What happened on 25th November?
A state-owned investment conglomerate - Dubai World Group, announced that they want to restructure its debt of US$59 billion including its property subsidiary, Nakheel. This sudden news caused a shudder in the financial markets and concerns about the ability of the UAE banking sector and foreign banks have on businesses related to Dubai World Group. Worries on how this would also affect the fledgling US real estate sector were evident as the Dow Jones U.S. Real Estate Index fell 2.9 percent, nearly twice the decline of broader U.S. market indexes on Friday 27th November.
Background of Dubai World and Nakheel
Dubai World, whose majority stakeholder is the emirate’s ruler, Sheikh Mohammad bin Rashid Al Maktoum, borrowed from more than 70 lenders to buy assets ranging from stakes in Las Vegas casino company MGM Mirage to upscale retailer Barneys New York through Istithmar. Their property arm, Nakheel is also perhaps best known as the developer of Dubai's palm-shaped islands, also carries the Mandarin Oriental and W hotels in New York in its portfolio, and has a 50 percent stake in the Fontainebleau Miami Beach resort. Dubai World's holdings go far beyond real estate. It has a 20 percent stake in Canada's Cirque du Soleil, and also invests in the global bank Standard Chartered Plc and New York boutique investment bank Perella Weinberg Partners.
Market reactions
The market over-reacted on Friday but over the weekend, the UAE showed support to Dubai's debt, and provided some assurances. Today, the global markets and banking shares are rebounding. In Hong Kong, shares of HSBC and Standard Chartered rebounded overnight as investors viewed Friday's reaction and fears of exposure to Dubai as overdone. However, stocks in the United Arab Emirates, trading for the first time (after a 4 day Hari Raya Haji holiday), fell with Dubai's index down 6.9 percent and Abu Dhabi's share benchmark 8.1 percent lower. Overall, the MSCI index of Asia Pacific stocks traded outside Japan rose 2.8 percent. Reflecting some of the calm, U.S. stock futures are up 0.4 percent pointing to a firm start at Wall Street, which had already started showing some signs of a recovery on Friday having erased some of the losses toward closing time. European stock index futures also point to a higher open, futures for the Eurostoxx 50, German DAX and French CAC gaining 0.3-0.4 percent.
Investors' Nerves Soothed
Investors were also placated by authorities' moves on Sunday (29 Nov) to prevent any major fallout from the looming debt default by Dubai World. The United Arab Emirates offered banks emergency support to ease fears in financial markets and to inject liquidity into Dubai's banks by the central bank, together with promises by neighboring city-state Abu Dhabi to provide selective support. The Central Bank of the United Arab Emirates said they would support domestic banks and foreign banks and would give banks a channel access to special liquidity which is tied to their current accounts at the Central Bank. This amount can be withdrawn at rates higher than 0.5% above the 3 month local inter-bank interest rate benchmark.The benchmark three-month Emirates interbank offered rate was at 1.919 per cent on Nov. 25, the last working day before the Raya Haji religious holiday.This is a very reassuring move by the central bank to limit the risk of any run on Dubai-based banks as it will alleviate any liquidity concerns by foreign banks about the banking system, mostly those based in Dubai.
What should we do ?
As usual, do not panic. For some reassurances, Asian markets rebounded sharply today. The Middle Eastern markets are down as today is their 1st trading today after a long public holiday. Investors should wait for the markets in the Middle East to calm down. You may want to do a portfolio review on your middle eastern positions (if you have any) after the storm subsides, hopefully by end of his week and realign them to more Asia centric positions
33 comments:
Sold Sign at 1.57; protasco at 98.5-99sen, cheetah at 54sen, realize T+1 profit.
Bought Lonbisc at 1.03
Hingyap perform below expectation; under selling pressure after the stock strong runup. Only mamage to sold about 10% stake a average 1.23, realize more than 10k paper profit.
Beside taking profit on Hingyap; portfolio have also take profit on Sign; protasco; glomac and cheetah; realize total of few more k profit first.
Portfolio at the moment realize transaction loss of more than 2k on GENM, but may buyback later if GENM on weakness to reverse back to profit.
Lonbisc has revised its 1st & final dividend from 4% to 3% but its a tax exmpted one, so i presume is a better dividend than 4% with tax imposed.
Good trade hng,,
Laughing all the way to Bank.... :)
horse
There is no different at all between 4sen less tax and 3sen TE. The coporate tax is 25%, so the 4sen less tax = 3sen in total.
The only different perhaps is if 4sen ex-date, share adjust down 4sen, but if is 3sen TE, share only adjust 3sen after ex-date
The other of course is for those entitle to tax-refund due to tax basket below 25% corporate tax
It almost the year end now, need to adjust portfolio.
i'm currently review my strategy and refine it to be implement from next yr
my mistake, i tot the corporate tax is stay at 26%.
bought back all GENM a 2.83; realize intraday few hundred profit.
Sold back partial GENM at 2.85
Sold more protasco at 99sen; kSL at 1.19; Sign at 1.57; bought more Lonbisc at 1.03
Bought Axiata at 3.05; hunzpaty at 1.39
sold back all Axiata at 3.07
Sold Genting at 6.95-6.97; realize one time loss
Wow lau! Genting slump to 6.89; i'v bought back all genting at 6.90, realize intraday gain, instead of one time loss.
Portfolio sold off all GENM at 2.86, realize lower transaction cost
Sold some of my GENM at 2.86.
Genting share slump very fast from 6.98-6.95 with unknown reason in last 30min before bidding time, portfolio make fast decision to selloff all to cut further weakness and avoid inevitable loss! Portfolio manage to buyback later at 6.90; but Genting share close at 6.89!?
Share remain weak on Hingyap, Protasco and glomac, unable portfolio to sell fast enough to reduce holding stake. Curent portfolio have over exposure using ultra maximum margin line have prompted portfolio to take action fast on Genting to cut loss fast first and think to buyback later.
Core portfolio
Protasco 61.2%
Hingyap 40.7%
Lonbisc 12.7%
Crestbld 10.6%
Glomac 8.2%
Sign 3.3%
Hunzapty: 2.6%
Cheetah 2.2%
Trading portfolio
Genting 60.7%
Added LONBISC at RM1.03 to my portfolio.
GENTING SP closed at 1.10. :)
Hope to spike some movement within this 2 months. :)
horse
Lucky, i've just sold off only yesterday margin line Genting SP at $1.09, core stake remain for longterm :)
hng,
I noticed from the way you trade, Public Bank system seem to be very fast & efficient in executing your trades. You seem to be always manage to match buy & sell orders easily whenever price touchers your price, even with the big volume that you trade. PBB system must be super duper fast, this one added advantage to your trading style. You have make the right choice of Broker... :)
7126 LONBISC LONDON BISCUITS BHD
1st & Final Dividend 3% T.E.
Entitlement Details:
First and Final Dividend of 3% Tax Exempt
Entitlement Type: First & Final Dividend
Entitlement Date and Time: 22/02/2010 04:00 PM
Year Ending/Period Ending/Ended Date: 30/06/2009
EX Date: 18/02/2010
To SCANS Date:
Payment Date: 23/03/2010
Sold off all Genting at 6.98, realize transaction cost loss first
Bought Axiata at 3.05
Bought more Axiata at 3.04
Sold half of Axiata at 3.07
Sold remaining half of Axiata at 3.08
Good trade mate. :)
horse
Portfolio have realize transaction cost loss on Genting by selling at 6.98 in earlier moring, loss more than 5k first. Will reverse back if Genting on weakness.
However, this loss manage to reduce half by intraday gain on Axiata.
Market seem to holding steadily.
The day not end yet, still got chance to turn -ve to +ve when Genting may turn weak later in the afternoon... :)
It seem that both GENM & GENTING are running on a different direction nowaday. Genting up GENM down and vice versa....
I hope so, if not, will just realize the loss. Portfolio afford to recognize loss first without significant affect portfolio performace, but will try my best recover back either buyback later or trade other stock to breakeven.
In regard to trading system with Public bank, there is no problem to execute trading fast as every second i'm sitting in front of these platform, but must possess mental alert and make decision fast.
Good long-term growth potential beyond Malaysia. AXIATA is the only listed telco player in Malaysia with exposure
beyond Malaysian shores, providing good long-term growth potential compared with DIGI and MAXIS, which are trapped in
an already saturated Malaysian market. Its exposure to highly populated countries like Indonesia, Sri Lanka, Bangladesh,
India and Pakistan could represent the next major growth platform for its telco business
If Genting unable to break 7.00 in next few day, these will send signal that this is resistance level, with next target floor price at 6.80.
In regard to GENM, there is mininum catalyst to spur share higher after miss delcare special dividend. Although GENM have commence share buyback to render support to share price, but with incoming opening of new casino, the impact remain uncertain to GENM.
Growth potential of Axiata in regional telco market support its rich valaution even its lack of yield
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