the day will come, Chinese knows that it is up to them to control. They will grow and grow and grow, and when they do revalue RMB, they dun care about the loss of USD foreign reserves. it will be shocking news to "world order" and dawn of a new order.

- what China is doing now is to buy GOLD, slowly change dependence of USD (both itself and the WORLD - very surprised China selling bonds!! - they definitely dun need $$, so its for "other political purposes".

- China is buying up the world's resources - and usually at a perceived high value eg. a huge premium to market price/capitalisation. But as mentioned earlier - China KNOWS that USD is overvalued. We perceived that China over-pay and spends billions and billions, but China knows that USD are overvalued (worthless???) and the Chinese are getting real assets using junk notes.

- China also buying companies but the anti-trusts (political agendas) are blocking the Chinese from buying the world using .... yes, worthless USD foreign reserves.

- When USD starts to depreciate, commodities prices will shoot up - China will be more secured and laughing as it is already holding the oil fields, coal mines, etc

- also read recently that UN are challenging the world's concept of using USD as the world's reserve currency.. hmmm

- China shifting gold storage to HK, China doubled its gold reserves -of course using USD-denominated foreign reserves to buy!!

Views on Oil and Gas
- Note that China are more keen to buy ready assets rather than developing projects. I noticed a trend of Chinese oil field rights, existing refineries instead of being a stakeholder holder in developing projects. But the Chinese will sign long term gas contracts with oil majors for the LNG. The oil majors need such contracts before they can develop the projects and book in reserves.

- China are also lending to Russia, Brazil, venezula etc to secure long term oil and gas supplies. I am sure the Chinese have great bargaining power when they negotiate the deals at the peak of the bottom crisis. smart move.

Gas prices are at all time low. In future, when oil supplies run low, USD depreciates, oil and gas prices higher - china would have already locked in at low gas prices (LNG contracts) and they can sell oil to the world from foreign oil fields/refineries they acquire.

PATIENCE is KEY to China's plan
China are really very patient and very smart. there will be dramatic shift in world power in the next 100 years. There could be thousands of Zhuge Liang in China now.... how to fight?

So now China will have to spend more USD than they can buy USD treasury bonds - gold, oil, gas, contracts, companies, mines, commodities, moon, stars, mars etc

China will also start to diversify into other currencies with their EXCESS reserves, China will make the world be dependent on RMB (very subtly). China will resist revaluing RMB till its economies move out on dependence of mass production to high tech. Note that they will STILL have mass production moved to the western china. the high tech knowhow transfers in last 2 decades have been very successful (note that some german companies refused to set up factories in china because of this concern - loss of competitive advantage)

USA response
wonder what will be USA's response? or Obama too busy trying to avoid inflation???

[Aspellian]

TOL:

Property Prices vs Property Counters Prices
I always have this idea that the property counters in spore are a leading indicator of the boom and bust of property cycle. but its just a gut feel. no data to back it up. probably one day should go and compile some property prices data and compare it to share prices of property prices - i quite sure there are distinct correlations between the 2. when property counters go down - it could also mean that indexes are near a top and could go down soon.

Share prices of property counters hit a top and gapped down on Monday because of government interventation of new rules relating to interest-free loan schemes. City Devt dropped 7%, Ho Bee 10%. All very high volume.
CHances of falling knife is high. chances of it going further up is still possible but much lower probability.

On the grounds, there could be another final leg up on property prices esp after 7th Month. Media news have still been positive on property... which i believe helped to fuel the enthusiasm... (what a coincidence!!)

[winston]

Share prices normally lead the real economy ( business ) by 6 to 12 months.

In this case, the share prices of property counters should also lead the physical property prices, by 6 to 12 months.

[Aspellian]

Share prices normally lead the real economy ( business ) by 6 to 12 months.

In this case, the share prices of property counters should also lead the physical property prices, by 6 to 12 months.

hi winston,

tks for sharing.

QN: from your experience, how do we then make use of the property counter share price movements to time property purchases (if it is possible at all...)?

TOL: when it is clear the property counters have peaked, market has hit a wall, its a downturn, so better to sell properties on hand (assuming for investment purposes) within next 2-3 months. yes, it is possible its a false alarm or you wont get the peak of the property price. but its the same as shares - how often can you get the last 10% of the bullrun?

also related point being that before buy properties, better take a look at stock market and property stock price movements. i have this idea that investors who bet big on property counters have a good FEEL of the property market and actual realized prices/transactions. so property stock prices are a useful indicator to time property purchase.

[iam802]

TOL: when it is clear the property counters have peaked, market has hit a wall, its a downturn, so better to sell properties on hand (assuming for investment purposes) within next 2-3 months. yes, it is possible its a false alarm or you wont get the peak of the property price. but its the same as shares - how often can you get the last 10% of the bullrun?

Selling a property (depending on luck) may take longer than 2-3 months.

In my opinion, even if it is an investment property, one should just set a target price and/or timeframe to hold. And if one of the events trigger it, just start to sell it. There's no need to wait till the counters peaked.

Counters can dive the very next 'month' ...and I doubt it is that easy to sell a property during the build up to the last 10% of the bull run.

[winston]

Hi A,

I dont like to invest in Properties. There's a big bid / ask gap. In addition, it's very illiquid and one cant get out easily.

However, I also know of some people who has made alot of money in Properties when it's very hot and also lost alot of money when the market drops.

Take care, Winston

[Aspellian]

Hi Winston,

tks for your reply.

i will not be investing in properties for next 3 years. but its good to watch and learn how the market behaves.

Cheers!

[Aspellian]

TOL:
Oil price stabilises around US$70/bbl. US$ weakenes, possible higher oil price. Economy stabilise, higher chance of oil price going up. more O&G capex, more activities, contracts etc.

On-going bull run of O&G service companies, CH offshore, Mermaid, Falcon energy. Before that was Ezra, Ausgroup, Ezion. Most of them breaking out of 52-week highs. some formed nice cup with handles, 3 week tights, breakouts on high volume, analysts churning out more reports and upping target prices.

Mermaid has a price of $1.71 based on wonderful assumptions of acquisitions of assets etc. analysts nowadays like to fantasise and so creative. bright minds!! haha!!

still learning. market is always there, be patient.

Ride the waves while the uptrend continues. ...

<vested in certain counters mentioned>

[Aspellian]

TOL: read report that when IR is up, there will be alot more exhibition spaces (>1/3 of current space).
market share erosion to suntec exhibition, expo, hotels' ballrooms and function rooms.

Hotel rooms increased. Office space increased. So many cannibalism of existing players.

Lots of counters to avoid - but potential shorting targets.

But who will benefit struturally (changes in industry landscape), tangible benefits in the mid/long run?

i'm thinking of :

1) creative advertising/designing companies to set up professional booths, decos etc for big events and companies. eg. kingsmen creative, cityneon. very niche segment.

2) food companies? catering - but not sure of the direct benefits and impact to revenue and bottomline.

3) construction companies (but its not sustainable)

any other comments?

who else will benefit?