Incredible. Amazing. Fun.
Three words that I could describe on the result.
I leave my GLC stocks to react to whatever policy and market announcement made by the government. It is a good time to own government stocks while hearing on price hikes etc.
+CIMB Malaysia, +Sime Darby , +Tenaga Nasional Berhad, +Petronas Chemical and +Maybank have been good to me.
Since my blog post back in June, I do nothing at all. I just monitor the price movements and be alert on unfavorable news.
By end of this year, I might be banking on 21% from my investment. I think it is an incredible achievement solely based on GLC stocks. I think I could do better if I continued to monitor the stock on monthly basis and take necessary actions.
I might be losing interests on finance stocks like CIMB next year. Will see.
On the recent decision made by +Fitch Ratings to downgrade Malaysia's credit outlook to negative have made the Ringgit down to RM3.20 range against the greenback, so far. Bloomberg reported that the currency dropped to the three year low and 10-year bond yield climbed to the highest since January 2011.
Fitch said that the cut is primarily due to Malaysia's public finance especially after the general election. The budget deficit widened from 3.8 percent in 2011 to 4.7 percent of GDP in 2012. The increase of 0.9 percent is closely related to the spending on public wages ahead of the May election, according to Fitch.
You can re-visit my previous posting on how rating agencies could influence the credit-worthiness of one economy here 'The story of ratings agency' and my slides...
S&P and other credit agencies, although reaffirmed their outlook, are playing wait-and-see game. They are eyeing for more macroeconomic measure from Malaysia government to reduce the fiscal deficit.
We could expect some direct measures like subsidy rationalization, tax implementation (Goods and Service Tax) and boosting private sectors investment from the government. Having said that, the transformation program that is in the may provide a quick affirmation on seriousness of the government on fiscal reform.
The key takeaway is debt is widen.
The question is, is it enough? They have a few months before the tabling of Budget 2014 in October this year.
If you are not too keen to be on the spotlight or put yourself in the front line of entertainment, investing in broadcasting technology might be something for you.
Broadcasting technology is evolving and continuously innovating. From black and white screen to colour screen. Analog. Cable. Pay TV. Digital. Satellite TV. Over-the-top (OTT). Multiple platform. 4K.
But where is the opportunity?
Simon Murray of Digital TV Research may provide a good sense of the opportunity. He found that the total pay TV revenues will more than double in another 18 countries. What is more, he said that Africa is the fast growing nation including Indonesia and Vietnam.
You can find more about his findings at +Digital TV Research
Nevertheless, the U.S, China, Brazil and India are currently experiencing USD billion growth from 2013 to 2018. China, India and the U.S will account 58% of global pay TV market. In addition, according to Digital TV Research, China is the most lucrative pay TV market in 2012. Pay TV revenues will more than double in five countries including Indonesia (tripling), Pakistan, the Philippines, Thailand and Vietnam.
Last but not least, satellite TV is a trending now in which predicted to surpass revenues from cable TV and IPTV.
Not too bad...
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I was not sure what to present when they asked for my thoughts about Three Years Outlook of ICT in Malaysia. Here is the link of my presentation in PDF 3-years Outlook of ICT in Malaysia.
Well, Malaysia is very good in providing ICT services especially global shared services and outsourcing industry. No 3 behind China and India. There are about 130 shared services and outsourcing companies and 250 call centers in Cyberjaya.
In 2012, the revenue was closed to RM32 billion in which translated to about RM9.6 billion contribution to the GDP. The job creation is also not bad, more than 7500 jobs were created.
Digital Malaysia is an optimistic target set by the government. Achievable but they need to find express routes, fast.
Above all, I see the convergence of ICT and Telecommunication as a good catalyst for Digital Malaysia. Penetration rate of broadband hopefully would meet the target of 75% with the penetration rate for mobile or smart phones usage may double from 47% last year.
The convergence of ICT Telecommunications would spur the service innovation in:
- Content Delivery Network (CDN)
- Big Data
- Broadband Remote Access Servers (BRAS)
- Network Function Virtualisation (NFV)
- Software Defined Network (SDN)
- Cloud
- Near Field Communication (NFC)
More acronyms to come, I suppose.
Nevertheless, telecommunication market in Malaysia or South East Asia is an emerging one. The business strategy would not be similar to what you might see in Europe. Over there, the experience of using the devices is more important. Well the good part is telecoms companies, at least, might try some strategies in the States or European region before shifting them to the east side.
I think I am going to continue a series of GLC stocks in Malaysia. The previous post Government Linked Companies II gave me 6.2% gain back in April 12, 2013. How about now? How about post-election period?
I am a bit neutral about the performance though. BUT, as at June 04, 2013, my portfolio is more than double. It is 13.7%! Thanks to Maybank and Tenaga Nasional.
How is this possible? One word. Certainty. Financial institutions are very important component to fuel growth and development. +CIMB Malaysia and +Maybank portfolio are the biggest in the country.
+Tenaga Nasional Berhad is a defencive stock. The introduction of renewable energy fee somehow, in my opinion cemented, at least, the future plan for Tenaga Nasional. Again, oil and gas is a very important to Malaysia. I chose Petronas Gas and Petronas Chemical in the view that these subsector could outperform the players in the core upstream.
Well, there you go. The next question is when should I sell?
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.
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!
