The Essential of Stock Screening : Malaysia Blue Chip

Previously in my Stock Screening : Dow Jones 30 posted in November 2012, I discussed lightly on the screening strategies on the Dow. Well, the screening strategy is applicable almost to every stock exchange in the world. Blue chips or companies that have significant weight on the exchanges are worth to consider.  

Fundamentalists like the screening the financial data very much. Specifically, many private investors and traders believe that being conservative and aiming stable big companies should be in their portfolio. However, for small traders, the cost per unit share may sound awfully daunting. They may need to have a substantial amount of capital in order to successfully execute this strategy. 

To make it more relevant, I back tested Malaysia Blue Chips on Bursa Malaysia.  It is quite a straight forward exercise. You could simply open up the newspaper and look for the top 30 of stocks based on the market capitalization. 

You can also try to screen specific industry indices. Aim for the big indices like Finance, Plantation, Properties and Trade Services. These sectors carry more weigh and more choices for investors. 

For me, I like Bumi Armada, Hong Leong Bank and Oil and Gas stocks. These stocks could offer stability in the earnings. In fact, their fundamental and business model are solid. It is quite unlikely to see a sudden turbulence in these sectors and as long as there is a quantifiable certainty, I could have a good night sleep. 

The key for this successful stock screening is the status of blue chip i.e. the size of market capitalization. Then, perhaps you want to find the cheapest of them. If your capital is limited, perhaps you should not be putting your bet on British American Tobacco or Nestle. 

Thus, screen the big companies or blue chips. Find the cheapest. Play your volume. 

The Essential of Stock Screening: Government Linked Companies II

In reference to the previous Stock Screening: Government Linked Companies, I would like to share the screen of my back tested on Malaysia GLCs. I use one of the online local newspapers market watch function in which publicly available. Just a small free registration required though.

I bought each stock 10,000 unit on Sept 10, 2012 and Jan 13, 2013. The stocks are Axiata , +CIMB Malaysia, +Maybank, PCHEM, PETGAS, Sime Darby and +Tenaga Nasional Berhad 

As you can see, until April 12, 2013 at 6.45pm, Axiata gains 10.9%, CIMB 4.2%, Maybank gains handsomely at 17.1% and Petronas Chemical and Petronas Gas sluggish around 4.4% and 2.6% respectively. 

I should cut my losses if Sime Darby continues in red while +Tenaga Nasional Berhad settled at 14.5% gain. 

Although by average, the total gain is about RM38,800 or 6.2% only, at least by conducting this exercise and back testing, you could easily establish favorable GLC stocks. These stocks could easily outperform Bursa Malaysia, if they are also top 30 of Bursa based on the market caps. 

Perhaps, just within 6 months, my portfolio matched with the usual dividend rate given out by the government or institutional funds. If the scenario remains predictable and consistent, on annual basis, don't you think you might be able to get a double digit rate? 

Nevertheless, given my testing period since September last year, you have to take into considerations the consolidation period during early and end of the year. Including the budget announcement, if it is significant.   

Just give a try!