Foreign Funds My Foot! Learn from Genting Singapore



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May 28 2009
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CIMB Investment Bank Berhad claimed that foreign investors returned in droves bringing in their hot money as if they have no where else to park their money. The funny part is CIMB can only target the KLCI to reach 1,060 points by year-end, another 20 points from today’s index of 1,040. Why not 1,200 or 1,300 or even 1,600 points by year-end? What’s wrong with a higher target if CIMB and other researchers or analysts for that matter are freaking sure Malaysia stock market is a honey-pot that it would be stupid for foreign funds to ignore? Furthermore when the Dow Jones jumped the KLCI happily jumped with the same quantum but when the Dow Jones plunged miraculously the KLCI staged a very high resistance in following suit.

Can you tell me the level of KLCI if the DJIA were to jump to 9,000-points by year-end, since the Americans are very optimistic of their economy based on the latest U.S. consumer confidence barometer? I would be very surprise if KLCI couldn’t even breach 1,200 by then judging from the current overall bullish sentiment on the local trading floor. Unless the market-maker decided to push the “game over” button, the speculators or punters can still happily punting and dancing to the tune of the music. As long as the volume is high and the composite index is above 1,000-points you can bet your last dollar that the top-20 active counters are all penny stocks. And you don’t think foreign funds, if they indeed have returned, are scooping from the same penny-stocks pool, do you?

There’s no doubt that the current bear rally or suckers rally is one hell of a good rally, if you believe the current trend is a suckers rally in the first place. It’s hard to justify that the current rally is a bull rally because corporates’ quarter earnings are still plunging. But why the bullish trend when the earnings are going south? Sure, you may argue that people are buying in advance because the bull will report to work end of the year and you don’t start buying only when that happen. You buy in advance because traditionally that’s how it works. You do not want to miss the boat because you believe you should maximize your profit by being “kiasu” – buy at the lowest. That’s the basic mentality of most of the punters and to a certain degree analysts of the day. But do you have a plan to lock in your profit now since analysts are getting nervous that the market is getting too hot and a major healthy consolidation should kicks in anytime soon?

Foreign Funds My Foot

When even “Big Boys” such as Genting knows when to close their gaming tables and take profit elsewhere, you would be slaughtered left, right, top and bottom if you do not have an exit-plan. It’s no-brainer that Genting Singapore Plc. was deliberately pushed up so that family trusts of the late Lim Goh Tong could unload their 8.8% stake or 853.88 million shares and in the process raised S$615 million or RM1.47 billion in order to purchase MGM Mirage’s 50% stake in MGM Grand Macau. MGM Mirage may have problem with Stanley Ho’s ties with organized crime but not so with Genting’s Lim family. Furthermore it’s a smart move not to put all your eggs in a basket, not even if your business interest is in the hand of a “clean” government such as Singapore. So what does this got to do with you?

What if the current bullish sentiment in the local KLSE was deliberately pushed up to attract local punters such as you? Every Tom, Dick and his cat knew the quarter earnings were going to be bad so to see the local stock market defying the gravity is simply breathtaking. But Najib’s administration needs to show that he’s a better PM than Abdullah Badawi. It’s strange that Abdullah didn’t think of using stimulus package stunt to push up the stocks. Indeed Abdullah Badawi was the weakest and lousiest prime minister so far. If the current bullish sentiment was the result of government-link-funds leveraging on the stimulus packages, can you imagine what it could do to the local stock market if foreign investors were genuinely pouring their hot money into the country? Of course that will take time and Najib’s administration needs to do more than lips service to ensure the blatant day-light robbery of NEP is history.

The other day we were having discussion with another Singaporean who had just arrived. We agreed that despite the big hoo-haa about the global recession, it seems Singaporeans and Malaysians do not see this recession as bad as the previous 1997-98 Crisis. Surprisingly we even suspected that many employers were actually using the recession as an excuse to retrench their staffs hence exaggerated the situation. Except for manufacturing sector, people are still shopping like there’s no tomorrow and Friday and Saturday’s happy hours are still as bustling as before. However there’re some key differentiators between now and 1997. Now we have China to cushion most of the impact and most of the people who got burnt in the stock market during 1997 are still licking their wounds.

What we’re seeing now are “new-birds” eager to try their luck on the gambling table, at least majority of them. At the same time the “old-birds” are getting smarter and place their bets in phases. Can you see the report that the country’s first quarter contraction of 6.2% has relatively no effect on the stock market? You may argue that investors had taken that into consideration since the report is outdated because we’re now into second quarter. But the Central Bank Governor also said the second quarter will have little difference from what was revealed so what gives? Meantime watch out for Vincent Tan’s Berjaya Corp because it has been more than a year since the stock was fried *brings back sweet memory of 100% profit*. Happy Dumpling Festival !!

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Comments

SPX approaching its 200 days MA. =) The moment of truth if tonight lads. Hang on tight. My take? SHORT all you can.

I have the theory that Lim Kok Thay is taking over MGM’s 50% in a private exercise. Not via Genting or Resorts. It seems from what you wrote, you think it too. Can u please confirm? I’m trying to get some overly bullish friends to refrain from buying the two counters until there’s a more definite play. It didn’t help that the earnings report for Resorts was pretty good.I’m worried that Genting and Resorts have been heavily speculated based on the rumors and idea that either these two companies will take over MGM. Also, I’ve informed them that while resorts may have the funds, Genting definitely don’t so don’t look there. There’s no rights issue as of yet in order to raise funds for this acquisition.Furthermore, even if the two companies did buy MGM, and not Lim Kok Thay, cash reserves of Resorts will be depleted from acquisition, raises possible issues of gearing thus affecting the NAV. Operation costs will definitely be doubled, to be expected with two new casinos with heavy marketing costSo there’s no need to rush to buy, but you know what they tell me? “Buy on rumors, sell on news”Hahaha, I’m so stressed I could vomit blood. However, maybe I’m wrong. What do you think? I need to confirm the right/wrongness of my thoughts, so I either let them be or push harder for them to resist.

Whether it’s rumor or not, Genting SP future outlook is bright. It it now more evident that Genting SP price that soared of late is a show done by the Lim’s to sell the stake of and to make almost double of the value.But nonetheless, Genting SP will never be at this price 2 to 3 years from now. ^^Just my 2 cents!

hello spatooey,the lim family has lots of reason to go into macau via private channel than via genting berhad … of course they can always call the new entity genting de macau or something similiar …cheers …

hello kampunginvestor,obviously genting s’pore will never be the same 2 years from now else why the trouble and where’s the excitement? :)cheers …

I agree there is not much foreign funds involvement in pushing the KLCI to 1050 so far. It’s the result of government funds and local syndicates. But who cares who is pushing as long as it’s a rally and there is money to be made by punters. We all know it’s a game of musical chairs.As for KLCI not reacting much to the -6.2% GDP, it was much expected and the trend all over the world. Stocks did not react much to these negative figures in Singapore, Japan, China, Korea etc too.As long as DJIA and regional indices do not crash, KLCI can hold and the music can last!

hi bro,out of so many articles that i’m following u for so long, u dare not tell us when,where n what stocks to pick up at times. can tell us what r the stocks that u r looking at now?for sure , u hve few in ur mind or not at the moment?pls share wif ur readers n i’m for sure ppl will follow ur call. challenge samgang’s blog man.

hello lofan,frankly i’ve not enter the local stock market since many months ago … what samgang?cheers …

[…] Foreign Funds My Foot! Learn from Genting Singapore […]

>>>>>>>
Whether it’s rumor or not, Genting SP future outlook is bright. It it now more evident that Genting SP price that soared of late is a show done by the Lim’s to sell the stake of and to make almost double of the value.But nonetheless, Genting SP will never be at this price 2 to 3 years from now. ^^Just my 2 cents!

<<<<<<

REALLY it been 2 years now… Genting SP peaked at 2.12SG
Now only 1.57 bro.

Your 2 cents can buy toilet paper or not?

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Comment by kampunginvestor on May 29, 2009 at 5:12 am
Whether it’s rumor or not, Genting SP future outlook is bright. It it now more evident that Genting SP price that soared of late is a show done by the Lim’s to sell the stake of and to make almost double of the value.But nonetheless, Genting SP will never be at this price 2 to 3 years from now. ^^Just my 2 cents!
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it ‘s gonna be 3 years coming.
Genting Sp is only $1.32
No wonder your nic is Kampung Investor. Just stay where you are.

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