The great 2016 sale

Sunday, 10 January 2016 18:12
Posted by owq 0 comments
I look forward to prolonged depressed share prices, as I will be a net buyer of stocks. One thing I realised recently is that market prices tend to overreact (in both ways). Unless earnings get hit by 10% permanently, the share price shouldn't drop by 10% (assuming it was at intrinsic value).

For example Keppel Corp. It is interesting how some people expect it to drop to $4 or even $3. While not impossible, it is highly unlikely. At that price, Keppel Corp will be worth less than what it paid Keppel Land for (which IMO, was not a big premium).

Anyway, I recently bought First REIT and M1, which are finally at levels that I find attractive. Actually I was queuing for Select, Starburst and Accordia, but bid-ask spread for Select and Starburst is so high that I gave up. I think other than the counterparty/delisting risk of First REIT, it is pretty much a no brainer at this price... The leases are very attractively structured and priced.

Do US indices affect STI?

Saturday, 2 January 2016 13:42
Posted by owq 0 comments
Well, it's a popular notion on HWZ forums that STI follows the US stock market, and people like to predict the STI movement based on the last closing of the US indices. So I tested that with data from Yahoo Finance ranging from Dec 2010 to Dec 2015, using Spearman's correlation between ES3 and a number of indices.

Name Symbol Spearman Correlation
Lyxor AsiaIT US$ NF4.SI 0.948438693
Lyxor World US$ H1P.SI 0.922792769
LYXOR Asia EX US$ G1K.SI 0.914623755
Lyxor AsiaCS US$ NF6.SI 0.902705567
Lyxor HSI US$ A9B.SI 0.879719834
Lyxor USDJIA US$ JC6.SI 0.870809236
Lyxor Asia US$ P60.SI 0.846190831
Lyxor Japan US$ CW4.SI 0.836158667
Lyxor Nasdaq US$ H1Q.SI 0.787960823
Lyxor Europe US$ JC5.SI 0.762374024
Lyxor AsiaRE US$ MT7.SI 0.75007067
Lyxor Taiwan US$ A9A.SI 0.733011747
Lyxor ThaiSET US$ P2P.SI 0.638932037
Lyxor MSIndia US$ G1N.SI 0.605130262
Lyxor ChinaH US$ P58.SI 0.528158153
Lyxor MAL US$ G1M.SI 0.487952323
Lyxor Korea US$ AO9.SI 0.418580403
Lyxor EM Mkt US$ H1N.SI 0.27739576
Lyxor Indonesia US$ P2Q.SI 0.232005556
Lyxor LATAM US$ H1O.SI -0.450758975
Lyxor Russia US$ JC7.SI -0.547590704
Lyxor Cmdty US$ A0W.SI -0.657178453
Lyxor CRBxEny US$ G1O.SI -0.665450671

So seems that the correlation with Nasdaq is 0.788, which is pretty high. Note some limitations: 1. no adjustments for currency, 2. Lyxor ETFs are not that liquid here, 3. Short timeframe.

Rights: Croesus Retail Trust, ARA Asset Management

Friday, 11 December 2015 23:25
Posted by owq 0 comments
I've only started investing recently and I already kanna 2 rights issue.

Croesus

The new acquisition is barely yield accretive  but I like the fact that it has potential for AEI. Japan interest rate is likely to remain low and although they devalued their currency recently, I believe it will get stronger. Not counting on rental reversions too much unlike the China retail trusts though.

ARA

A surprise rights issue, probably to strengthen balance sheet and fund their acquisitions in China and Down Under. Didn't really count, but they probably reached their 2B per year goal for this year. Will they reach their 40B goal soon? We'll see... Hoping to get my excess rights and especially, please help me round off my odd lots. Haha.

My first and last contra

Thursday, 12 November 2015 20:20
Posted by owq 0 comments
Since I was on leave on Jumbo IPO day, I decided to contra for the fun of it. Before opening, I actually put the bid around 20% above IPO, thinking there was a margin of safety and I could pay even if it dropped 10%. But alas it rose much more and so I bidded at a higher price. But DBSV didn't accept the order, saying the bid was too far away from last price. I was trying to input order and as the bid and ask soared I put in higher prices without realising it had gone significantly above my margin of safety. It got filled at 0.39! Then prices settled at around 0.365 and I knew I was screwed. I had made a big mistake because I was in an emotional state and fortunately I decided to cut loss quickly, resulting in about 1.4k loss.

On SCB side my lower bid got through and I got around $70 profit, enough to offset one of the commission from DBSV.

Well it could have been worse and I guess this is one of the mistakes that you must experience before you really learn. It was pretty painful as the leveraged position was quite big for me. Even after reading about how much people got burned by leverage, you don't fully feel it until you are on the receiving end...