Bursa Malaysia Is Too Expensive !

April 25, 2009
market valuation

market valuation

 
According to various research house (international & local included), the current market has been overbought. Please click here for a copy of these reports.
 
Let’s look into the valuation of Bursa Malaysia. Earnings of Malaysian companies will moderate in 2009 but their share prices have been going up and up. This has caused the forward market P/E to breach 16x. In January 2009,the forward market P/E was around 13x. P/E of 16x is actually the average P/E for Bursa Malaysia for the past 9 years but with current economic crisis, the P/E should be below 16x. Frankly speaking,I will value the whole market at 12x only. 
 
The sharp rise in the share price is not supported by any good fundamentals. Most of the Malaysian companies have yet to show losses as their annual reports will be out around June 2009.But if you investigate into their quarterly reports,you’ll see that most Malaysian companies have shown sharp drop in their revenue & profit in Q4 2008 and Q1 2009. Hence,it’s matter of time for the bear to rule again.
 
So what cause the market to go up so fast? My group of friends (who are analysts) discussed & have several explanation for it.
 
a)  Political power which requested inflow of public funds,  trust  funds and ‘Foreign Direct Investment’ which is ‘proceeds’ belonged to some politicians parked in overseas banks.
 
b)  Human Greed: Retail investors who are actually market followers (PIGs) have been ushered by mass media to jump into the market now. When retail investors start to trade actively and confidently, big funds mentioned above will quitely and slowly sell their holdings to retail investors who are mostly ‘Uncle and Aunties’. This has pushed the volume to 1-2 billion several times.
Big funds exchange their paper money (shares) with real money (invested by retail investors). This is a great way to ‘collect’ money from the public. Who needs ‘EPF’ and ‘PNB’ anyway?
 
c) Foreign funds who have fled from the West into Asia. Foreign funds know that the current economic crisis is still with U.S. Therefore,it’s better to park their cash in Asia which has large pool of surpluses.These funds will pull back anytime especially right now, when market valuation in the West start to become more attractive than Asia.
 
I advise my readers to take their profits now. Even Mr. Tan Teng Boo is smart enough to sell his funds’ holdings. What are you waiting for?
Latest disposal by Capital Dynamics

Latest disposal by Capital Dynamics

 
 
 
 
 
 
 
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ICAPITAL

November 21, 2007

When I read the blog about how good is ICAP in Ah YAP, i took a few weeks to research about the company. This blog is on the research outcome.

We need to look at two sides of the coin here; just to make sure there are no two heads or tails. My research started with looking at the advantages and disadvantages of a closed-end fund in general. Since icapital.biz website overemphasized on the advantages side, you cannot really find any useful there. So, i go to Closed-end Fund Association .From a non-bias third party view, you can see what is a closed-end fund in details. Compare ICAP with other international closed-end funds, what do you understand? Please read more from the website.

After reading about closed-end fund, i go into researching about ICAP. The first thing i tried to find is the prospectus from Bursa Malaysia. To my disappointment, I cannot find any from the internet. If you have a copy, please post it here. Usually, a prospectus will contain a section called, ‘Risk Involved in Closed-end fund’. At the end of the prospectus, you will see disclaimers. Read it if you have it.

The nearest source is the annual reports. From two annual reports of ICAP, I noticed a few issues which I think, are important to highlight them here. I will show you the page to find the information, sections and excerpts.

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1. Icaptal.biz was listed 2 years ago on 19 Oct 2005. Whatever ICAP is doing, it will be under scrutinised by Bursa starting from that date only. Before the listing, ICAP self-claimed in here about the performance of Capital Dynamics without any supporting documents or evidence. No one can certify the performance of Capital Dynamics before the listing of ICAP. Since ICAP is has two years of track record only, I cannot make any good judgement about the fund. By the way, did you read the disclaimer in the website? Past performance is not an indication for future performance. See it here:

  

…..continue here.