REMNANT 888: August 2008

Thursday, August 14, 2008

Asian Stocks Dropped. Commodities Slighty Up

Aug. 14 (Bloomberg) -- Asian stocks fell, led by financial companies, after developer Urban Corp. filed for bankruptcy and Merrill Lynch & Co. said the credit crisis is far from over. Commodity producers gained after oil and metal prices rose.
You've got Europe slowing, Japan slowing, and a question mark over China. Something has to give.The MSCI Asia Pacific Index lost 0.4 percent to 125.75 at 5:35 p.m. in Tokyo, a third day of declines and the lowest close since September 2006. The gauge has slumped 20 percent this year as inflation accelerated, growth slowed and global financial companies posted writedowns and credit losses of more than $500 billion.

Metals & Oil:
A measure of six metals traded on the London Metal Exchange rose 3.2 percent yesterday, its largest gain since March 27. Crude oil for September delivery advanced 2.7 percent to $116 a barrel, the largest gain since July 30, and futures climbed as much as 0.8 percent to $116.94 today.
The rally in commodity prices coincided with a rebound in the Baltic Dry Index, http://www.bloomberg.com/apps/quote?ticker=BDIY%3AIND which tracks transport costs of raw commodities on international trade routes. The gauge gained 1.5 percent yesterday, ending a 23-day, 25 percent slump.
Measures tracking materials companies and shipping lines on MSCI's Asian index have dropped 12 percent and 8.4 percent respectively in the past month, the worst performances among the broader measure's 10 industry groups.
Longer-Term Outlook:
``Global growth may have slowed, but it hasn't stopped, which is why people are looking to pick up oversold commodities shares and shippers on their longer-term outlook,'' said Hideyuki Ookoshi, who helps oversee $365 million at Chiba- Gin Asset Management Co.

Sunday, August 10, 2008

US Market Info

Basic Material Sector: http://finance.google.com/finance?catid=57629812
Gold & Silver: http://finance.google.com/finance?catid=64980108
Steel & Iron: http://finance.google.com/finance?catid=59337585

Energy Sector: http://finance.google.com/finance?catid=60918252

Sector Rotation Says Bearish

SECTOR ROTATION MODEL...

One of our readers asked where we are in the Sector Rotation Model. That model shows the normal sector rotation that takes place at various stages in the business cycle. The chart shows that basic materials and energy are market leaders at a market peak. As the economy starts to slow, money starts to rotate out of those two inflation-sensitive groups. Basic materials peak first and energy last. This week's downturn in basic material stocks suggests that the topping process is moving even further along. Energy may be the next to roll over. As the economy slows, money flows into consumer staples, healthcare services, and utilities. That's where we appear to be right now. One way we can tell that a bottom is near is when money starts to flow into financial and consumer discretionary stocks. So far, there's no sign of that happening. That leaves us in the midst of a bear market with money flowing toward staples, healthcare, and utilities.

John Murphy

Friday, August 8, 2008

Steel Counter Potential

With the listing of Perwaja on Weds 20th Aug., there is a potential steel related counters may stage a rally. So be prepared..

Ann Joo RM3.68
4 Q nett profit RM267 million. Shares 522 million. Earnings per share = RM267/522= 51 sen.
Therefore the PER is 368/51= 7.
Nett asset = 159. Price/book= 368/159= 2.3
Earnings/nett asset= 51/159= 34%

Perwaja IPO RM2.90
4 Q profit RM215M. Shares 560M. EPS = 38.5 sen
If IPO is RM2.90, then PER is 290/38.5 = 7.5 which is similar to Ann Joo
If Perwaja moves beyond Rm2.90, expect other steel counter to rally,,?

Southern Steel RM2.90
4Q profit RM180M. Shares 419M. EPS = 43 sen
PER is 6.7 Price/book is 1.66 Earning/asset is 24%

Huaan RM0.59
4Q profit RM125M. Shares 1100 M. EPS = 11 sen
PER is 5.2 Price/book is 0.9 Earning/asset is 19%