Sunday, December 30, 2007

Fengshui outlook for 2008

Just came back from a chalet..damn tired, didn't sleep for 1 night :)

This is from a friend of mine...a rather long convoluted message about 2008 based on Fengshui. I suppose with the chinese new year coming, there should be more of such things coming along in the next few weeks. No need to believe or disbelieve, just read for fun :P Pardon the bad English though, haha


The Chinese calendar, commonly known as the Farmers’ Calendar, or the Hsia Calendar, is a fascinatingly accurate system, which not only records the passage of time, but is also a tool for fortune-telling. The famous traditional fortune-telling system – The Four Pillars of Destiny – is exactly referring to reading a person’s destiny from his birth data as presented in the Hsia calendar format. The unique feature of such calendar is that all information about time – year, month, day and hour are presented in terms of the five basic elements – metal, water, wood, fire and earth, which are believed to be the basic components of everything in the Universe. The relationship between the five elements accurately helps one predict what is to come by way of one’s fortunes and thus, one can by using this knowledge, multiply the good luck or minimize the bad luck in one’s life.

The Year of the Rat, 2008, in the Hsia calendar, is symbolized by two elements – with earth sitting on top of water. According to the cycle of birth and destruction, which governs the inter-relationship between the elements, earth is the conqueror of water. . Therefore, earth sitting on water is a symbol of control. But the water of the Rat year is very strong and the earth floating on top of water has no foundation and cannot control the ocean of water. As such, instead of conquering water, it is more like confrontation between earth and water elements. The Earth on top is Yang earth which symbolizes a mountain, and mountain gives sense of stability and firmness. But such floating earth in the ocean is weak in foundation and the stability appears to be fragile. This elemental relationship will bring a year which apparently is more stable but there are a lot of underlying tensions and confrontations.

The Chinese calendar year goes on 60-year cycle. This means that we have experienced the same year of yang earth on rat in 1948. This was a year when the confrontation between USSR and the west intensified with the Blockade of Berlin started and the formation of the Western Union by the Brussels Treaty to confront the threat of USSR; this is the predecessor to NATO. In May this year, the State of Israel was established and also the confrontation between Israel and Arabian countries began leading to the Arab-Israel war. .

The Chinese character for “Yang Earth” represents a big mountain. . It is associated with the quality of a firm and steady person. People born in a day of “Yang Earth” .is often calm and steady and faithful, practical and “down to earth”. . Some examples of famous earth people born on a “Yang Earth” day are Hillary Clinton, Danzel Washington, David Beckham, Mahmoud Ahmadinejad, Michael Jackson, Dick Cheney, Eric Clapton and Ben Affleck .

The Rat belongs to the strongest water element and it is the first of the 12 animal signs. So it also represents the beginning of a new 12 years cycle. As such, the Rat year can bring a new beginning of international relationships and social order; this could bring new regimes with new government in some countries. Indeed, there will be many major elections happening between 2007 and 2008 with change of leadership in many countries including U.S.A., United Kingdom, Russia, France, Taiwan…..The rat is also considered as a “Flower of Romance”. So years of the rat will stimulate more romance and sex scandals. The Rat is in clash relationship against the Horse. . This is a clash between water and fire elements and will often bring accidents related to both fire and water, air and the sea. The Rat is the most powerful ocean water and it will bring heavy flooding or even tsunami disaster. The most famous water disasters in history, such as the South Asia tsunami on 26/12/2004 and the sinking of the Titanic on 14/4/1912, both incidents happened on a date with prominent appearance of the Rat. Looking at past history, in 1228 a year of Earth Rat, there is big flood in Holland killing 100,000 people, and in 1588 another year of Earth Rat, the Spanish Armada encountered storm in Ireland and 5000 people died in this heavy storm. In 1888, year of Earth Rat, there is “Great Blizzard” in the east coast of the USA and 400 people died. The clash between fire and water will also bring accidents related to fire and the airline business is in the category of fire element. As such, it is observed that the year of the Rat seems to experience more air disasters. A typical year with many aviation disasters is the previous Rat year in 1996. During this year, there are over 20 major airplane crashes including the U.S. TWA Boeing 747 crashed in July, 1996 killing 230. Looking at the immediate last Earth Rat year in 1948, there were also quite a numbers of airplane crashes including the hijack of a Cathy Pacific airplane in June, 1948.

Yang earth on the rat also symbolizes unstable earth, this will also bring earth disasters such as earthquake, landslide, collapse of buildings. The Earth element is also associate with homosexuality. It so happens many famous homosexuals is born on the day of earth – this includes Leonardo Da Vinci, Michael Angelo, Tchaikovsky, George Michael, Boy George, Andy Warhol, Tracy Chapman, K.D. Lang. Rosie Odonell etc. As such, there could be more issues in this aspect in 2008. It is not really clear how earth element is linked with homosexuality. Perhaps earth is an element of more neutral nature, compare against the other four, water and fire, wood and metal.

The clash between the Rat and Horse is a serious clash between water and fire elements. This will often bring injury and bloodshed. Therefore people born in years of Horse have to be particularly careful in 2008. As it is water clashing against fire, the danger could be associate with water and fire disasters such as traffic accidents in the air or at sea. Therefore, for people born in the year of Horse, it is recommended that they carry the pendant of an Ox which will help to attract away the Rat, so as to minimize the negative influence of the clash. Anyhow, people who are born in the year of Horse will experience a more turbulent year with more movements and traveling, changes. It is suitable to engage in such movements, such as moving house or moving offices. Traveling is also good but one should avoid going straight towards the North direction as it is the direction of the Grand Duke in 2008.

The Rat also forms a penalty relationship with the Rabbit. Such penalty may cause disharmony, worries and irritations, or hidden sickness. Therefore people born in the year of the Rabbit is also recommended to carry the pendant of the Ox to minimize such penalty influence in the year of the Rat.

The Five basic elements also represent different parts of our body, earth in general relates to stomach, pancreas, muscle and cells. As such, the health problems related to earth could be stomach problem, food poisoning, and diarrhea. Disorder of earth elements can mean problems of muscle and cells, this can bring obesity, diabetes, and cancer …these are all sicknesses caused by imbalance of earth elements. Diabetes is a sickness caused by disorder of insulin which is produced by the pancreas which is also symbolized by earth element in Chinese medicine. . So diabetes problem is also caused by imbalance of earth element. As such, these kinds of health problems will also come in focus in the Earth water year of 2008.

In recent years the most imminent issue threatening the survival of human race is Global warming. The polar ice caps have been melting down in an alarming speed and there are forecasts that many coastal populated cities will be submerged under the sea by the year 2050. In 2007 we have experienced dramatic change in climate and there are more weather triggered disasters. It is expected such serious impact of Global warming will intensify in 2008. The pair of elements, yang earth sitting on the rat can be interpreted as the image of floating mass of ice on a big ocean. And this is an alarming sign that the melting of Arctic and Antarctic ice will become more and more alarming in 2008. If we examine the fateful moment of one of the biggest water disaster – the Titanic, we can see the Titanic collided with a floating iceberg at mid night of 14th April, 1912. and when we translate this fateful day and time into the Chinese calendar, we can see the mid night hour on this day is actually Yang earth over the Rat, with yang earth representing the floating iceberg. And this is identical to the elements of 2008. It is anticipated there will be more flooding and water disasters associate with climate change in 2008. Such alarming signal not only shows up in the Chinese calendar, it is also reflected in feng shui. In 2008, the feng shui flying star number 1, symbolize water element, is in the centre. This centre number often reflects the focus of events prevailing in the year. Take for example, in 2005 we have Flying star 4 in the centre and the number 4 symbolizes the chicken. So this the year the threat of avian flu began. In 2006 the star 3 in the centre represents conflict and earthquakes, 2007 the number dominate the centre is 2 which is sickness and it has brought the alarm of avian flu in focus again. So we have to assume the number 1 in the centre in 2008 will bring more problems with flooding and water disaster. Global warming is an issue concerning the entire human race and every one of us has the duty to take up effective measures to preserve our environment and support the move to reduce CO2 emission.

Regarding the economy, fire element is often the driving force behind the stock market. In the year 2008 there is yang earth on the Heavenly stem with water underneath. The dominating element is water. As such, it is a year of cooling down after the heated economic atmosphere in 2006 and 2007. Fire is the symbol of the financial market and strong fire will stimulate optimism and speculative mentality. Without fire investors will play cool and conservative. However, the strong water element is the symbol of money to the earth industry. With strong water showing up, the property market is still active and profitable. Despite the absence of fire element in the year 2008, the spring and summer months still shows strong wood and fire influences bringing upward surge in the stock and property market. But investors will be more cautious and practical and there will not be dramatic fluctuations such as in the magnitude of yin fire year in 2007. In general 2008 is a year of cooling down with more stability and calmness in the stock market. .

The strong water of the Rat year favors earth and metal industries, as earth conquers water, so the Rat is a symbol of money to the earth industry, which includes property, mining, hotel, chemicals, insurance… As for metal industries, metal gives birth to water, so the strong water element in the year indicates productivity and strong activity in metal industries – this include machinery, computer, high tech industries, skincare, health business. The Wood industries, which include textile, fashion, books, publications, paper, forestry, furniture is also into a profitable year as wood conquers earth, so the earth showing up in 2008 symbolize the money of wood industry. But the profit will only be superficial as the earth element is weak.

The less prosperous industries in 2008 will be businesses of water and fire elements. Water industries refer to shipping, communication drinks…etc. The strong water appearing in the Rat year will bring stronger competition in the water areas and this will very much weaken the profitability. Fire industries refer to finance, stock market, energy, electricity, entertainment, and airline businesses. As fire conquers metal and produces Earth element, so to Fire industry, metal represents money and earth represents productivity. In 2008 metal element is absent and earth element is weak. . That is why it is a relatively weak year for the industries related to the fire element.

The property market is symbolized by the earth element. This industry had stronger activities in the past years of monkey and rooster in 2004 and 2005 as the metal elements represent productivity of earth industries. There had been some slowdown in 2006, as the fire ad earth year brought stronger competition and eroded profitability. However, in 2008, the water element of the rat will bring some money luck to the earth industry, despite there is no strong activities in the property market owing to absence of metal element.

With respect to the hi-tech industries sector, as represented by the NASDAQ. I have postulated that this industry is mainly represented by the metal element. As such, the prosperity of hi-tech industry requires the strong appearance of water and wood, which are symbols of productivity and money of the metal industry. In 2008 the water element, meaning activities to hi-tech industries is very strong. As such, it is anticipated that the year is favorable for hi-tech or internet types of business. But the absence of wood in this year could mean there are more activities without real substantial money gains.

In summary, the industries that will perform well in the year of the Rat will be industries related to earth and metal elements – such as property, hotel, mining, insurance, machinery, engineering, health, computer, and high tech industries. The sectors relating to water and fire will not be doing so well. Water industries include shipping, communication, drinks, and fire industries are stock market, finance, energy, electricity, entertainment business. The wood industries – such as textile, publications, fashion, furniture, etc are into a year with some superficial prosperity but not substantial.

In general, the yang Earth Rat year, with earth on top failing to control water below, is symbol of apparent calmness on the outside but such calmness lacks a solid foundation and the mountain can tumble and devoured by the ocean of fierce water. Some kind of new world order began to emerge but it will take time to consolidate into stability. . Still there will be international conflicts and uprisings and unrest but such events may be less turbulent than 2007. The new beginning of the 12 animal cycle led by the Rat will be first step to cool down or slow down the acceleration of Global warming problem.

The animal sign which is most unfavorable is the Horse which is in direct clash against the Rat. Such clashes will usually bring about turbulence, movements, accident or changes... So people born in the year of the Horse will anticipate more traveling, or movements such as changing jobs or moving house. It is necessary to carry the pendant of an Ox as protection to attract the Rat away. For the Horse people, the clash against the Rat could bring accidents related to the water and fire element, such as explosion, fire disasters, and air and sea traffic accidents. For people who are under clash with the year, it is ok to travel more, making changes such as moving house, or change job. However, for people born in the year of the Horse, it is recommended not to travel directly towards the direction of the Grand Duke, which is the north direction, and it is also not recommended for them to travel by sea. The other animal’s signs facing unfavorable positions are the Rabbit and the Rat. When Rabbit encounters Rat year will form “Two Penalty” relationship. . Such penalties will usually bring disharmony, irritation, worries and frustrations. Also people born in year of the Rat are offending the Grand Duke which is also not auspicious and it is necessary to carry Ox pendant to minimize the negative effect. The imbalance of fire and water elements brought about by the Horse and the Rat may bring fire and water diseases, such as high blood pressure, heart burn, irregular heart beat, inflammation, diabetes, and kidney problems. As such, it is necessary to take heavy dosages of anti-oxidant, omega 3 oil or COQ10 which is good protection against cardiovascular diseases, hyper-tension and inflammation problems. .

The animals combining with the Rat year are the Ox, the Monkey, and the Dragon. These animals are into a year of harmony. However, such animal astrology is not totally reliable as the system is not recognized as a formal type of fortune-telling. For more reliable assessment of ones fortune in the year of the Rat, it is recommended that one checks the full Four Pillars of Destiny, which requires full birth data information of the Year, Month, Day and Hour of birth. As the animal signs can appear in all four pillars in a person’s birth data, the clash and penalty relationship with the Rat will not only cause impact on people born in the year of Horse and Rat and Rabbit. Such clash and penalties can also impact any one who has such animals in the birth month, or day or hour.

Some examples of famous people born in the year of the Horse and under clash in 2008 are Paul McCartney, Danzel Washington, John Travolta, Condoleezza Rice, Richard Li, Angela Merkel, Victor Yuschenko, Kiefer Sutherland, Warren Buffett and Katie Holmes. There are people who are not born in the year of Horse, but they are also under clash because they are born on the day of Horse, so they will also face a challenging year. Some examples of these people are – Chris Martin, Lura Bush, David Furnish, Elizabeth Taylor…...

People born in year of the Rat is said to be “offending the Grand Duke” and it is also recommended to carry pendant of the Ox. Examples of Rat people are Prince Charles, Prince Henry, Gwyneth Paltrow, Cameron Diaz, John McCain, Olivia Newton-John…..

For people who are born in the year of the Pig, the Rabbit, and the Goat, the Rat year will bring “Flower of Romance” so one can anticipate a more sociable year with more opportunity to develop friendship with the opposite sex...
Feng Shui energies also change from year to year. Therefore, it is necessary to watch for the re-allocation of good and bad energies at the beginning of each year, so that we can take necessary precautions if some bad energy happens to arrive at important locations of our residence or offices. In the year of the Rat, the bad energy called “Five Yellow” – symbolizing obstacles and misfortune, arrives at the South. If your South of the house is an important area such as bedroom or entrances, it is recommended that one hangs a metal wind chime there to dissolve this bad energy. The worst months will be in February, August, and November. Another bad star number 2, symbolizing sickness, will arrive in the Northwest in 2008. The traditional method to dissolve this 2 is to hang a string of six metal coins in the affected area in the Northwest of the house The Grand Duke this year is in the North, hence it is not favorable to “move earth” or make substantial construction work in this direction. It is also not recommended for one to sit with back against exact South as you will be sitting against the unfavorable energy called “Three Shars” or “Three Killings”. As well as the “Crash position” against the Grand Duke. The bad star 3 is a star of conflict and robbery. This is present in the West of the house. It is necessary to put a piece of red paper in the West to minimize such bad influence. Also the bad star 7, representing scandals is in the Southwest, the traditional solution for this bad star 7 is to place 3 or 4 of bamboo plant grown in clear glass vase of water in the Southwest location.

Friday, December 28, 2007

The darkest day in Pakistan - Benazir Bhutto assasinated...

STI went down 31 pts to close at 3445 with a volume of 1.2 billion. Dow went down a lot - down 192 pts (1.42%) to close at 13,359. Haven't seen Dow dropped so much in a while. Could be news that Benazir Bhutto was assasinated. My sincere condolences for this brave woman.

Wasn't monitoring the market since I'm out for a good part of the day. I saw that overall it didn't drop that bad...still okay. Still, a little part of me is still hoping that 2007 will end with a good note. Well, we still have half more trading session on next Monday to conclude 2007. Haha, it's funny when I saw the top gainers today...STX PO, China rail...STX PO warrants...more china rail warrants :)

Today I borrowed even more books. Can't help it...whenever I'm in the library, I have to grab some books. As a result of this 'addiction', I have like a huge pile of books in my 'in' tray, haha, waiting for me to clear. I'm reading a management book by Jack Welch together with Suzy Welch, called Winning. Interesting concepts, but too bad, not very applicable for me :)

I'm gng to chalet for a year end party, ending 30st, so probably won't be around. Haha, have fun and most importantly, reflect what you've done in the past year. I'll do that too :P

Thursday, December 27, 2007

Ominous signs for Dow

Here's the intraday chart for Dow:

Within a few minutes of my posting, more mayhem:

I think 13400 here we go :P

Warren Buffet prediction for 2008?

STI was flat today; it closed up 4 pts at 3477 with a volume of 1.19 billion. This is quite similar to Dow performance last night when it closed up 2 pts from a negative opening. Volume in the market is really pathetic, which isn't surprising given that most people are abroad enjoying their holidays. I don't expect market volume to return to 1.5 or even 2 billion till perhaps the start of the year 2008.

Today all the agri stocks went up a lot. Wilmar, Golden agri and to a Indo agri shot up. I guess agri is the sector to focus on for this bull run, just as construction stocks were the darling around June/July period. Well, as the saying goes, every dog has its day.

Ecowise announced their full year performance today. They did pretty well, with a net profit growth of 37%. I like their prospects to capitalise on the carbon trading - they are the first registered company to sign carbon credit sales. This is basically a whole plan to reduce the carbon output of every country. If a certain company wants to emit more carbon, they have to buy carbon credit beyond what is allocated for them. Nice system, but don't know how it'll turn out in the year.

This article from cnn gives the prediction of warren buffet for the year 2008. In my opinion, he isn't really giving any prediction. I like his point number 2 and 3. When stock market is having a big sale, we must get ready to buy. For guitar lovers, there's a shop in Bras Basah called Swee Lee - famous for their wide selection of musical instruments and perhaps more famous for their yearly 50% sale off all items. I remembered getting a guitar from there. This is what I did:

1. I found out that there is a sale

2. I checked out the items I'm going to buy by doing some research - went to surf different models of guitar, went to ask around people who had guitars, went forum to look for information and went to the actual shop several times to test try the guitar I want

3. I saved up money to make the purchase

4. I queued up overnight as I anticipate that there will be a long queue (and yes, there is a long queue - good time I was the 2nd in line)

5. I already know the shop layout, so I went in and grab the item and got out

That's how I buy big ticket items - and there shouldn't be any difference when I'm investing too :P

Today I also finished my book on the 5 keys of value investing. A few things I remembered about the book. Firstly, margin of safety is the difference between the value of a company and the price you pay. Secondly, n value investing, we need to find or identify a catalyst that can push up the price to fair value. Time is also a catalyst (though it's a bad one). Lastly, there are some many different ways to valuate a's mind boggling. I'm trying to finish all the books in the library on investment and valuation. Big ambition huh? haha

Dow futures is down by 11 pts. Could have a flat to negative STI tmr.

Wednesday, December 26, 2007

S-shares went up a lot

STI was up 38 pts to close at 3473 with a volume of 1.28 billion. Still low volume but at least that it shows signs of a bull coming. We're so approaching STI's resistance - around 3550 to 3600? HSI is closed today, and I expect tmr it will surge up on a pent up urge to buy, haha :)

With the new bidding system, I think I need some time to get used to it. I remember on Monday that some people are still using the old system (it's still observable today). Oh well, one of the side effects of this new system is that it made STI move slower. With banks making up 1/3 of the value of STI, I think it'll be rare to see STI move up or down 100 now. Remains to be seen of course.

A lot of singapore listed china shares (affectionately called s-shares for those uninitiated) went up a lot these days. Rumors are flying around of the china funds, possibly coming next month? Haha, those stocks with 'china' in it went up a lot. China fish, china milk, china new town....haha, just to name a few. Construction stocks also went up quite a lot. Just a few more cents and I can get rid of them :P hee hee!

Today I bought from berkshire business books. One is Security analysis by Benjamin Graham (heard it's a heavy read) and the other is Five rules of successful stock investing. Nowadays I'm in a mad rush to read FA books, so I'm wondering how much I can digest them.

Dow is now down 29 pts.

Monday, December 24, 2007

Have a great christmas eve and a joyous christmas!

Saturday, December 22, 2007

Bradley turn date fulfilled

What a wonderful rally by Dow last night, fulfilling Bradley's turn date :P Dow was up 205 pts (1.55%), Nasdaq up 1.94% and SP500 up 1.67%.

Just a reminder that on Monday, the new bid size system will come in place. I'm still wondering what kind of impact it will do to traders here. Ccloh from cna forum had analysed it very nicely, so I'd like to share it here:

1. for less than $3 stocks, the bid size is as usual but good thing is now you can queue 10-bid lower or higher to buy or sell. example dumpling close 1.59, you can queue 1.50 to buy or queue 1.69 to sell on monday before open. isnt that good.

2. for more than $3 stocks, good news for investors as you dont need to wait behind mountain queue to buy a certain stock. example capitaland you want to buy at $6 but the mountain queue is so long that it is impossible to hit you. as such buying at 6.00/6.01 or even 6.02 makes slight different to you only as compared to now if cant get 6.00, you have to buy at 6.05.

3. for those traders still into index stocks that is more than $3, probably the new bid system can allow you to cut loss at a less loss if things turn not your way. example capitaland buy 6.30 and with the old system, 1 bid down = 6.25 and you already loss 0.05. under new system, perhaps your risk is down 3c to cut ie from 6.30 -> 6.27 then you cut loss. in a way, you save that 2c on loss. give you more time to react also.

4. as most of the index stocks are more than $3 and some at more than $10, a sudden gap up or gap down might not be that easily achieved. example DBS under old system can gap up/gap down 0.60 but the new system if no force key gap up/gap down max 0.20. that can mean a very much different to the index.

1. for more than $10 stocks, the queue system is stupid. example SGX today closed $13.40. under the old system, you can queue up to $14.00 to sell or $12.80 to buy but with the new system, w/o using force key, the most you can queue up to $13.60 to sell and $13.20 to buy.

2. under the old system, for retail playing the more than $10 stocks, you need 2 bid to hit and run but under the new system, you need to queue up all the 10-bid in order to hit and run, psychologically it is a long wait.

3. under the old system for retail playing in the more than $5 but less than the $10 stock, you need 2 bid to hit and run but under the new system, you need to queue up to 6-bid to get break even.

4. the psychological barrier of from $2.99 -> $3.02, $4.98 -> $5.05, $9.95 -> $10.10 is no longer valid. under the old system, it is these barriers that attract alot of players as you can get that additional profit by just doing a 2-bid hit and run. under the new system, all these benefits are no more.

Well, I agree with him. Let's wait and see what happens on Monday. Monday's trading will be from 9 am to 1230pm only, so no afternoon session. On Boxing day (26th), HKSE is closed but STI will be open. I think it'll be a ghost town on that day.

Have a Merry Christmas!

STI up 1.21%

STI was up 40 pts to close at 3398 with a volume of 1.5 billion. Haha, was half-expecting that STI would close flat or bad due to HSI, but both surprised me! HSI was up +609 pts, possibly bringing up STI to close 1.21%. I see most of the badly beaten S-shares went up, a good sign :)

With today's strong closing, a lot of charts went from bad to showing signs of reversal. Tmr, 22nd Dec is the Bradley turn date - a date where a strong reversal has a strong possibility of occurring. Looks like it already did :) Anyway, glad that I bought china milk during the downturn. Hope that chinamilk isn't just going to cover gap and then go down again!

Dow looks good at +175 pts now. See how it closes, we might just have a wonderful year end next week :P Went drinking with budddies just now, so haha, a bit tired to blog.

List of things to do:
1. Do FA of fjben (to compare the retail business against popular)
2. Do FA of singpost
3. Do FA of chinamilk
4. Do FA of challenger (to compare the retail business against popular)

I'm quite interested in retail business. Not for investment purposes but to learn about the different earnings and growth qualities of different business. Quite interesting to compare I think :)

Updated portfolio losses now -2k

Thursday, December 20, 2007

I'm back :)

I'm back!

After spending a few days at Batam doing nothing (what a luxury), I'm quite refreshed! STupid is right, it's hard to reflect when your gf is around, haha :P

STI seems to hold well, with prices fighting back up after touching 3300. At least it didn't drop lower, so that's a good thing. Saw some of my stocks falling more though - Swiber, CSC, Yongnam, Pac andes... See already also sianz right? :)

I got my rights for yongnam converted to Yongnam warrants W121214, which will start trading tomorrow. I wonder what's the starting price for it? Really hope all the construction stocks will do better the next coming rally. I really really need to get it out of my portfolio.

China milk which I bought before I left went down to $1.000. Wow, good price! Hhaa, I'll hold my ammo. There's a time to average down, but I don't think this is the time. Not to mention I'm a little tight on cash.

Starting next Mon on 24th Dec, SGX is going to change its minimum bids. They are making each bid smaller so as to encourage liquidity. Haha, I think they are just out to make more money, stupid SGX! What to do, if you can't fight them, join them and buy their shares! I wonder how this would affect the price action on Monday...will the buy/sell queue really spread out to cover all the bids? Hmm....we'll see next week.

Oh, force keyed orders are also increased, so we can queue much lower/higher from the current market price.

This one below is for HK stocks. Shouldn't affect a lot of people I guess. Is there any difference? I'm not so sure too.

Dow is up 60 pts. Tmr HSI might be flat or down a little - I think China just raised the interest rate again right? Should have been factored in already, seeing how HSI dropped some much the past few days and last week. Tmr should be quite a quiet day.

Didn't realise that swiber had a contract extension from Brunei shell petroleum. This contract cements Swibe's strategic relationship with brunei shell petroleun (BSP), with the total contract value inclusive of extension totalling US$200 million. Works are scheduled for 2009. No wonder today Swiber reversed trend and went up 4.5% as of now.

Monday, December 17, 2007

Bought china milk @ 1.04

STI dropped 112 pts (3.25%) to close at 3353 with a volume of 1.39 billion. Woah, all the big caps like SGX, DBS all falling like dominoes. Agri stocks is also whacked hard and fell sharply. Well to be fair, everything fell sharply, most breaking support too.

Today I entered China milk and got my buy queue fulfilled at 1.04 price. Haha, I didn't know that they are the only ones in China to distribute bull semen. ONLY. Talk about monopoly, ahha :) Read somewhere that they are requesting to allow imports of bull - isn't that breaking their monopolistic status? Well, they said it's better for them because they want to import the best bull in US over and by the time their competitors catch up, they will be fall ahead of the race to worry so much. I like that already. Haven't really looked thru their financial statements. I'll do that when I have the time - so many things to do!

Tmr I'm going to Batam for a short trip from 18th to 20th, so I might not be able to post any stuff these few days. Hopefully by the time I come back, the general market condition will be more in tune with the christmas season :P

Got to pack my stuff now :)

(that's my cat staring at you :P Have a great time here!)

China milk

Snap TA for chinamilk. A bit messy, I know.

3 supports come together at 1.05 for chinamilk. Long term trend line (tested 4 times), horizontal support at 1.05 and fibo retracement zone. I suppose that will be a good entry point. Being cheapskate and being half-hearted to go in, I queued at 1.04 :)

HKSE opens at 10am. That might be my small window of opportunity to enter at that price. The last I saw around 920am, there's only 141 k queuing at 1.04 and I'm one of them. Might have a chance. If break 1.05 convincingly, might see it hitting 0.965/0.970 - August low.

Saturday, December 15, 2007

My precious!

Sorry for the side-bar advert that is slowly creeping upwards. In case you're wondering why I'm writing this sycophantic blog about my ad-host, well, don't. I'm not being paid for it. I just had to say it.

Was emailed by nuffnang that a host had decided to put their advert on my blog. Since it was the first thing that I managed to sell pixels on my webpage for some cash, I'm naturally excited. Their requirements? Had to put it on top (or rather, it was suggested by Nuffnang) of my sidebar - which is fine with me.

Who's the host? Well, it's motorola, for their new product - Motorola Q9. It's quite nice to know that motorola is the first company to host their ads on my site as I'm a big fan of motorola (yes, really). My first phone Motorola ROKR impressed me enough for me to buy another Motorola phone - Z6.

(The above pic is taken from here - the BEST website to review the handphone you're eyeing for before you go down to purchase it!)

What? Z6? Haha, you're not the first person to give me that 'huh' look. Even asking for quotes on plans that comes together with Z6 elicited the same response - and we'll talking about seasoned salesperson. I was told that at least for M1, they are eager to sell their 3G handphones and not so eager to sell off-beat brands - supposedly motorola is included - to customers. As a result, I wasn't offered too much of a discount.

There is actually a contest going on where we can just blog about the upcoming Motorola Q9 and stand a chance to win it. Well, I don't have a PDA before, never held it, never seen it and never used it before, so I thought it's not fair to comment on it. I would love to review on it if someone can pass it to me (HEARD ME, SPONSORS??).

Haha, enuff of nonsense! Have a great weekend!

Head and shoulders

It's late at night and I should be sleeping...but couldn't resist posting this nice head and shoulders formation from Dow intraday.

Ideally the price will rebound back to neckline after breaking to test the newfound support turned resistance (thought it's not necessary). It's interesting to see how the rest of the chart develops when I wake up in the morning :)

Based on head and shoulders price objective (measure head to neckline and measure from neckline below), it should hit 13350? haha :) My wild guess!

Have a great weekend!

Friday, December 14, 2007

STI down 12.9 pts to close at 3466

STI dropped 12.93 pts (0.37%) to close at 3466 with a volume of 2.07 billion. OKAY lah, still okay, considering that intraday, STI dropped much heavily before recovering towards market close. Still far from bottom trendline, scared for what? :)

Haha, didn't expect china milk to give in so easily for 1.100 :) Intraday low of 1.070 reached, close at 1.08. Seems like a breakdown of support line :) Go in or not? hmm.. Still waiting for the ultimate big fish HSBC, so must be careful of my funds.

Saw quite a number of counters have intraday low but close up flat or slightly down. If it didn't want to go down, perhaps there is strength? Haha, but looking at Dow now also sian, opening already drop 100 pts already. Oh well, believe in Bradley turn date (that's astrological analysis)? 22nd Dec there is one - there is hope?

Portfolio losses down to -2.5k. Oh well :)

HSBC chart updated

The chart below is HSBC at the end of Nov 2007.

The chart below is HSBC today on the 2nd week of Dec, 2007.

Latest chart shows that HSBC did not rebound from the support trendline and the price fell below it. I'm waiting patiently at HKD 120, which is both the horizontal support line AND the dynamic support line B AND the price objective of breaking the rectangular pattern.

Thursday, December 13, 2007

STI down to 3479

STI dropped another 70 pts to close at 3479 with a volume of 1.6 billion. Banks and property continued dropping after the rate cut. Dow opened up 200 pts but closed around 40 pts up, a rather disappointing performance.

A news to share about construction:

1. Koh brothers secured a S$78.9 million contract from MOE to build river valley high school and hostel. Again, this news was totally discounted from the price today, as Koh bros traded down 0.035 to close at 0.420.

STI looks set to go down after breaking short term support at 3500. Well, drop lah! It'll be interesting to see how we close for Fri. Weekly chart shows a symmetrical triangle - that means equal chance of breaking on upside or downside. I still hold my view - that it's more likely to break on the upside than down. Of course, must wait for confirmation by looking if STI can break the top trendline (bullish) or break the bottom trendline (bearish). Since the triangle converge towards end of dec, I think the showdown between the bulls and the bears is coming soon - latest by Jan 2008.

What to do? Watch the stock you're going to enter with an extra pair of eyes - once it hits the target, can go in. Of course, that is if your views is still bullish :)

Wednesday, December 12, 2007

FED cut rate by 25 basis pt - global bloodshed

Haha, market always surprise people! A rate cut of 25 basis point by FED last night resulted in bloodshed of DOW - it fell 2.14% (294). STI followed by dropping near 80 pts before recovering to close down 40 pts (1.11%) at 3549 with a volume of 1.45 billion. Banks and property stocks which are strong gainers just yesterday, fell upon the bad market sentiment of the rate cut.

I suppose the market is expecting a 50 basis point cut but it didn't happen, hence the fall. I don't see it as a bad thing. I have a strong feeling that Dow would close strongly up tonight. Well, this episode just goes to show Murphy's Law - all that could go wrong will go wrong. Woe be on those that bet heavily yesterday when a rate cut will 'surely' result in a rally. Well, there is a possibility that it will tank - and it did. Warren Buffett wouldn't care a damn about the FED meeting, why should us?

I've got a few stocks in mind:

1. Chinamilk @ 1.100
2. HSBC @ 120 (Fat hope!)
3. Singpost @ 1.09

Not all is based on TA, so if you can't find a good reason to enter based on TA, well, so do I!

Dow opens up 216 pts. Welcome christmas rally? :)

Portfolio down by 700 thereabouts. Swiber....keep trending down.

Tuesday, December 11, 2007

Yongnam rights oversubscribed

STI went thru another boring day. With a volume of 1.33 billion, what can we expect to see? Do not be misled by the 36 pts upside by STI today to close at 3589, it's lacklustre. Only the big caps, esp banks and properties are moving up in anticipation of the rate cut tonight over at US.

Yongnam excess rights issue is oversubscribed 184.4% of the total number available. Very low chance of getting excess rights, if you applied for it (I didn't). Preference will be given to those who are rounding up to whole lots while directors and substantial shareholders will rank last in priority, as per normal. Those invalid/unsuccessful applications and acceptances will have a cheque redunded to them within 14 days after closing date (6th Dec).

This means the latest date of receiving any refunds will be on 20th Dec, next Thurs. The exact date of listing and the quotes for the warrants will be announced subsequently on SGX.

DJ futures at -8 now. Going to be flat until they announce the results of the FED meeting. Probably won't be staying to watch it 'live'. No point :)


Today I did a crash course on html and blog template editing. Haha, managed to convert a 2 column template to a 3 column one! Big thanks to kgaihc for the excellent website that guided me a lot. Wanted to put in some cool stuff in but atlas, it slowed down the website too much to be comfortable, so in the end I removed it. For those caught in the delay and unreadable page during the day, I apologise :P

Newbie's faq well-recieved :) Thks!

STI closed flat at 3553 with a volume of 1.38 billion. The low turnout today must be attributed to the FED meeting to be held tmr night. Most are staying on the sidelines rather than holding any positions over the next few days.

Market is so quiet, no point watching it. The only worthy announcement that interests me is the release of popular's 1HFY08 report. Interesting to see what they've got after I did an FA on it recently. I'll comment on it in due time.

Seems like my newbie's FAQ is well received :) I think I must have done the right thing to compile and write down some of the more pertinent questions that always lingered in a newbie's mind when they started. I'm very empathetic because it's not so long ago that I was such a lost soul in the world of investing.

I always remember wanting to buy a stock, but not knowing that it must be transacted with a minimum of 1 lot (1000 shares), I told the broker I wanted to buy 200 shares. You can imagine the reaction :) haha! Well, I started wanting to enter the stock market not because I heard stories of people earning big bucks, interesting right? I started because I wanted to know what the hell those people are talking about in the newspaper and the news. I had put it in my 2006 new year's resolution that I would:

1. Open an investing account with DBS vickers

2. Learn how to read stock charts and jargons surrounding stocks and equities

3. Build a mock portfolio and track it to have a trial run

4. Build an actual portfolio

5. Earn at least $1250 per week in order to hit the target of $5000 per month.

Bold and a little innocent, I know :) With the exception of pt 5, I think I need it more than I hoped for. The problem about pt 5 is that it's very short term. If your results are based weekly, chances are you'll be too pressurized and screw up your long term plans. Bad start - but couldn't be any better because I don't have any guidance. My family dun do stocks - my friends dun do stocks.

Well, one whole and 3 quarters year later, here I am :) Since I had such a hard time learning all these myself, I thought someone can have an easier life than me! Hence the motivation to write the newbies faq. Practically, having a faq in my blog also means that next time I dun have to keep writing the same answers again and again (the questions newbies asked is surprisingly similar).

The poll results for the results of the FED meeting:

25 basis pt cut - 13 (39%)
50 basis pt cut - 20 (60%)

A total of 33 people voted, with majority aiming for a 50 basis pt cut. Haha, fun fun, let's see if 60% of the people polled (includes me!) will win :)

Seems like Dow is doing quite well - up 94 pts now.

Monday, December 10, 2007

Midas, UOL, XLX, China hongxin

Some charts for charlesming:

I choose weekly charts whenever I can since I know you're not trading the stocks - so a longer time frame is appropriate. If I have more data, I'd also do a monthly, but as it is, I only have 1 year worth of data from chartnexus free :)

It's interesting because what you see on daily might be exactly opposite to what is seen on the daily, so which do you believe? For me, the longer the time frame of the charts - the more significant the trend. Most importantly, see what your time frame is like. If you dun intend to hold for more than 7 days, use daily. Anything less than a month, use weekly :) But before doing all these, check STI and other major index for macro trends. When general market is down, seldom do individual stocks do well.

Friday, December 07, 2007

Newbies FAQ

Since I kept answering the same few questions time and time again in cna forum, I decided to post it in my blog so that next time I don't have to retype it again. This is what I'll do - i'll collect all the most commonly answered questions about the stock market, then I'll post the answers here. Easier for everyone. Here goes:

(Updated on 4th Feb, 2008)

Summary of questions:

1. What causes the price of a stock to go up or down? How come even though the buy queue is higher than the sell queue, the stock doesn't move up in price?
2. What is the trading hours of Singapore and HK bourse?
3. What actually happens when I buy a stock?
4. What is long? What is short = katek?
5. What is naked short?
6. This short cannot, that short also cannot. Then if market turns bearish, just sit and cry ah? Any other options?
7. What is averaging down?
8. What are bonds, bills, warrants, CFDs?
9. What's XD, CD? Do I get dividends if I buy on XD?
10. What is the x you see just before market opens and after it closes, when looking at the sales and transactions for the day? Married deals?
11. What are right shares? Nil-paid rights?
12. What is force key? I see that option when I'm getting my orders keyed in.
13. I have been using X brokerage firm and now I’m using Y brokerage firm. I bought some shares using X firm, so does the shares that I bought with X be transferred over to Y? If I sell my shares using Y does it constitute a short sell?
14. What are odd lots? Can I sell odd lots?
15. What is contra? (No, it’s not the game)
16. I got a company warrant. How do I exercise the warrants to covert it to shares? (Note: company warrant is not structured warrants)
17. What is pre-open and pre-close?
18. What should I do when I receive the thick annual report every year? Do I have to do anything about it?
19. What are rights warrants?
20. How do I apply for rights? What are the options I have?
21. How is the opening price of a stock determined?
22. Why is it that when I queue to buy at price of $0.50, but when the current price of the stock reaches that, I still haven’t bought my stock yet? Is it because of queuing?
23. What is CE and XE? What is cash distribution?
24. What is BB? I keep seeing people saying BBs are buying/selling.
25. What is shares splitting and what are its implication?

1. What causes the price of a stock to go up or down? How come even though the buy queue is higher than the sell queue, the stock doesn't move up in price?

I'll give an example.

Buying vol | buy price | sell price | sell volume

say initially its 520 | 0.770 | 0.775 | 330

This means that there are currently pple waiting to buy 520 lots at 0.770 and pple waiting to sell 330 lots at 0.775. The key word is waiting, because the buy/sell queue are waiting queue.

If you want to buy 5 lots at 0.770, you join the queue at 0.770, the quotes become

525 | 0.770 | 0.775 | 330

If I want to sell 10 lots at 0.775, i join the sell queue and the quotes become

525 | 0.770 | 0.775 | 340

Notice that up to now, the price didn't move at all. Now if I'm sick of waiting and i'm in a hurry to sell off another 10 lots, i dun sell at the sell price, i sell at the buy price. Immediately i jump the sell queue, quotes become:

515 | 0.770 | 0.775 | 340...price drops to 0.770

Same thing for buying up. If someone is too eager to buy the stock, he wants to get in 10 lots at 0.775 to jump the whole buy queue, here's how the quote look like:

515 | 0.770 | 0.775 | 330.... price increase to 0.775

Basically it's the enthusiasm of buyers to bid higher price that drives the price up, and the desperation of sellers to sell at lower bid that drives price down, not the buy and sell queue.

2. What is the trading hours of Singapore and HK bourse?

Singapore opens at 9 am to 1230pm, break for lunch and resume the afternoon session at 2pm to 5 pm. Hong Kong opens at 10 am to 1230pm, opens again at 230pm to 4 pm. Do take note that if you use most of the 'live' prices for HK stocks, it'll lag by at least 5 to 15 min. Yahoo! finance lags by as much as 30 mins to 1 hr. The livest live price can be found from the following sites:

a. Live HSI charts - This one is good as it even has charts and is detachable

b. Real time HSI forex gold - this one is not real time, but it's not laggy, good enuff for me.

c. HSI stock quotes - this one is straight from the horse's mouth, so to speak. Too laggy for me

The only free HK live price I know from brokerage is from dbs vickers. But it has it own set of problems...

3. What actually happens when I buy a stock?

After you buy a stock, we don't have to pay for it immediately. The day that the stock is purchased is termed T day. We have to pay the stock by T+3 (or T+4, T+5, depending on your brokerage firm or broker). This means that we have to make payment by transaction day plus another 3 market days (market days exclude public holidays and weekends).

For example, if I buy on Thurs, I have to pay on T+3, which is next Tues (usually by evening, but dependent on broker). If payment is not received on end of T+3, the brokerage will sell off your shares. After payment is made, the scripts will be electronically transferred to your central deposit account (CDP). If you have an online password with them, you can check their website and you'll see your shares there. You'll also receive those irritating perforated pieces of paper (two of them!), saying that you made a transaction with your brokerage firm and another saying that the CDP received the shares.

4. What is long? What is short = kateks?

Longing a stock means we buy a stock, wait for the price to move up to sell again to pocket the difference. Shorting a stock means we sell a stock first, wait for the price to move down, then buy it back again to 'cover the short position', thereby pocketing the difference. How come we can do such things - selling something that we dun have?

The reason is because of 'contra'. Basically it just means that it takes some time for the stock you buy or sell to be delivered to your central deposit account (CDP), so if we sell or buy before it's delivered we don't have to pay for anything. Usually contra period is T+3, meaning the day you transacted (T) + another 3 market days. So if I buy a share and sell it all within T+3, I don't have to make any payment and can pocket the difference. Be careful about buying things you can't afford to pay. If you can only buy $1000 worth of stocks and you bust that limit and buy all the stocks your trading limit allows (say $50,000) on contra (meaning that you have no intention to pay and die die have to sell by T+3), you are either skillful or just very optimistic in the face of death.

Shorting, on the other hand, doesn't work on T+3, take note!! We have to cover our position by the end of the day (T+0), otherwise SGX will buy back for you.

5. What is naked short?

Naked short means that you short a counter that you didn't have, AND didn't cover by the end of the day and is subjected to SGX buy back. The procedure is like this

a. You sell short a counter and never cover your position by buying in at the end of the day

b. On T+3, you don't have the scripts in your CDP to deliver to the buyer, so SGX will initiate a buy in for you

c. SGX will buy at 11:30am on T+4 at 2 bids higher than the closing price of T+3 or 11:30am price of T+4, whichever is higher. That is, higher of (closing of T+3 or 11:30am price of T+4) plus another 2 bids. I remember someone saying that the bids will increase every few minutes until someone sells it to SGX. Other penalties may apply.

In other words, you're subjected to the whims of the market and you'll only know the results after 3 or 4 market days. AND DO NOT BUY BACK YOURSELF - YOU'LL JUST BE OPENING ANOTHER POSITION! Good luck to you.

6. This short cannot, that short also cannot. Then if market turns bearish, just sit and cry ah? Any other options?

There are proper ways to short the market. Listed below are the ones I know, but bear in mind that each also have its own risks. It's not within the scope of this faq to discuss.

a. Put warrants

b. CFD - contract for difference

c. Short the market, borrow scripts from SGX to cover your short position . When price drops low enough, buy back the scripts and return to SGX, pocketing the difference.

7. What is averaging down?

This is a method to lower down the average buy price so as to be able to get out of it IF it rebounds at lower price. An example will do the trick.

Suppose I bought a stock, 10 lots at 0.770. The price subsequently tanked and I held on, thinking that it is temporarily. But it tanked to 0.600, a 22% drop in price. For it to rise back to 0.770 (ignore brokerage for simplicity), it has to rise up 28%, which is even harder. So I buy in more to 'average down' my buy in price.

So when it reached 0.600, I bought 10 lots at 0.600...tanked down further
Bought it 5 lots more at 0.550.

My weighted average buy price is 0.658 [ (10x0.770 + 10x0.600 + 5x0.550)/(10+10+5)]. If the price rebound slightly and hit 0.660 (assuming no brokerage), I can break even and sell already, instead of waiting to sell at 0.770.

The risk? You are throwing money into a sinking ship. It might sink and sink and never recover. Do this only if you're sure why the stock is sinking. Otherwise you're just digging deeper in your own grave. Most pple prefer averaging up - if the stock is performing as you expect, then you throw in more funds. Whatever you choose, just know what you're doing and the risks involved.

8. What are bonds, bills, warrants, CFDs? (adapted from veron97, cna forum)


A debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.

The indebted entity issues investors a certificate, or bond, that states the interest rate (coupon rate) that will be paid and when the loaned funds are to be returned (maturity date). Interest on bonds is usually paid every six months (semiannually). The main types of bonds are the corporate bond, the municipal bond, the Treasury bond, the Treasury note, the Treasury bill and the zero-coupon bond.

The higher rate of return the bond offers, the more risky the investment. There have been instances of companies failing to pay back the bond (default), so, to entice investors, most corporate bonds will offer a higher return than a government bond. It is important for investors to research a bond just as they would a stock or mutual fund. The bond rating will help in deciphering the default risk.

A bill is just a shorter term version of bonds. In Singapore, bill is anything less than or equal to 1 yr while bonds are more than 1 yr, like 1,2,5,7,15 and 20yr bonds.
Check this website out to find the difference in prices and yields.


A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue as a "sweetener" to entice investors.

The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months.

Basically, call warrants means that you want the price of the underlying to go up. If the underlying goes up, the call warrants will also rise in price. Put warrants means you want the price of the underlying to go down and it will rise in price if the underlying goes down. Can read this website for more information on the basic of warrants e.g. IV, delta, strike, settlement, expiry.

Contract For Differences - CFD

An arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.

This is generally an easier method of settlement because losses and gains are paid in cash. CFDs provide investors with the all the benefits and risks of owning a security without actually owning it.

9. What's XD, CD? Do I get dividends if I buy on XD?

When a stock wants to give dividend, it will put a CD - cum dividend remark. This means anyone who buys now or owns the stock already, will be entitled to get dividends by the time the stock closes its book. XD stands for ex-dividend. If you buy the stocks on XD, it will be too late to reach the registrar so your name will not be in the company's book - so you'll not be entitled to dividends. To make it really simple:

a. If you buy on or before CD, you'll get dividends

b. If you sell on or before CD, you won't get dividneds

c. If you buy on or after XD, you won't get dividends (the seller gets it)

d. If you sell on or after XD, you'll get dividends (the buyer won't get it)

Don't worry about record date or book closure date, it's none of our concern. Just worry about CD/XD will do. Oh, and of cos the payment date.

10. What is the x you see just before market opens and after it closes, when looking at the sales and transactions for the day? Married deals?

The x at the opening and closing is the pre-open and pre-close matching respectively.

For pre-opening, it's basically for those orders that are keyed in before the market is opened AND are transacted. What happens is that there are buyers who bid for a price and sellers who ask for a price. There is some formula to calculate these two bid/ask price, and this calculated price is the opening price of the stock. If there are a total of 10,000 buyers and sellers matched, then you'll see 8:59 x 10,000.

Same thing for pre-close matching, but this time the calculated price is actually the closing price of the stock.

Do not mistake the x when market is open for trading for pre-close/open matching, they are not. These x are married deals, a different ball game altogether. Married deals are private deals with a willing buyer and seller, so the price are decided between the two parties and are independent of the bid/ask quotes you see currently on the screen. Married deals are important, esp if the volume for the transactions are huge - usually indicates to me that institutional buyers are buying/selling.

11. What are rights shares? Nil paid rights?

Cash-strapped companies can turn to rights issues to raise money when they really need it. In these rights offerings, companies grant shareholders a chance to buy new shares at a discount to the current trading price. Let's look at how rights issue work, and what they mean for all shareholders.

Defining a Rights Issue and Why It's Used

A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called "rights", which, well, give the shareholders the right to purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price.

But until the date at which the new shares can be purchased, shareholders may trade the rights on the market the same way they would trade ordinary shares. The rights issued to a shareholder have a value, thus compensating current shareholders for the future dilution of their existing shares' value.

Troubled companies typically use rights issues to pay down debt, especially when they are unable to borrow more money. But not all companies that pursue rights offerings are shaky. Some with clean balance sheets use them to fund acquisitions and growth strategies. For reassurance that it will raise the finances, a company will usually, but not always, have its rights issue underwritten by an investment bank.

How Rights Issues Work

So, how do rights issues work? The best way to explain is through an example.

Let's say you own 1,000 shares in Wobble Telecom, each of which is worth $5.50. The company is in a bit of financial trouble and sorely needs to raise cash to cover its debt obligations. Wobble therefore announces a rights offering, in which it plans to raise $30 million by issuing 10 million shares to existing investors at a price of $3 each. But this issue is a three-for-10 rights issue. In other words, for every 10 shares you hold, Wobble is offering you another three at a deeply discounted price of $3. This price is 45% less than the $5.50 price at which Wobble stock trades.

As a shareholder, you essentially have three options when considering what to do in response to the rights issue. You can (1) subscribe to the rights issue in full, (2) ignore your rights or (3) sell the rights to someone else. Here we look how to pursue each option, and the possible outcomes.

1. Take up the rights to purchase in full
To take advantage of the rights issue in full, you would need to spend $3 for every Wobble share that you are entitled to under the issue. As you hold 1,000 shares, you can buy up to 300 new shares (three shares for every 10 you already own) at this discounted price of $3, giving a total price of $900.

However, while the discount on the newly issued shares is 45%, it will not stay there. The market price of Wobble shares will not be able to stay at $5.50 after the rights issue is complete. The value of each share will be diluted as a result of the increased number of shares issued. To see if the rights issue does in fact give a material discount, you need to estimate how much Wobble's share price will be diluted.

In estimating this dilution, remember that you can never know for certain the future value of your expanded holding of the shares, since it can be affected by any number of business and market factors. But the theoretical share price that will result after the rights issue is complete - which is the ex-rights share price - is possible to calculate. This price is found by dividing the total price you will have paid for all your Wobble shares by the total number of shares you will own. This is calculated as follows:

1,000 existing shares at $5.50 $5,500
300 news shares for cash at $3 $900
Value of 1,300 shares $6,400
Ex-rights value per share $4.92 ($6,400.00/1,300 shares)

So, in theory, as a result of the introduction of new shares at the deeply discounted price, the value of each of your existing shares will decline from $5.50 to $4.92. But remember, the loss on your existing shareholding is offset exactly by the gain in share value on the new rights: the new shares cost you $3, but they have a market value of $4.92. These new shares are taxed in the same year as you purchased the original shares, and carried forward to count as investment income, but there is no interest or other tax penalties charged on this carried-forward, taxable investment income.

2. Ignore the rights issue
You may not have the $900 to purchase the additional 300 shares at $3 each, so you can always let your rights expire. But this is not normally recommended. If you choose to do nothing, your shareholding will be diluted thanks to the extra shares issued.

3 Sell your rights to other investors
In some cases, rights are not transferable. These are known as "non-renounceable rights". But in most cases, your rights allow you to decide whether you want to take up the option to buy the shares or sell your rights to other investors or to the underwriter. Rights that can be traded are called "renounceable rights", and after they have been traded, the rights are known as "nil-paid rights".

To determine how much you may gain by selling the rights, you need to estimate a value on the nil-paid rights ahead of time. Again, a precise number is difficult, but you can get a rough value by taking the value of ex-rights price and subtracting the rights issue price. So, at the adjusted ex-rights price of $4.92 less $3, your nil-paid rights are worth $1.92 per share. Selling these rights will create a capital gain for you.

Be Warned

It is awfully easy for investors to get tempted by the prospect of buying discounted shares with a rights issue. But it is not always a certainty that you are getting a bargain. But besides knowing the ex-rights share price, you need to know the purpose of the additional funding before accepting or rejecting a rights issue. Be sure to look for a compelling explanation of why the rights issue and share dilution are needed as part of the recovery plan. Sure, a rights issue can offer a quick fix for a troubled balance sheet, but that doesn't necessarily mean management will address the underlying problems that weakened the balance sheet in the first place. Shareholders should be cautious.

12. What is force key? I see that option when I'm getting my orders keyed in.

When buying or selling, you can only key in within 6 bids of the current price. Different price range have different bid size.

So, if a stock is currently trading at say 1.50, you can only sell up to 1.56 or buy up to 1.44 (within 6 bids, each bid being 1 cent). If you need to go beyond, you need to check the 'force-key' option. Some brokerage firm have free force keys, some are subscription based.

Take note that on 24th Dec 2007, SGX will revise a new minimum bids with increased forced key orders. The bid size is reduced according to this:

For stocks:
1. Below S$1, bid size is 0.005
2. S$1 - S$9.99, bid size is 0.01
3. S$10 and above, bid size is 0.02
4. Forced key orders for stocks is +/- 10 bids.

For all ETF
1. Bid size is 0.01 or 0.001 as determined by SGX-ST
2. Forced key order is +/- 30 bids

13. I have been using X brokerage firm and now I’m using Y brokerage firm. I bought some shares using X firm, so does the shares that I bought with X be transferred over to Y? If I sell my shares using Y does it constitute a short sell?

The answer depends very much on whether the shares you bought with X firm are deposited in the central depository (CDP). It will be, after you made payment by T+3 days. If that is the case, the shares you bought have nothing to do with X firm anymore, so you can very well sell the shares using Y firm or any other firms. It will not be a short sell.

If you buy shares using X firm, but within T+3 you sell it using Y firm, then you have an open position with X and a short position with Y. You still need to pay for your shares plus brokerage with X before the shares will be transferred over to CDP. In the meantime, you have to cover you short position with Y by buying back within the same day of transaction, otherwise you will be subjected to SGX buy back.

If you buy shares with X firm, paid for it by say T+1, then sell it by T+2 using Y firm, then I’m also confused! To be sure, check CDP website to ensure that the shares you paid for are already deposited inside before selling using Y firm. Life’s too bland for you? haha

Do yourself a favour, keep a good transaction record of which shares you buy, T+3 payment date and with which brokerage firm.

14. What are odd lots? Can I sell odd lots?

Usually, each lot size in SGX shares consists of 1000 shares. There are some exceptions, for example the STI ETF 100 shares, you can buy at 100 shares per lot instead of the usual 1000 shares per lot. How do we get odd lots? Usually through corporate actions like rights or entitlement, script dividend. For simplification, I assume all shares have a lot size of 1000 shares here.

Since you can only buy or sell a minimum of l lot, there is some problem if you want to buy/sell less than 1 lot, like 800 shares. These are called odd lots, and they can’t be transacted in the normal markets.

I know that for poems, there is a unit shares market – specifically used to buy/sell odd lots. But take note – due to the liquidity (or rather the lack of), expect to sell your odd lots below market price and buy odd lots (to top up to 1 full lot) at a discount. This mean you can buy 1 share of DBS at $20 plus dollars if you so wished.

15. What is contra? (No, it’s not the game)

When you buy a stock, you normally have to pay on T+3. T+3 means that transaction date + 3 more market days (public holidays, sat, sun not counted as market days).

E.g. If I buy on Thurs, T+3 is actually next Tues.

If I managed to sell off the stock I bought before T+3, that means that I don't have to pay any capital upfront and get the difference between the price I bought and the price I sold. This is called contra.

Usually contra are for short term traders, who goes in and out within the T+3 days. Those who contra all the time will also whack huge lots (more than what they can afford to pay) since they don't have to really pay for the stocks upfront and they are going to sell off before the T+3 date, regardless of profit or loss.

Just be careful if you buy more than what you can afford...If the stock went down, you might have to hold or sell at a loss. Not advisable, unless you're a good chart reader who knows when a stock can make spectacular gains all within T+3.

16. I got a company warrant. How do I exercise the warrants to covert it to shares? (Note: company warrant is not structured warrants)

Courtesy of lonewolf from cna forum, who did the sleuthing.

Q. What shall I do when I want to exercise my warrants?
A. When exercising your warrants, you must submit the following to the Warrant Agent:

1. Your latest statement showing the number of warrants you have in your securities account. This can be obtained from The Central Depository (Pte) Ltd or via CDP Internet Access if you have applied and gotten an I-PIN.

2. The exercise notice, a copy of which can be obtained from the Warrant Agent. You need to sign the notice and provide the following details:
a. your name
b. address
c. CDP securities account number
d. NRIC number
e. no of warrants converted *
f. no of shares subscribed *

* The number of shares subscribed for every warrant held depends on the conversion ratio.

3. The subscription amount in the form of a cashier's order made payable to the issuer.

The Warrant Agent will inform CDP of your exercise notice after it has verified your particulars. This date is known as the Lodgement Date (L).

Q. How will I know who the Warrant Agent is?
A. Pulses, a monthly publication by Singapore Exchange, publishes a list of warrants traded and their respective Warrant Agents. You may also check with the company which issued the warrants.

Q. When will the warrants be debited from my account?
A. CDP will debit the warrants from your securities account immediately after notification from the Warrant Agent that they have earmarked the warrants and that your exercise notice is in order.

You cannot sell the warrants once you have exercised them.

Q. How long will CDP take to credit my account with the new shares arising from the exercise of my warrants?
A. After receiving the exercise notice, CDP will credit the shares into the 'Available' balance. The converted shares will be credited to the 'Free' balance of your securities account five market days after Lodgement Date. This is provided the Warrant Agent has sent the new share certificates to CDP and the new shares have been approved for listing.

CDP will notify you in writing after your account has been credited.

Q. When can I sell the converted shares?
A. You may sell your converted shares only after receiving CDP's notification, or when your shares are in the Free balance of your securities account.

If you sell before the shares are in your account, you risk being bought-in. To meet your delivery obligation, the Exchange will buy-in the shares from the market if you do not have them in your account by due date. You will have to pay for the difference between your sale price and the buy-in price, and all other related charges.

Q. I have just sent in my exercise notice to convert my warrants to shares and there is an entitlements distribution. Will I be eligible for the entitlements distribution?
A. Whether you are eligible for the entitlements will depend on how the listed company had defined the entitlements date. Listed companies can set the entitlements date to be either on Lodgement Date (L) or the day after Lodgement Date (L + 1).

Consequently, if your warrants are converted on L, which happens to fall on Books Closure Date and the listed company had defined entitlements date as L, then you will receive the entitlements.

However, if you have converted the warrants on L, which happens to fall on Books Closure Date and the entitlements date had been set as L+1, then you will not receive the entitlements.

Q. What happens if there is a warrant issue or entitlement for the shares I have in my CPF Investment Account?
A. If the warrant entitlement comes free, the warrants can be left in your CPF Investment Account for you to sell or convert to shares with your CPF funds before the expiry date.

However, if you have to pay for the warrant entitlement, i.e. you have to subscribe for the warrants, you will not be able to use your CPF savings to do so. In this case, you can:
1. provide your CPF Agent Bank with the cash to subscribe for the warrants on your behalf; or
2. transfer the right to subscribe for the warrants from your CPF Investment Account to your CDP Securities Account before you subscribe in cash.

However, if you want to sell your rights instead of subscribing for the warrants, you may sell your rights in the same manner as you sell your shares purchased with your CPF savings.

Q. What happens if I do not sell or exercise my warrants by the expiry date?
A. On expiry date, warrants become worthless and cannot be exercised into new shares.

Q. I am still holding the physical warrant certificates although the company's shares and warrants are already traded scripless. How do I exercise the warrants?
A. The exercise procedure is similar to that for the first question. However, you will have to surrender your warrant certificates to the Warrant Agent.

If you wish to have the new shares credited directly to your CDP securities account, you will have to fill in your securities account number in the exercise notice.

Q. How do I sell my new shares if I have opted to receive physical certificates after exercising the warrants?
A. Physical share certificates cannot be used to settle the sale of your new shares. You must first deposit the certificates with CDP. You need to pay a deposit fee of S$10 (excluding GST). Payment may be made in cash, or by cheque made in favour of "The Central Depository (Pte) Limited".

After receiving your share certificates, CDP will send them to the share registrar to have them transferred and registered in CDP's name before they can be credited to your account. The whole process takes 17 market days; 15 days for the registrar to transfer and register, and two days for CDP to credit your account.

You may sell your converted shares only after receiving CDP's notification, or when your shares are in the 'Free' balance of your securities account.

Q. How can I check the expiry dates for warrants?
A. The trading name of the warrant provides the expiry date. It appears in a year-month-day format. For example, CSC W050427 indicates that the warrant expires on 27 April 2005.

17. What is pre-open and pre-close?

'Pre-Open' Routine
It is a 30-minute session before regular trading starts at 0900 hrs. It comprises the 'Pre-Open Period' and the 'Non-Cancel Period'.

During the 'Pre-Open Period' (0830 to 0859 hrs), buy and sell orders can be entered, amended or withdrawn. They will not be matched and executed during this period. The 'Non-Cancel Period' is between 0859 to 0900 hrs, during which input, amendment and withdrawal of orders are not permitted. Orders that are matched are executed at a single computed price, which will be the same as or better than the price at which the orders are entered. This computed price shall be the opening price for the day. Unmatched orders will be carried forward into the regular trading session.

'Pre-close' Routine
At 1700 hrs, all unmatched orders are carried forward to the Pre-Close Routine, which runs for 6 minutes and consists of a 'Pre-Close Period' and a 'Non-Cancel Period'.

Orders can be entered, amended or cancelled during the 'Pre-Close Period' (1700 to 1705 hrs). During the 'Non-Cancel Period' (1705 to 1706 hrs), input, amendment and withdrawal of orders are not permitted. Orders that can be matched are executed at a closing price computed for the day, while unmatched orders will become void.

18. What should I do when I receive the thick annual report every year? Do I have to do anything about it?

The thick annual report consists of a few important information that any serious investors need to pay attention to. Firstly, it gives a snapshot of how well the company is doing in that financial year if you look at their financial statements. Secondly, the chairman/CEO will have give his/her message to shareholders, detailing the next year’s direction, a summary of the company’s performance and generally what to expect in the future. Lastly, there will also details of where and when the annual general meeting (AGM) for the company is taking place. The AGM is a meeting where shareholders and the directors will meet once each year to pass resolutions regarding the company. Examples of such resolutions include approval of director’s fee, re-election of directors, approval of dividend payout, rights issues, etc.

You can choose not to go to the AGM and missed communicating directly with the directors (and the free food) and instead appoint a proxy to vote for you on your behalf. OR you can totally choose to ignore the AGM.

19. What are rights warrants?

In addition to issue rights shares, a company may instead choose to issue rights warrants. Somewhat similar to right shares, rights warrants give the shareholders an opportunity to subscribe to rights that will be converted to company warrants upon ceasing of nil-paid rights trading. These company warrants give the holders the right to convert the warrants to ordinary shares at some point in the future (before the expiry of the warrants) by exercising them.

This is quite different from rights shares. Subscription to rights shares and subsequent ceasing of nil-paid rights converts the rights to ordinary shares immediately, whereas rights warrants are converted to company warrants (so you can choose when to convert to ordinary shares anytime before expiry of the warrants). The benefits of the warrants is thus this – you can save capital that would be otherwise locked up as warrants are leveraged derivatives, so the locked up capital is a fraction of that of ordinary shares. If the company is doing well, the price of the warrants will rise and you might choose to sell it without exercising it. Or if you believe in the long term prospects of the company, you can choose to exercise your warrants by converting it to ordinary shares.

To find out how to exercise warrants, look for the relevant questions in this faq.

Paul (see comments) mentioned that there are some warrants that can only be converted on a specified date, an example of which is TechOil@GaeW101126. As always, it's better to check the OIS that comes together with the rights issue for more information that might not be applicable for others.

20. How do I apply for rights? What are the options I have?

Okay, you received a bombshell in the form of rights issue and you don’t know what to do despite reading the thick OIS (offer information statement) mailed to you. You panicked.

If you flip the OIS and look for the section under “Procedures for acceptance, payment and excess applications by entitled depositors” under the Appendix section, you can see that it’s all spelt out clearly for all the possible cases you can imagine.

I’m only going to go through the basics. There are two main ways to subscribe for your rights:

a. acceptance and application by ATM of a participating bank

b. acceptance and application by CDP

First before choosing either options, look at the mailed Form A - white form (ARE for rights shares) or green form (WEWAF for rights warrants). Pay attention to the number of rights shares/warrants provisionally allocated – that is the amount that you are allocated, so you can choose to take it all up, partially, not at all and/or apply for excess. Find out how much you need to pay for and how much you need to pay if you want the excess rights.

If you go by ATM, it’s the easier option. Just go to the ATM screen, click on other transactions, then look for something like “ESA – IPO applications”, then find the company that is relevant. You’ll be guided to type in the amount of rights that you wish to accept out of the allocated (e.g you may be provisionally allocated 5000 rights but may want to accept only 2000), plus another separate screen where you’ll be guided to type how many excess rights you want to subscribe. Then you’ll come to a screen where they will tell you how much you have to pay. Make sure this screen you check carefully before pressing. I know for DBS you need to pay a service charge of $2.00, not so sure of other banks.

If you applied through ATM, then do not send any forms! It’s done – just wait for them to mail you how many excess rights you’ve successfully got and how much you applied for.

If you’re going through application by CDP, then you have to fill form A (the coloured forms). There’ll be instructions to tell you how to fill but I’ll run through a little. First, delete away the I/We* and my/our* that you see accordingly. Then look under Registration – and fill in quantity (the number of rights shares/warrants) you accepted, calculate and fill in the amount payable to CDP (multiply the quantity by issue price per share/warrant). Fill in the number of excess rights you wish to apply and repeat, total it up and sign below.

Next go to the bank to get a cashier’s order or banker’s draft (it’s just a cheque that is issued by the bank – you have to pay the bank a certain fee in addition to the amount for their services) with the following written – “CDP – XYZ RIGHTS ISSUE ACCOUNT” and crossed “NOT NEGOTIABLE, A/C PAYEE ONLY”. On the reverse side, write your name and your securities account number. Finally send the banker’s draft/cashier’s order and the form A to the enclosed envelope mailed to you. Affix your own stamp!

21. How is the opening price of a stock determined?

(from ccloh of cna forum)

This is done by matching the highest bid price and quantity with the lowest ask price and quantity until a common price is met. For example:

100,000 1.10
90,000 1.09
80,000 1.08
70,000 1.07
60,000 1.06
50,000 1.05
40,000 1.04
30,000 1.03
20,000 1.02
10,000 1.01

10,000 1.00
20,000 1.01
30,000 1.02
40,000 1.03
50,000 1.04
60,000 1.05
70,000 1.06
80,000 1.07
90,000 1.08
100,000 1.09
200,000 1.10
300,000 1.11
400,000 1.12

the 100,000 @ 1.10 BUY will match with 10,000 @ 1.00, 20,000 @ 1.01, 30,000 @ 1.02, 40,000 @ 1.03 from the SELL

the 90,000 @ 1.09 BUY will match with 50,000 @ 1.04, 40,000 @ 1.05 from the SELL

the 80,000 @ 1.08 BUY will match with 20,000 @ 1.05, 70,000 @ 1.06 from the SELL

Finally 70,000 @ 1.07 BUY will match with 10,000 @ 1.06, 60,000@ 1.07 from the SELL

Hence, the opening price will be 1.07, with the buy queue of 60,000 @ 1.06 and the sell queue of 20,000 @ 1.07

22. Why is it that when I queue to buy at price of $0.50, but when the current price of the stock reaches that, I still haven’t bought my stock yet? Is it because of queuing?

It’s best to give an example of how the queuing works.

Say for company A, you'll see the quotes as
B vol, Buy price, sell price, sell vol
10, 0.775, 0.780, 12

You queue to sell at 0.780, 5 lots. You'll see the quotes as
10, 0.775, 0.780, 17

I want to buy 2 lots at 0.775, the quotes become
12, 0.775, 0.780, 17

Basically you join the queue to sell at 0.780 while i join the queue to buy at 0.775. Let's say you're impatient and wanted to sell immediately. So you sell another 5 lots at 0.775. The quotes become
7, 0.775, 0.780, 17

TAKE NOTE: I didn't buy anything as my queue is not up. Unless another seller sells at 0.75, 6 lots - i'll get 1 lot (order partially filled). If sells at 0.75 for 7 lots - i'll get 2 lot (order fully filled).

Same thing goes for buying. If I can't wait, I'll just hit 2 lots at 0.780. THe quotes change from
12, 0.775, 0.780, 17 to

12, 0.775, 0.780, 15

Did you manage to sell? No, unless someone buy up 0.780 for another 15 lots, then your order will be fully filled.

23. What is CE and XE? What is cash distribution?

CE means cum-entitlement. This means that the company is going to distribute cash to shareholders as a result of:

a. Delisting – so all the shares held by shareholders will be ‘bought’ back by them with the cash returned to the shareholders

b. Shares cancellation – this is to reduce the number of shares outstanding. They will announce a ratio, say 1 out of every 12 shares will be cancelled at $0.50. So, if you’re holding 6000 shares, 500 shares will be cancelled so you’ll get back $250 (500 x 0.50) with 5500 shares remaining (6000 – 500).

To qualify for entitlement, you need to have shares before or on CE. This means that if the stock went XE (ex-entitlement) and you went to buy it, you won’t get the cash distribution due to the entitlement.

24. What is BB? I keep seeing people saying BBs are buying/selling.

BB stands for a lot of things - chng kay, big boys, big brothers etc. Basically they refer to institutional players like fund managers, brokerage house like JP morgan, Merrill lynch, hedge funds and others. They are the ones who possess the will and the clout to move the markets that retailers investors like us can't. They are able to do a lot of things to the stocks - drive it up, bring it down, issue reports to buy but sell it etc. Basically, you wouldn't want to bet the other direction from what the BBs are doing - it's suicidal.

25. What is shares splitting and what are its implication?

All listed companies have a fixed number of shares outstanding. A shares split is when the company increased the number of shares outstanding by issuing more shares to current shareholders. For example, a 2-for-1 split means that a company initially having 30 million shares will end up having 60 million shares.

There is an ex-date and a record date, which are duly announced beforehand. Normally, the current shareholders will receive the split shares a day after the record date but it is more advisable to check with CDP to confirm that.

The most direct implication is that the value of the company per share will be diluted. Price per share and key ratios like earnings per share (EPS) will also be changed. Obviously the number of shares outstanding and the par value of each shares will be affected. What will not be changed is the accounts as well as the capital structure of the company (same market capitalization)

For example, company A has 10 million issued ordinary shares @ par value of $0.50 each (Capital = 5 million). After splitting, it will have 20 million of issued ordinary shares @ par value of $0.25 each (capital is still 5 million). Hence, there will be no change in the capital structure of the company.

So why do companies do that?

1. Sometimes the share prices of the companies have risen too high for retail investors to participate, so a shares splitting is good to lower the price per share to entice investors to jump in.

Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices. For a good example, look at Chinafish.

2. Shares splitting is good for illiquid stocks with very low floating shares. This can affect the reflection of the company. Basically it's to increase the liquidity of the company. For an example, look at Ezion.

(Courtesy of Jeng)