USD/MYR = 4.1365

USD/MYR is currently forming the sub-wave ii of its wave C.

This sub-wave ii may go to 4.400 to form a 'head and shoulder' reversal pattern before starting its sub-wave iii that can strengthen the Ringgit to 3.200 or 3.000 to one USD.

One event that can trigger the starting of sub-wave iii is the escalating US/China trade war, when China is forced to dump a portion of its holding of US$1.2 trillion Treasuries (bonds, bills and notes).

Dennis Ignatius

"We are running out of time as a nation. We cannot continue to keep fighting old battles; we either fight amongst ourselves and be left behind or unite to compete with the rest of the world".

"The challenges are enormous. .......... If anyone can do it, it is surely Dr. Mahathir and this government".

Click 'Part 9 : China & Malaysia - The Challenges Ahead' for his article.


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Pinehill Pacific bhd (Rm 0.50) - Part III

Assuming Pinepac has bottomed at 14 sens last week and it has started its new uptrend cycle.

Today is the 4th day of its new cycle. The 69 sens high marked the end of its mini wave 1. From the 5-minute interval chart, it appeared to me that Pinepac is possibly forming the wave b of its mini wave 2. 

 

It is good to take note that besides the possibility of a simple a-b-c wave form for the mini wave 2, there are other possible forms such as a-b-c-d-e or a-b-c-x-a-b-c and so on. 

For stocks that have been moving downtrend with thin volume for years and then suddenly became very active with high volume, I usually disregard its past OBV figures and start a new OBV computation to monitor the accumulation/distribution.

From the table, beside the OBV, I have added a column for 'cumulative volume' that is for me to check the velocity of Pinepac. The velocity is defined as the number of times Pinepac turns its capitalization of 150 million shares. The cumulative volume is expressed as a percentage of the capitalization. By the close of today's trading the velocity has reached 40.66% of its capitalization and the OBV has reached 21.54% of its capitalization.

Due to the activities of day-trader and short term speculators, it is possible that velocity may reach a few hundred percents (having turned over the capitalization a few times).

Daily volume is expected to shrink during consolidation until the next run up.

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Pinehill Pacific Bhd (Rm0.54) - Part II

From the 5-minute interval chart, on the second day after its announcement to sell its 8,999 acres of oil palm plantation in Perak to United Plantation Bhd (UPB) for about Rm413 million, from its Friday's limit-up price of 44 sens, its price opened with a gap and moved to a high of 69 sens followed by sharp drop to 53 sens before moving side way and closed at 54 sens. Volume traded is very high at 29.75 million, which is 19.8% of its total number of shares of 150 million.

At its closing price of 54 sens, its total market capitalization is Rm0.54x150m = Rm81 millions. This figure is far lower than the proposed price of Rm413 millions by UPH to buy the 8,999 acres of land.

The major shareholder of Pinepac is Tan Sri (Dr) Ketheeswaran with 22.78% indirect interest and 9.55% direct interest. The shareholding of the next 5 major shareholders are 3.87%, 2.47%, 2.4%, 2.2% and 1.9%, totaled 12.84%. I can safely say that more than 60% of the shares are in the hand of the minority shareholders plus free float held by other investors.

It appeared to me that it is possible for UPB to buy up to 33% of Pinepac share from the open market for a price of 54 sens a share to Rm1.00 a share to trigger a mandatory general offer. Even at Rm1.00, it will cost UPB less than Rm150 millions to takeover Pinepac with its 8,999 acres of land in Malaysia and another 51,400 acres of land in Indonesia. Not forgetting 22,192 acre out of 51,400 has been planted with oil palm and 22,100 acres are matured oil palm area.

At the worst, if UPB is willing to pay RM413 millions for 8,999 acres, why not used the Rm413 millions to buy up 150 millions of pinepac shares, that is Rm2.75 a share for 8,999 acres in Perak plus another 51,400 acres that has 22,100 acres of matured oil palm area in Indonesia.

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Weekly Update

Dow (26,743)

Dow closed the week with a new record high. It continues its uptrend to form the sub-wave iii of wave (vii) of its major wave 7.

FBMKLCI (1,810)

KLCI will reach a crucial stage in the next two weeks. If it will to move in tandem with the Dow, it will set new record highs on its way to form the wave (iii) of its major wave 5.

However if KLCI is unable to continue with its current uptrend with higher volume and with strong momentum, very likely it will move lower and the moment it punches through the 1,785 level, it is almost certain that KLCI is on the wave C of its mega wave (6).

Wave C of (6) is likely to touch a low of 1,530 level for another 15% drop. Be careful.

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Pinehill Pacific Bhd (Rm 0.44)

Pinepac suspended its trading yesterday pending announcement. It resumed trading at 2.30pm today with its price traded at limit-up price of 44 sens, up 30 sens from its last traded price of 14 sens.

It announced a proposal to dispose 8,999.13 acres of plantation land in Hilir Perak to United Plantation Bhd for a total cash consideration of Rm413,574,302.49.

Lets look at its liabilities

Total liabilities is Rm287,931,000.00. After paying off all its liabilities Pipepac still has a net cash of Rm123 millions. Divided by its total number of shares of 150 million, its net cash per share is Rm0.82.

Its book value for this 8,999.13 acres is about Rm254 million. The surplus over its book value is Rm159 million that is about Rm1.06 a shares. Its net assets per share will increase from its current Rm0.60 to Rm1.66.

Very likely Pinepac will announce a special dividend for its shareholders after completing the deal.

After selling off its 8,999.13 acres of land in Hilir Perak, Pinepac has no more plantation in Malaysia but it still has 51,400 acres of leasehold (60-year lease) land in Indonesia with book vale of Rm21,784,000.00 (about one sen per sq. ft.).

Out of its 51,400 acres of land in Indonesia, only 22,192 acres are planted with oil palm. By 2017 the matured oil palm area has reached 22,100 acres.

After selling off all its plantation in Malaysia, will Pinepac sell off its Indonesia plantation?

How much dividend will it reward its shareholders?

How high can the share price move up?

Your guess is as good as mine. But one thing is very likely, the price surge today marked the starting of a new cycle for its stock price.

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Weekly Update

Dow (26,154)

My reading for Dow remained the same, it is on its way to complete its major wave 7.

FBMKLCI (1,803)

If KLCI can move in tandem with the Dow, it will move higher to complete its major wave 5.

However, if KLCI failed to move in tandem with the Dow due to the weak ringgit and other local political and financial issues, it is possible that KLCI may continue to move lower in the medium term to complete its mega wave (6).

Inari Amertron Bhd (Rm 2.21)

If Inari has already completed its mega wave (1), it is on its way to form its mega wave (2). It is either a 'double-top' reversal scenario.

Or it is heading for a 'head and shoulder' reversal pattern.

It is also possible that the last high is not the end of its major wave 9, it is the wave (i) of its major wave 9, the current correction is the wave (ii) of 9.

Insas Bhd (Rm 0.835)

It remained possible that Insas is forming the wave i-ii of its major wave 5, but it needs to move higher again pretty soon to confirm its wave iii. I hope my reading is correct.

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Another Currency Crisis ?

Venezuela

It started with Venezuela, early this year the exchange rate of bolivar is around say 120 bolivar to 1 USD. Within 6 months the bolivar dropped to 248,000 bolivar to 1 USD. That is a 194,000% drop.

How can this happen, Venezuela ranked No. 1 in term of oil reserve. It has more oil than Saudi Arabia. A good example of mismanagement and corruption. Luckily we kick out BN.

Argentina

Then came Argentina. The peso started the year with 18.45 peso to 1 USD and now it is about 38.62 peso to 1 USD, that is about 110% drop.

Turkey

Now everybody is looking at Turkey's Lira. The lira started the year with about 3.72 lira to 1 USD and now it is about 6.62 lira to 1 USD, a 78% drop within 6 months since March 2018.

Is there a secret hand behind all these?

Will the crisis spread to Asia? Another Asian Currency Crisis on the way?

Lets look at the performance of major Asian currencies in 2018.

Chinese Renminbi dropped about 9%

Japanese Yen dropped 5.7% from its March high of 105.28 yen to 1 USD

Korean Won dropped 6.14%.

Singapore dollar dropped 5.5%

Philippines peso dropped 10%

Indonesia rupiah dropped 13%.

Thailand baht dropped only 5.6%, quite strong.

And our ringgit is weaker than Thai baht and Singapore dollars, it dropped 7.4%

The Australian dollars dropped more than the ringgit, it dropped 13% against USD.

Why USD is so strong despite the fact that the Federal Reserve had printed so much USD in its QE programs from 2008 to 2014. Altogether 3.6 trillion USD were printed. From the chart one can see how drastic is the Fed's action from 2008 to 2014.

China and Japan together they held a combined US$2.2 trillion of US treasury bonds

Looking at today's US's Federal Debt Clock, the figure is US$21.45 trillion

Based on US's 2017 GDP figure of US$19.48 trillion, the debt to GDP ratio is 110%.

Looking at the above my question now is whether the USD will collapse one day when the whole world decides to dump USD. That will be another crisis.

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MACC Shocked

Click 'MACC Shocked At Lim's Acquittal, But Never Shocked At Shahrizat's Cowgate Acquittal' for an interesting article from financetwitter.com.

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KLCI and Its OBV

All stock monitoring software compute the OBVs (on balance volume) of stocks and indices based on price movement. Whenever prices went up, the respective volumes were assigned as positive volumes and whenever prices dropped, the respective volumes were assigned as negative volumes. Summation of all these volumes for a particular stock or index is the OBV for the stock or the index.

For stocks, it is acceptable to me to compute the OBV based on price movement. But for index, I usually compute my own OBV based on market breadth (advance/decline) instead of price movement. The reason is simple, sometime the index can be positive but there are more losers than gainers. And sometime we can have more gainers than losers but the index can be negative. Basically market breadth is a better indicator than index to gauge the direction of the overall market.

From the above figure one can easily notice the obvious difference between the OBV based on closing price and that based on market breadth. 

The OBV based on market breadth has provided sign of distribution as early as end of 2016 and confirmed by August 2017 whereas the OBV based on closing price continued to move up and down together with the index. When KLCI moved very close to 1,900 level in mid-April 2018, the OBV that is based on market breadth has reached its temporary bottom at -100,000. 

The indication is that the 'smart money' has been selling since end of 2016.

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