KLCI: Sign of Weakness

Wow, it has been 9 months since the last posting. I have extremely buzy with my work for the last 9 months. I was involved in completing 2 M&A deals with a total value of RM120mil, one of which involve acquisition of a foreign company. Well it is time to put back life into this blog.

Recently, looking at the performance of KLCI, it seems that the equity market has been subtly retracing from the top and heading to serious correction.

The last market correction started in July 11 to Sep 11, lasted for 3 months. Market corrected almost 20%. Another incident was in early 2013 but it was not serious, market manage to pull back and heading higher. Again in July 2014, market has shown series of weaknesses but subtly. should the EMA20 persistently cross down EMA180, it appears to be a down side risk to 1770 level.

Lets start tracking now, good opportunity to short the market.

KLCI

Wow! KLCI down 33 points - 1.91% half day. 30 FBMKLCI Index stock KO! 

 

Malaysia - A DEBT Nation

The Edge (Week 12 Aug 2013)   

This headlines send a signal to all investors from equity to property that the fundamental is diminishing.  The catchy words : Malaysia and Malaysian are over-geared. The debt levels are as follows: Government (53% GDP), Household (82% of GDP) and Corporate (95.8%).

As debt level is high, the GDP growth is at risk. With limited borrowing capacity, high yield investment opportunity is missed (negative to GDP growth) and current income generated is required to service the debts. Should the interest rate rise due to

1. FED taper bond purchase - USD liquidity tightening leads to reverse of carry trade

2. FED will normlise it policy rate to higher level (0.25% now). hence the only direction is up.

It really does not look good for equity and property market in 2014. BNM expect GDP to be 5-5.5% in 2013 but street economists are generally agreeing to 4.5 - 5% only. I m doubting that 2014 GDP could breach 4% mark.

Does it mean 2014 will be a quiet year. We shall see.

KLCI @ 31 July 2013

Fitch Downgraded of Malaysia outlook from stable to negative. More foreign funds are pulling out. A break out in dollar will leads to short term weakness in KLCI.