Singapore Stock signal rebound

There are too many external force affecting Singapore stock market. We can't just look at our own market while it is driven by external factors. Let's look at HK's HSI  

Hong Kong HSI closed at 20,803 in thinner trading volume. However, performance is better than expected. If Monday stock did not fall below 19900, 10 days and 5 days moving average will be across and sign rebound.

Yesterday's HSI trading volume is HK$2.3 billions. Which is 89% of 10 days' average volume. DJI closed lower on Friday. Market stock may go lower. However, as long as HSI end above 19900. Market will continue to recover.

Better data from Japan last Friday.

China's cash crunch is improving.  China central bank will keep Chinese Banks' cash flow at lower possible level. And force banks to withdraw their money from Shadow Banking system and other finance vehicles. It will stabilize Chinese Bank in long run. But short term pain is lower non interest income.

USA GDP grow slower than expected. Federal Reserve may delay tapering QE and let easy money to flow into world markets longer time.

Markets are heading toward brighter future. I find Singapore Stock's PE and Price/ NAV are NOT too attractive. I will continue to buy Bank of China and ICBC. I am expecting 20% return in one years.



  

Could start to buy in Slowly

Market start to rebound. Stochastic analysis show market start to rebound. Unless HK HSI fall below 20000, MACD shall turn into rebound signal in next Wednesday. And this will confirm market rebound.
 
I am busy buying in. Allow me to explain further during week end.

Singapore stock index STI fall below 3100 - too early for bottom fishing

STI closed at 3074. Hong Kong HSI closed at 19813. On my previous posts dated 16 and 20 Jun 2013, I suggested investors to wait.

My suggestion is the same today. Wait until technical indicator to show rebound signal. (refer to my post on 20 June)

Today's bigger news is Chinese Banks credit crunch. Interbank Rate went up to 10% (may be over 10%).  China central bank PBOC instead of inject needy cash into banking system. but they drain away more cash by issue new bond. Apparently PBOC want to teach all Chinese banks "Watch how you lend" lesson. In order to reduce the size of "shadow banking" system. PBOC have all necessary tools to contain the problem. It shall not turn into crisis.

Investment fund is exiting Asia. Downside risk is high. Too early for bottom fishing

Don't buy Singapore REIT drop now - too early for bottom fishing , wait for technical rebound signal

I remind the risk of capital outflow and inflated Asia asset in my previous blog. I recommended to sell in May. And I sought some of my stock before crash. In my latest post. I suggested to wait for confirmation indicator before buying. 
 
Singapore Stock is affected by US Federal reserve Chairman's QE tapering announcement. Which is an external factor.

Hong Kong Hang Seng index are commonly used as Asia stock indicator (Asia outside Japan).

From my technical analysis.

1st bullish indicator when HSI break through 20815 (stochastic 15 days) 
2nd bullish indicator when HSI break through 22579 (moving average 5 days cross over 10 days)

HSI today is around 20300. 1st indicator 20815 looks ok but it is too far away from 2nd indicator 22579. 
We should wait till HSI above 1st indicator and close to 2nd indicator.

Don't buy now.

Buy Singapore stock below 3100 ? - wait

On 2 May - I agreed with" sell in May". On 28 May I sold 30% of my stock. On 6 June I predicted that STI would drop below 3100. and it happened on 14 June.

And I suggested to monitor foreign fund flowing by Philippine Peso exchange rate.

PHP drop further from 42.2 on 5 June to 42.85 today. Foreign investment fund continuously flow out from Asia.


We can't decide unless we knew what was happening. 

Foreigner invested Asia trust funds. And those fund were trading both Asia stock and currency. In 1H2013, funds bought Japanese companies share and selling Yen. They drove Nikkei up more than 50%. Yen went below 100

Asia trust fund earned a lot money. It worked so well until 23 May. Yen reverse it's falling and went up. Yen exchange trading cause huge loss. They were selling share to cover their loss. And Nikkei fall. Foreigners withdraw from trust funds. It caused Asia markets to go down further. 

Japanese bond crisis become our new focus.

In past 20 years, Japanese Government relied on issuing bond. Total Government debt is around 250% GDP.  In the past, interest rate was low which was around 1%. But the total debt amount is huge. Therefore bond interest cost 25% of total Government revenue. 

The new PM decided to drive interest rate down further by double the amount of their QE progromme to 7 T Yen. Lower interest rate would promote spending and investment. It could reverse deflation into 2% inflation. Small amount  of inflation may promote economic grow.

Government bond with less than 1 % interest. If inflation would go up to 2%, bond holder's real interest rate will be 1% - 2%= -1%. Investors want to sell their bond immediately. Central bank's 7T bond purchasing can't meet sellers demand. Bond seller drive up both interest rate and currency.

Only when Bank of Japan could buy all seller's bond. Interest rate and currency will remain at high level. 

No quick fix available. And market should go down further. 
  

Nikkei 225

Strategy : Actually monitor market and waiting for technical analysis market reverse confirmation. e.g.  Nikkei 225  Stochastic value go beyond 20. Buy slowly



  

When does Singapore Stock - STI bottomed out ?

When does Singapore Stock market STI bottomed out ?

Foreign fund exit from ASIA. We may not know actual amount immediately. But Asia currency exchange rate could be an indicator. I choose Philippine Peso which shall have lesser central bank intervention than our almighty SGD.

Today Peso exchange rate stay at low level 42.2 PHP to 1 USD. It may signal foreign investment fund continuously outflow from Asia.

When does STI bottomed out ? I may start to buy when STI go below 3100. 3000 shall be very strong support level

Similarly to HSI, I will start to buy when it reach 21000. Strong Support at 20000

 Beware of big Chinese banks book closure date. They are concentrated on June. They only pay dividend once a year. Banks share price may drop 5% after book closure date. HSI will drop accordingly. I factor in those effect.

Beginner's guide for new stock investor - Stock selection

  Beginner's guide for new stock investor

- Timing - refer to my previous post

- Stock selection

They are hundreds of stock trading in Singapore Stock exchange. You can start your select from

1. Company you like ? e.g. if you like beer, you may like F&N
2. Company you are know? e.g. banks, MRT....
3. Company within STI index components.

Don't buy company which you don't know their business ? e.g. High tech research company. You can buy Google which you know their business. 

After you shortlisted some companies, you shall start to do your homework i.e. fundamental analysis.

1. PE                      Not more than 15 lesser is better
2. Dividend Yield    Not lesser 3%  more is better
3. Quick Ratio       Not lesser than 0.5, more is better
4. Price / NAV      Not more than 1.5, lesser is better

If you can talk with companies' customers about their business, it will be better. Read their reports especially their market Outlook page. Never buy stock only because you believe that it will go up. e.g. someone suggest a company to you, you shall do your homework. Don't just rely on someone.

If you use fundamental analysis to compare between Facebook and Google. They can tell which one is better. I pick a number of companies from analysis. And wait for buying opportunity

When the TIMING is right, you could use technical analysis methods e.g. probability, stochastic chart ..... to determine your buy in  price. Technical analysis can improve your earning. However, overall market position are more important than technical analysis.  

If you are looking for quick return, the above method will not work. When someone sell their stock to you, they may think that is good price. You can have quick profit only if seller is wrong.

Company are growing. Share price will normally go higher with their profit grow. Therefore It take time to grow investment return.

Buy low, review companies' finance ratio and allow time to grow your return.