Baltic Dry Index and Maybulk Again.

On Feb 13th 2008, I blogged the following: Another Update on Baltic Dry Index

What interest me the most was the chart of the BDI then. BDI on that day was at 6712 points. See below:



And on that day, the leading BDI stock in our market, Maybulk, was at 3.98.

So how is BDI doing now?



BDI closed at 8403!

Here is the incredible one month chart of the BDI.



Let's see on Feb 13th, BDI was at 6712. it's now at 8403.

Oh.. it's up only some 1691 points.

And Maybulk now is at 4.02.

Up a mere 4 sen from Feb13th 2008????

Macam Mana Ni?

Rational or Irrational?

Saw this set of commentary.

• Baltic Freight Rate Gain Supports Commodities Story
  
  FN Arena News - March 07 2008
  
  By Chris Shaw
  
  Having hit a low in late January the Baltic Dry Index, which is an indicator of the cost of moving raw materials by sea, has run significantly higher, hitting a level this week up more than 45% from those lows earlier in the year.
  
  According to TD Securities global strategist Stephen Koukoulas the fall in January was nothing more than a seasonal blip, a view supported by the fact the index is now up around 300% from its lows of 2006 and around 860% from its lows of 2001.
  
  This has important implications for commodity prices as the index is seen as a reasonable proxy for commodities demand and the latest gains in the index suggest there has been little sign of any slowdown in the global demand for commodities and by extension, global economic activity.
  
  This implies global growth rates should remain at solid levels despite the recent volatility in financial markets, which Koukoulas suggests will also mean the current inflationary pressures evident in a number of economies around the world are unlikely to go away any time soon. ( http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=868B898C-1871-E587-E1A46D8B77BB2002 )
  
  
  

HwangDBS and its Call Warrants

Was alerted by Jamesy on the following story. HwangDBS rolls out structured warrants

• HWANGDBS Investment Bank Bhd will roll out its first retail structured products for this year today - two call warrants that leverage on the upside potential of two of China’s leading blue chip stocks, China Railway Group Ltd and China Mobile Ltd.
  
  They provide investors with alternative investment choices and the opportunity to gain exposure to China stocks for a small investment outlay, said HwangDBS in a statement. The issue price of the call warrants is set at 11 sen for China Mobile and 10 sen for China Railway, and the exercise price is set at HK$111 (RM45.13) for China Mobile and HK$9.30 (RM3.78) for China Railway, it said.

The very last line in the article was most interesting.

• HwangDBS chief executive officer Alex Hwang’s view is that in bear markets, equities and equity derivatives such as call warrants are a good choice, especially blue chips and heavyweights with an upside story.

OMG!

I guess when one wants to sell a product, most of the time they will say anything!

Let's examine that statement.

In a bear market, what would most likely happen to blue chips and heavyweights? My answer? I would imagine that since it's a bear market, by the law of averages, most blue chips and heavyweights would be hit bad, since by definition, it's a bear market. And if that's the case, how could derivative such as call warrants be a good choice?

Of couse, as noted, it was stated blue chips and heavyweights with an upside story. That's always possible. But in a bear market, finding blue chips with upside story is extremely difficult! And if it's difficult, again I ask, would call warrants be a good choice?

So in a bear market, do you reckon call warrants are good ideas?

Credit Suisse goes bull on Ta Ann

Read this article posted on Business Times. Plywood price rebound a boon to Ta Ann

The first paragraph reads

• TA ANN Holdings Bhd, one of the largest timber companies in the country, has been upgraded to "outperform" from "neutral" by Credit Suisse on signs that plywood prices are starting to rebound after falling for the last 12 months.

I was left curious.

I used Globalwood website as my indicator for plywood prices.

This is Dec 2007 Market prices link: http://www.globalwood.org/market1/aaw20080202a.htm

This is Jan 2008 Market prices link: http://www.globalwood.org/market1/aaw20080101a.htm

This is Feb 2008 Market Prices link: http://www.globalwood.org/market1/aaw20080202a.htm



Perhaps my eyes are failing but do I see plywood prices rebounding? Do you? Or maybe I am using a poor website?

The article then continues..

• The fresh target price for Ta Ann is RM9.20 a share, more than a third of the stock's last trading price.
  
  According to Credit Suisse, Ta Ann's share price, historically has a 74 per cent correlation with plywood prices.
  
  It noted that in the last cycle, plywood prices bottomed in December 2005 and its share price surged by up to 51 per cent when plywood prices rose in 2006.

Ta Ann closed yesterday at 6.65!

Now given the fact that Ta Ann was only trading a low of 5.65 on Feb 15th, this would mean that Ta Ann's share price has already appreciated by a whopping 1.00.

See the nice chart posted on BTimes.



Assuming that the date of the Credit Suisse report is fresh and not too out-dated, then surely one would ask why after the share price had already increase so much, then only publish such a bullish article on Ta Ann with a whopping target of rm9.20?

"Macam Mana Ni?"

Gee thanks Credit Suisse!

The article then continues

• "Ta Ann's plywood prices bottomed after falling 38 per cent from the high in late 2006. Prices are just starting to recover. The risk to our target price is if plywood prices don't recover or if there is a total ban on logging in Malaysia," the report stated.
  
  Ta Ann, which exports 98 per cent of its plywood to Japan, had a challenging time in 2007, hurt by an 18 per cent drop in Japan's plywood imports, the steepest drop since the Asian financial crisis a decade ago.
  
  For the year ended December 31 2007, Ta Ann's sales grew by five per cent to RM669.6 million while net profit fell 26 per cent to RM97 million.

Ta Ann net profit fell 26%.

Of course, they would argue that stocks should be valued based on what they earn in the future, which I accept. However, are plywood prices rebounding?

How?

Grand Master Cow!

Here's a video to cheer everyone up!

Many thanks to Doraiddd. Your love for si lembu shall not be forgotten!

:)

Maybulk and BDI again.

A couple of news clip yesterday.

From Bloomber news clip ( Japan's Commodities Shares Gain on Metal Prices; Refiners Fall )

• Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd., Japan's two largest shipping lines, gained after the Baltic Dry Index, a measure of commodity shipping costs, rose to the highest in almost two months.
  
  Nippon Yusen jumped 3.2 percent to 993 yen, breaking a four- day losing streak, while Mitsui O.S.K. climbed 3.8 percent to 1,375 yen. The Topix Marine Transportation Index was the biggest gainer among the 33 industry groups on the benchmark.

From Reuters ( Singapore's NOL moves 17 pct more cargo in Dec-Feb )

• SINGAPORE, March 3 (Reuters) - Singapore's Neptune Orient Lines (NEPS.SI: Quote, Profile, Research), the world's eighth-biggest container shipping firm, said it carried 17 percent more containers on its ships in the six weeks from Dec 29 to Feb 8, compared with the same period a year ago.
  
  The company said in a statement on Monday that its shipping arm APL carried the equivalent of 289,400 forty-foot containers on its ships in that period.
  
  The average revenue on each container carried by the state-controlled firm rose 17 percent to $2,989, from $2,562 in the same period a year ago. (Reporting by Daryl Loo, editing by Neil Chatterjee)

Here is the how the BDI is looking the past one month!

On the local front, there isn't any action yet on Maybulk. Last traded 4.12.

Worrying Decline In IPO?

The following article was published on the Edge yesterday. 03-03-2008: Worrying decline in IPOs on Bursa

• KUALA LUMPUR: Bursa Malaysia is seeing a worrying trend in the declining number of initial public offerings (IPOs) that have come to the market over the past few years, with a significant number of companies preferring to look abroad to raise equity funds.
  
  According to Bursa data, the number of IPOs last year fell to 28 from 40 in 2006 and 79 in 2005. The number of annual IPOs has declined by about 68.2% from a decade ago. So far this year, there have been six IPOs, comprising three for the Second Board and three for the Mesdaq Market. (rest of article here )

For me, as an investor, it's always quality over quantity for me!

I do not like to see listing just for the sake of listing and I would rather prefer more quality listing!

Just look the Messed-Daq market. The quality of most stocks in there is simply appalling in my opinion!

Warren Buffet Mania!

Did you miss the Warren Buffett show last night?

Here all the video links! Enjoy!

• Warren Buffett to CNBC: U.S. Economy in Recession By "Common Sense Definition"
• LIVE BLOG: Warren Buffett on CNBC's Squawk Box - 6am ET Hour
• LIVE BLOG: Warren Buffett on CNBC's Squawk Box - 7am ET Hour
• LIVE BLOG: Warren Buffett on CNBC's Squawk Box - 8am ET Hour
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 1)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 2)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 3)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 4)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 5)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 6)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 7)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 8)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 9)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 10)
• Warren Buffett Answers Your Emails on Squawk Box: Transcript (Part 11 and Final)

Don't Think Bull!

Published on Fortune, here is a nice piece from senior editor, Alan Sloan, Don't expect another bull market

• When the greatest bull market in U.S. history started in the summer of 1982, only a relative handful of people owned stocks, which were cheap because they were considered highly risky. But by the time the Standard & Poor's 500 peaked in March 2000 amid a fully inflated stock bubble, the masses were in the market. Stocks were magical, a supposedly can't-miss way to pay for your kids' college, save for retirement, enrich employees by giving them options, and regrow hair. (Just kidding about the hair. Alas.)
  
  Stocks might go down in any given year, the mantra went, but in the long term they'd produce double-digit returns. However, one of the lessons of the past eight years is that the long run can be ... really long. As I write this in late February, the U.S. market - which I'm defining as the Standard & Poor's 500 - is well below the high that it set on March 24, 2000. Even after you include dividends, which have run a bit below 2% a year, you've barely broken even, according to calculations for Fortune by Aronson & Johnson & Ortiz, a Philadelphia money manager.
  
  Hello? Eight years of dead money in the broad stock market? How can that be, given that Ibbotson Associates says the S&P has returned an average of 10.3% a year, compounded, since 1926? Think of it as a six-foot man drowning in a pond with an average water level of six inches - if you step in at the wrong place, the water can be eight feet deep.
  
  To be sure (the favorite phrase of us journalistic hedgers), this has been a flukishly bad period. Ted Aronson says that it's in the bottom 2% of the almost 900 different 96-month periods in the Ibbotson statistical universe. Nevertheless, it's the return we have.
  
  Barring a miracle - or the creation of a New Math of the market variety - there's no way we'll ever see a bull market along the lines of what so many of us grew up with. During that enchanted period, the boring old S&P returned more than 19% a year. When you include compounding, your money more than doubled every four years. Pretty slick.

Do you agree? Is this it? Or do you still believe that bulls live forever and perhaps we are facing a temporary setback?