Sunday, July 01, 2007

A matter of opinion

The cover feature of Bizweek, the Star Newspaper, on Saturday 30 June 2007 collated opinions from various fund managers on the second half of 2007 for the KLSE. While all the fund managers therein agree that the second half is likely to see the KLCI scale new heights, every one had a differing view on how high it can reach. Most opined that the KLCI will be above 1,400 by year end and probably hit 1,500 in 2008. The most bullish of them according to the Star said that ‘the [Malaysian stock] market will eventually scale to 2,000 mark over the next 24 months’.

As responsible fund managers, probably they are doing their bit in talking up the market or providing some information on it. They are paid to do a job well and get rewarded. If the market overruns their set target(s), they are still fine by all counts, but if the market does a u-turn and plunge, the most they lose is a well paid job. But in a bull run, anything can happen. That is why one never relies on analysts or fund managers in any type of investments. I can do the necessary homework and then ask the Yi!

While the stock markets of many Asian countries rose in 2005; both the stock markets of China and Malaysia that year were down. The Shanghai Composite did exceptionally well in 2006 rising by 126.6% while the KLCI rose only by 22.8%. In the same year, the markets of Indonesia, India, Philippines, Hong Kong, and Singapore again outperformed Malaysia.

The 2007 YTD performance of the KLCI of 23.4 % underpins my earlier prediction of a super bull run for the KLSE this year. Continual liquidity and overall confidence in the stock market will provide the key supports to drive up shares prices.

The main reason for the call of a super bull run is because of the various good oracles given by the Zhouyi in late 2006 and in January 2007 on investments in the KLSE – from divination experience, similar phenomena had occurred during the early days of the bull runs in 1993 and in 1996. The actual price rise from each good prognostication had outperformed the expected returns on investments depicted in my 64 hexagrams table because of the bullishness (read confidence) of the underlying stock market.

It therefore means that the KLSE would perform better in 2007 than 1993 – the year in which the table for the 64 hexagrams, their expected returns was laid out based on actual rises and falls of the investments in question (read experiments). However only time will tell - a further six months to go - if the prediction for a super bull run will be correct or not.

Actually the rise in share prices in the KLSE is the start of a painful recovery process from the abysmal plunges caused by the Asian Financial Crisis in 1997/ 98. Those who were veterans of the 1993 and 1996 bull runs, like the particular bullish local fund manager, will note that most of the remaining low liners and second board counters that were quoted then are still way below – many less than 10% of - their peaks, notwithstanding their recent good run ups last year and the first half of 2007.

I chuckled when I read the Outlook for Second Half 2007 by CIMB Private Banking published in BIZWEEK, The Star, on Saturday 16 June 2007 and the following excerpts:

“We expect Bursa to consolidate in the short term after a very strong eight-month rally. Likewise, regional and global stock markets are also expected to experience a pullback on similar grounds. However, any pullback should be a buying opportunity as we expect equity returns of 10% - 15% on a one-year horizon.”

In the article, CIMB also mentioned about factors which can cause a fall in the KLSE: “a sharper than expected US slowdown; a rise in US interest rates; a delay in the widely anticipated cut in the US interest rates; and a heightened inflation outlook in the US, China and India.” “Any material negative surprises could precipitate a correction in markets given many investors are prepared to take profits” the bank added. They suggested “swapping a portion of equities position with non-equity correlated investments or lower volatility investments such as fixed income, hedge funds [sic], or just keeping liquid cash for re-entry on a correction.”

It sounded like they have been reading my mail (or the entry on ‘Reduce your gearing’)! However they may be a tad conservative in their expected returns. Like the various local fund managers, CIMB top range 15% increase of say 1,350 points currently will take the KLCI to 1,552.5 points by mid 2008.

In my opinion, and like anyone else, it is just a matter of opinion, if the performance of the KLSE or the Bursa in 2007 turns out as one expects, by mid 2008, the KLCI could be around the year stated. (Read the year aloud?) But do not wager the KL Futures based on my prediction; you could lose your shirt because of the daily, weekly, or monthly fluctuations (Think Changes).

Before 2007 comes to an end, there will still be bigger obstacles to cross. No, you would not get that type of readings from charts and analysis, even if you can chart superb ‘time windows’. (Think SN Lock, the chartist who formerly wrote for the New Straits Times)

The Yi prognostications together with the Yi chart and hexagrams table shall suffice. Confirmations from Daoist immortals strengthen each prediction.

If only kin and friends had listened carefully to my various suggestions on how to maintain and create wealth, perhaps then they would not have to lament their recent costly mistakes or lay blame on this or that.


No comments: