10:20 am - Market Report II by Bill Wermine

Dear Traders,

Saturday, I had the pleasure of attending the mid year market outlook by Jupiter Securities held at the Sime Darby convention center.

Pong Teng Siew, head of research gave an objective, common sense KLSE market outlook. He targets 1180- 1200 for the KLSE by end of August seems achievable as funds go out of US Dollar assets and into Asian equities. Foreign funds are currently accumulating quality blue chips and index heavyweights.

He feels Malaysia, Singapore, Thailand and Indonesia are in the beginning stage of a grinding recovery. Non performing loans in Malaysia as reported by Bank Negara are at 2.2 % while in the US are at 6.5 %. Malaysia has almost a zero exposure to sub prime mortages and derivatives and credit is available to worthy borrowers. This is also business positive and supportive for the KLSE

The Asian economies are on much sounder footing as compared to Europe, UK and USA and should recover faster from the world wide recession. Savings rates are also high and that provides a cushion.

He favors consumer goods companies such as Pet Dag- the petrol station operator that pay generous dividend- currently 5.3 % for Pet Dag. In my opinion Pet Dag is the best run petrol station business in Malaysia. I like the business cluster model that includes a Mac Donald, 7-11, Bank ATM machines, and high margin cash businesses that surround each Petronas.

These contribute to their bottom line. Sales and earnings continue to increase and they are due to raise their dividend again.

Why would anyone in their right mind hold an FD paying only 2 % interest with absolutely no chance for capital growth with companies such as Pet Dag are on offer at only a PE of 11.

Disclosure: (Am holding Pet Dag for myself and all managed and EPF accounts)


Here is a reply from my adviser Dr Dorn in reply to my flash alert to liquidate all holdings of the US ETF GLD: Here advice is not as blunt as mine but the message is the same.


Hi Bill,
These rumors about GLD have been circulating for some time. No one knows the truth except whoever is in charge at the ETF. Since they won’t tell us, they likely have something to hide. In these cases of uncertainty and lack of transparency it is always the better part of valor to err on the side of caution.
Regards
Dr Dorn www.thetradingdoctor.com

Martin and I are holding our Master the Markets foundation course next Monday and Tuesday 27 28 July- start at 10 AM- my office at Phillip Capital.
We have 8 sign ups and room for about 7 more. Any graduates are FOC to resit - notes if you do not have are RM 50. if you have any friend who wishes to attend we offer the rate of RM 588- pay at the door. (This is a generous discount from the published in rate of RM 788)

As seats are limited please inform Dolly 03 4252 4149 - if you or friend wishes to attend . On the 2nd day Martin will review his blog recommendations, Metastock filtering and CPO/CI futures backtest results.

Have a prosperous week ahead
Bill