SPH: Reading the lines.

It is quite obvious that the Bollinger bands started expanding on 17 Jun and price rose above the upper band for the next two sessions. However, resisted by the 50dMA, price has declined and went on to test the 20dMA as support in the last session. So, for next week, the important MAs to pay attention to would be the 50dMA as resistance and the 20dMA as support.  These would be at $3.86 and $3.77 respectively.  So, I would not renew my buy queue at $3.74.  I would instead wait to see how things turn out.

MFI and RSI are both rising and this tells us that momentum is positive. However, price itself has been choppy with interchanging black and white candlesticks in recent sessions. The MACD, although above zero, looks somewhat tired and we have had three red histograms in the last five sessions.  OBV is flattish. Technically, we could also make a case that price rose on rather low volume in the last session.

If the 20dMA fails as support, the next supports are at $3.72 and $3.68.  I expect $3.68 to be a stronger support as it was a many times tested support in the recent basing process.

Now, many have been talking about the possibility of the STI going down to 2,400 points.  Personally, I blogged about it as well earlier on in mid May.  You might want to read it here: STI at 2425 points?  If this happens, what would happen to the price of SPH's shares? Would it be spared? I think not.  Then, how low would it sink to? For a clue, let's look at the weekly chart.

I would draw your attention to the declining MACD.  This has been the case since late October 09. In the same period, price has risen somewhat.  This is theoretically unsustainable. In recent weeks, as price recovered somewhat, there is no corresponding rise in the OBV which suggests that price has risen due to a lack of sellers and not because of an abundance of buyers. Volume has been similarly lacklustre.

If we believe in fan lines where traders who missed the first uptrend gets a second and a third opportunity to buy in, it is quite easy to see that the stock is now on the third line.  The initial steeper trend has been flattening into one that is more sustainable.  However, if this third line, which happens to coincide with the rising 50wMA, should break, we could see price correct to the flattening 100wMA at $3.35. Yes, why not?

I have divested quite a fair bit of my shares in SPH. Let's see if I get to buy some again at much lower prices.

Related post:
SPH: Another pleasant surprise.

AIMS AMP Capital Industrial REIT: Stable.

Although the momentum oscillators have been forming lower highs and lower lows of late which is similar to LMIR's case, the OBV here shows a clear trend of accumulation. This has been the case since early March this year.  This is probably the reason for this REIT's relative price stability.  Everytime its price falls close to the long term support of its range, smart money would move in to accumulate.

I mentioned before that if the MFI continues to decline while the price remains at or above the 21.5c resistance turned support, it would be good news for the bulls.  Why? In the absence of positive buying momentum, if the price is able to stay up, it shows a lack of sellers as well.  When positive buying momentum returns once more, chances are higher, therefore, that price would be pushed up in such an instance.

Both the MACD and the signal line are rising above zero.  However, as price is technically still rangebound, this does not say anything more than the fact that momentum has returned to positive territory.

The 20dMA has completed a golden cross with the 50dMA today while the Bollinger bands continue to tighten. I liken this to the coiling up of a spring as price gets ready to move in either one direction. It might or might not be positive. We will have to wait and see.

LMIR: Distribution.

LMIR's volume expanded today as price fell to close at 47c.  Momentum oscillators, MFI and RSI, have formed lower highs and lower lows as the price continued to be resisted by the merged 100d and 200d MAs. I have mentioned a few times before that, of late, LMIR has been rising on weak technicals and, therefore, I would not add to my long position yet.

47c is a many times tested support level, a support level that gave way on 19 May.  At the moment, this support level is underpinned by the rising 20dMA and might be a tad stronger than it was back in May. If 47c gives, the next major support is at 45c.

The MACD has completed its turn down and seems set to form a bearish crossover with the signal line.  If it does this and goes below zero once more, the recent upmove in LMIR's price would be nothing more than a rebound in a downtrend which started in January this year.

I would keep an eye on the momentum oscillators at the same time as they could be predictive if we spot divergences. I still like this REIT's fundamentals and will wait for a more opportune time to load up.

Tea with AK71: Water, water everywhere.

The Cantonese saying goes "yao shui, yao choi" which literally translated would say "have water, have money". However, we know that we cannot have too much of a good thing.  Back in school, biology class taught us that if we drink too much water, we might get drunk but I am sure the effects are different from being drunk on alcohol!  Really bizarre.

Well, we are having too much water lately from the heavens.  On that faithful day when Orchard Road became a river last week, I was so drenched walking from the carpark to my office (yes, I don't have a sheltered carpark at work) even with a super large umbrella that I had to exchange my socks and shoes for a pair of slippers at work.  I was feeling quite miserable. 

Today, a bit wiser, I stayed home as the rain came pouring and left for work an hour later when conditions became slightly better.  Guess what.  The roads were still jammed.  Traffic on Jalan Bukit Merah was paralysed.  That was at 10.30AM.  Imagine that.  The last time it happened was when a huge tree fell across six lanes in both directions and till today, the authorities have yet to replace the fence which was destroyed on the center divider at the T junction with Jalan Membina. Residents there are not complaining and I have seen quite a few happily jay walking now that the barrier is gone to get to the bus stop on the other side of Jalan Bukit Merah. That tree fell on a day with strong winds and torrential rainfall just weeks ago.

Thankfully, by the time I arrived at work today, the rain became a light drizzle.  I half jokingly told a customer just now that the world is coming to an end.  Half jokingly because I know that extreme weather conditions are here to stay.  My major in the university was Geography and climate change was something I studied.  Half jokingly also because I have faith in the Singapore government to pre-empt and do the right things.  Building the Marina Barrage is one such example of a right thing.

By many estimates, the Earth would be a very different place by end of this century.  The sea level could have risen 70cm by then.  Imagine that. The polar ice caps would be almost totally gone and that goes for the glaciers in the mountains too. We have made such a mess of this world.

This is something I memorised for my "A" Level Literature class two decades ago:

"To her fair works does nature link the human soul that through me ran and much it grieves my heart to think what man has made of man" - William Wordsworth.

My memory has become a bit patchy over the years and I hope I have not mangled Wordsworth's words.  Still poignant, don't you think?

Flash floods come to the neighbourhood!

Singapore warns of heavy rain a week after Orchard flash flood
Friday, 25 June 2010

© 2010 - The Edge Singapore

Saizen REIT: CEO bought more warrants.

Saizen REIT's CEO, Chang Sean Pey, bought 197,000 warrants today from 7c to 7.5c a piece. Persistent insider buying remains a characteristic of Saizen REIT.  This REIT is probably one of the most undervalued ones currently available in the Singapore stock exchange.

Successfully refinancing YK Shintoku's CMBS in future remains the strongest possible catalyst that would give Saizen REIT's units a lift up in price. Refinancing to bring down the current punitive interest rate of 7.07% to a more reasonable level would greatly improve the EPS of the REIT and, therefore, the DPU.

If the recent successful refinancing of the loan provided by Societe Generale for GK Choan, which attracts an interest rate of 3.8275% throughout its three-year term, is anything to go by, we could see the interest rate for YK Shintoku's loan in the region of 4% once it is successfully refinanced.  This would save 3.07% on interest payment for Saizen REIT's largest loan in its portfolio.  That would represent savings of about JPY200m a year!

The skies are clearing up for Saizen REIT and, at the moment, I do not see any storm cloud for the REIT apart from YK Shintoku's CMBS which I feel confident would dissipate in the coming months.

Other than the JPY 7.1 billion (S$108.6 million) loan of YK Shintoku (which is currently in maturity default) and the JPY 0.45 billion (S$6.9 million) loan of GK Chosei, Saizen REIT has no further loans that are due to mature in the next two financial years. This will allow the Management Team to focus on the refinancing of the loan of YK Shintoku.

Related posts:
Saizen REIT: Refinancing of loan from Soc. Gen.
Replies from AK71: All things Saizen REIT.

Charts in brief: 24 Jun 10.

LONDON (AP) -- World stock markets mostly fell Thursday after the U.S. Federal Reserve struck a note of caution in its latest assessment of the world's biggest economy, indicating Europe's debt crisis poses a risk to the recovery. Read full article here.

AIMS AMP Capital Industrial REIT:  Bollinger bands continue to narrow. Flat 100dMA is providing support at 21.5c. Rising 20dMA seems set to form a golden cross with the 50dMA. OBV is steady and MFI's decline halted just below 50%. Keeping an eye on this counter for a possible impending upmove.

SPH: Since selling away some shares at $3.82 and $3.88 on 18 June, I have been watching this counter, looking for signs of a reversal. Today, it closed at $3.79 on lower volume. The uptrending MFI suggests that the sell down lacks conviction, perhaps. OBV is flattish.  So, I have put in a buy order at $3.74 where we find the rising 200dMA.  This is a hedge.  Remember, the 200dMA support was compromised for a few sessions a few weeks back and this could happen again.

LMIR: A gravestone doji. MFI formed a lower high and dipped under 50%. OBV is flat. Negative divergence between price and volume still very obvious. 48c is reasserting itself as the immediate resistance. Bollinger bands are narrowing. Will the price go up or down? Hard to say but the negative divergence is worrisome and I am not adding to my long position here.

STI off 0.1%; Outlook not clear, says analyst
Thursday, 24 June 2010

© 2010 - The Edge Singapore

Related post:
Charts in brief: 23 Jun 10.

British Petroleum: Time to buy?

Someone asked me if it is time to buy shares of British Petroleum (BP) since it has declined so much and looks cheap.  I said honestly that I don't know as I only buy Singapore stocks.  I saw this on TechTicker and would like to share with anyone who is thinking of buying BP shares:

"There's still a ton of risk," says Chris Edmonds, managing principal with FIG Partners' Energy Research & Capital Group. Edmonds believes it's very possible BP can survive the economic damage caused by the oil leak, but can the company survive the political fallout?

Charts in brief: 23 Jun 10.

AIMS AMP Capital Industrial REIT: It is hugging the support at 21.5c. MFI continues to descend and has gone below 50%.  I said earlier that if the price stays at or above 21.5c while MFI descends, it is good news for the bulls. This analysis is still valid.  The Bollinger bands look like they are in the early stages of tightening.  A narrowing of the bands signify reduced volatility before a possible sharp movement either way.  With the increased accumulation activity as suggested by the rising OBV, it is likely that this eventual movement is going to be up.

CapitaMalls Asia: I would be very cautious and not go long here. If we look at the daily chart, the price action has closed above the 100dMA. Even though it has done so on lower volume, bulls may cheer. However, if we look at the 100dEMA instead which gives greater weightage to recent price activity, we see a different picture and realise that resistance really has not been taken out yet and that is at $2.22.

Golden Agriculture: MFI seems to be in the early stages of forming lower highs and lower lows. Positive buying momentum is failing. The declining 50dMA is providing resistance at 54.5c now which is where the price closed today. Immediate support at 53.5c but a stronger support is at 51.5c where the 20dMA has just made a golden cross with the 200dMA.

Healthway Medical: Price has very clearly detached from the upper Bollinger band. Forming another doji at this stage suggests that it is most likely that a reversal is on the cards.  MFI is falling from overbought territory and the MACD is turning down towards the signal line. All signs of technical weakness. Initial support is at 18.5c, a resistance level which failed to be taken out earlier this year in March.

Problems in over-leveraged developed economies will eventually reach Asia, including Singapore, either via reduced Asian exports or shock to global financial system, says CIMB, according to Dow Jones....Against this backdrop, house advocates overweight strategy on defensive plays like REITs, as well as proxies to Asia consumption theme, such as Genting Singapore (G13.SG), Raffles Medical Group (R01.SG).

Go for defensive, consumption stocks in Singapore, says CIMB
Wednesday, 23 June 2010

© 2010 - The Edge Singapore

CDL Hospitality Trust (CDREIT SP), the hotel operator partly-owned by City Developments (CIT SP), tumbled 6.4% to $1.77, its biggest decline since March 30. The company said it raised net proceeds of $196.4 million, selling shares at $1.71 each, the lower-end of the price range for the share placement.

STI little changed at 2,871.05 at the closing
Wednesday, 23 June 2010

© 2010 - The Edge Singapore

Related post:
Charts in brief: 22 Jun 10.

AIMS AMP Capital Industrial REIT: REIW 2010.

AIMS AMP Capital Industrial REIT made a presentation yesterday at the Real Estate Investment World 2010 at the Raffles City Convention Centre. Presenting itself to potential investors at the Convention was a very good idea.  Present at the Convention were pension funds and asset managers. I won't be surprised if they are looking to invest in high yielding S-REITs too. Link to the Convention's homepage here.

These were a few points made by the REIT's managers which I like very much:

1.  Asset recycling and asset management programmes:

– Divestments: (i) Japan property; and (ii) one or more of the smaller Singapore properties.
– Redeploy the net divestment proceeds into (i) debt repayment and / or (ii) acquisitions.
– Focus on positive leasing outcomes and enhance selected assets in the portfolio.

2.  Refinancing of the existing S$175 million debt facility with improved financing terms.


3.  Broaden and diversify the Trust’s funding sources.

4.  Target investment grade credit rating of Baa3 or above (current rating of Ba2) by maintaining strict financial discipline and investment grade metrics.

Why do I like these points in particular? These actions, if carried out singly or in sum, could strengthen the REIT's balance sheet, improve EPS, improve DPU, increase the REIT's resilience in the face of future economic slowdowns and attract institutional investors although these benefits might not all happen at the same time.

Based on the fundamentals, accumulating at 21.5c per unit for a 10% annualised yield is rather sound.  Based on near term technicals, 21.5c is resistance turned support.  However, the longer term technicals suggest that the REIT is still in a trading range between 20c to 23c. With momentum still somewhat lacklustre, its price is unlikely to make any big moves in the near term.

To view the complete presentation slides for Real Estate Investment World Asia 2010 Conference, click here.

Related post:
AIMS AMP Capital Industrial REIT: Big boys.

Charts in brief: 22 Jun 10.

NOL: Sell signal seen on the MACD histogram. So, will the price fall for sure? I cannot say but the negative divergence between price and volume has to be resolved.  There should be a pretty strong support at $1.95, a many times tested resistance of a mini ascending triangle pattern. $1.95 is also where we find the rising 100dMA at the moment.

NOL off lows; Low-risk container shipping play, says UOB
Tuesday, 22 June 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: OBV shows steady accumulation. MFI has formed a lower high in the very short term. MACD has crossed into positive territory. If the MFI could gradually fall while the price remains at or above the 21.5c support, it would be good news for bulls.

CapitaMalls Asia: A black spinning top and a bearish harami to boot. A possible pullback to $2.13 where we find the trendline support and the 50dMA is not hard to imagine. Rising positive buying momentum as suggested by a rising MFI should limit any selling pressure.

Courage Marine:  MFI and OBV continue to rise sharply as volume almost tripled on a day that saw price hit a high of 21c.  21c was identified earlier as a strong resistance and it could not be taken out today.

Charts in brief: 21 Jun 10.

Most counters in my watchlist are positive today as the STI gained to close just a whisker off 2,880. It would seem that the Chinese government has done the world a great favour by deciding to let the RMB strengthen. This is something I have believed should happen for some time. A stronger RMB would ameliorate the problem of inflation within China, raise the purchasing power of its people and improve standards of living. Increased domestic consumption would do a lot of good for China's own economy as well as the global economy. You might want to read what I wrote in an earlier post here.

STI +1.6%; More upside on window-dressing, says SIAS
Monday, 21 June 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: Volume expanded today and all trades were done at only one price, 22c. MACD has turned up.  MACD histogram has a buy signal. MFI has turned up, forming a higher low. OBV has turned up, suggesting increased accumulation.

CapitaMalls Asia: Price broke the resistance band of $2.19 to $2.21 which I identified earlier. Closing at $2.22 seems bullish but volume suggests that this might not be durable. This counter is probably rising due to a lack of sellers rather than an abundance of buyers. Nonetheless, the momentum is still good as suggested by the MFI and price might be pushed higher.

Courage Marine: The picture is somewhat similar to CapitaMalls Asia.  A white candle day on improved volume but not impressively so which suggests a lack of sellers rather than an abundance of buyers. MFI shows improving momentum while the OBV has turned up slightly.  It remains to be seen if resistance at 20c could be taken out. A significant resistance after 20c is at 21c.

FSL Trust: MFI and OBV continue to rise. Could 40c be taken out this week? The next resistance level which is likely to be a strong one as suggested by candlesticks and a declining 20dMA is at 42c.

Golden Agriculture: Price continues to be resisted at 55c although it touched a high of 55.5c today. Momentum is still positive and MACD is about to cross into positive territory. Volume is, however, unimpressive which probably resulted in the failure to take out 55c and instead formed a white spinning top which is a possible reversal signal.  Support is at 51.5c in case of a trend reversal.

LMIR: It seems that the merged 100d and 200d MAs are too strong to be taken out today. Price closed at 47.5c which is where we find the 50dMA, forming an inverted cross in the process. The negative divergence between price and volume continues to suggest LMIR has been rising on weak technicals. If the 50dMA does not hold up as support, the next support is at 46c as provided by the 20dMA.

Related posts:
AIMS AMP Capital Industrial REIT: Big boys.
Courage Marine: Triple bottom?
Golden Agriculture: Resistance remains at 55c.
LMIR: Testing resistance.
FSL Trust: Verona I.

AIMS AMP Capital Industrial REIT: Big boys.

This REIT is generally thinly traded but on some days trading volume would spike.  In recent weeks, I have noticed quite a few single large volume buy ups.  These buy ups were usually to the tune of millions of units. This morning at 11.27AM, 2,825,000 units were bought up at 22c. Again, a single large volume buy up.

I went through the manager's annual report over the weekend and they have a very clear idea on the REIT's direction and what they will do in time. They want to offload their Japanese property and concentrate on Singapore.  They want to offload some underperforming properties in Singapore too.  If they manage to divest these properties, they might pay down the REIT's loans or look for better prospects within the industrial real estate sector in Singapore.  In time, they want to venture into high growth China.

Looking at the OBV, it is obvious that there has been steady accumulation in recent times although the momentum has not always been positive. Has this REIT, with its relatively high yield, low gearing and big discount to NAV, heightened the interest of big boys?

A quick check on SGX's website reveals the following:
3 June 10 - APG ALGEMENE PENSIOEN GROEP N.V.  increased its stake from 8.935% to 9.307%. That was their second major purchase within a short time.  An earlier major purchase happened end of May which bumped up their stake from 7.862% . They currently own about 136,501 lots.

Given such a consideration, for anyone who is thinking of buying into this REIT, hedging with a position initially at or close to 21.5c resistance turned support might be a good idea.  It would be sweet to buy closer to the support of the trading range which remains at 20c. However, it might or might not happen.  Hedging is probably again the way to go.

Hedging and precious metals.

I have always liked hedging. Why? Because there are very few absolutes in this world. Anything is possible and we can only work on probabilities.  So, plans which do not take into consideration how things might go awry are not sound ones. Even with hedging and contingency plans in place, we might still end up with the shorter end of the stick sometimes. Well, the Chinese has a saying: "Humans plan but the Heavens fulfill."  Sometimes, things do go wrong.  Do what we can to reduce risks but we cannot eliminate risks.

My greatest losses in investments usually resulted from not taking enough precautionary measures to reduce risks. Sometimes, I just threw caution to the wind and went with my heart and, in most such instances, ended up with a broken heart and a thinner wallet. Actually, the pain from such experiences is good in a perverse way because I would then go back to basics and become very cautious again. This is what being human is about, perhaps.

Gold has hit a new record high of US$ 1,258 an ounce.  I have talked about buying physical gold as a hedge against all other forms of investments and against fiat currencies for some time now.  However, with gold's price rising higher and higher, silver is looking more and more attractive.

On 7 February, I blogged about how silver offered more value than gold. I said "Silver is currently trading at the higher end of the Gold:Silver ratio since 1980. Silver is now US$15.15/oz while gold is US$ 1,052.20/oz. This gives us a ratio of 69.45 to 1. This is closer to the historical high of 99.8 to 1. So, there seems to be some truth in the claim that silver is undervalued now and that it is a laggard in the realm of precious metals or it could also mean that gold is simply too expensive. Some hedging might not be a bad idea."

At that time, a reader mentioned that it might be better to wait for US$12 to US$13 an ounce before accumulating silver and my reply was "Yes, I saw the head and shoulders pattern and the neckline broken. There is support at US$15. This, however, was violated recently as price dipped below US$15 for a while but recovered. I see support at US$14 as well. US$12-13? Possible, of course.

 "But with limited downside compared to the potential upside, I prefer to average in slowly. After all, TA shows where the supports are but it does not mean that the supports will be hit. I will buy some at current price level and if it weakens, I will accumulate. I believe in hedging."
 
Anyone who went ahead and started a Silver Savings Account with UOB back in February then would be in the money today. 

Now, with gold at US$ 1,258 an ounce and silver at US$ 19.17 an ounce, one ounce of gold would buy you 65.62 ounces of silver.  Compared to 7 February when one ounce of gold could have bought you 69.45 ounces of silver, the rate at which the price of silver is rising since then is faster than gold's.  If we believe in charting, silver's longer term trend is still up and I would buy more on weakness.

Related post:
Gold at US$1,210 an ounce.