Friday, January 24, 2014

Robust 9.4pc Investment Growth Likely

KUALA LUMPUR: Malaysia, which has the region’s highest investment to gross domestic product (GDP) ratio, is likely to see robust growth of 9.4 per cent in investments this year, according to Credit Suisse.

The research house said while domestic demand is slowing across Asean, what makes the nation unique is it ability to push through the infrastructure projects under the Economic Transformation Programme such as the doubletracking of southern railways and the second phase of the Klang Valley Mass Rapid Transit. 

“While the government is projecting investment by these entities to fall by 13 per cent year-on-year in 2014, we note that it also projected an 11 per cent year-on-year decline in its 2013  budget announcement only to recently revise the figures up to a 50 per cent year-on-year increase,” said economist Santitarn Sathirathai. 

On top of the government’s infrastructure investment push, the year-on-year rise in the value of manufacturing investment requests to the Malaysian Investment Development Authority, which is around five per cent of GDP, also bodes well for investment growth in 2014. 

“This increase in capex applications has been led by the electronics and petroleum sectors.” 

He said the slowdown in public investment growth in 2013 reflected temporary disruptions due to the general election and Umno elections, implying that a rebound is likely this year. 

Meanwhile, Credit Suisse said Malaysia may need to increase fuel prices again this year if it wants to move towards reducing its budget deficit and meet the 3.5 per cent GDP target next year. 

“This will likely add to headline inflation and have some negative implications on GDP growth, while allowing the federal budget shortfall to reach its target and preventing the debt from exceeding the self-imposed limit of 55 per cent of GDP.” 

Government spending had decelerated in the third quarter of 2013, falling from a peak of 43 per cent year-on-year in the first quarter to three per cent. 

Santitarn, however, warned that the ongoing subsidy rationalisation process and the weaker ringgit can add pressure to the consumer price index (CPI). 

Credit Suisse has revised its 2014 CPI to 3.5 per cent year-on-year. 

The Singapore research house expects private consumption growth to slow, while exports and investment will drive GDP growth. 

"Household spending will likely face a number of challenges. 

"This will be in the form of lowering government subsidies in the context of weak palm oil and rubber prices resulting in a real income squeeze for households, high household leverage and recent macro-prudential measures by the central bank, capping further borrowing by consumers." 

Credit Suisse expects Bank Negara Malaysia to hike the policy rate by 25 basis points before year-end. 

This will add to the government's recent measures to tighten credit conditions and tame property prices, including the hike in the real property gains tax and ban on the Developers Interest Bearing Scheme. 

"We think a combination of rising inflation, tightening up of credit conditions on the back of still elevated household debt and weak commodity prices will erode household spending growth."


Saturday, January 11, 2014

Psychology Edge Of Trading Fear

Fear, Feelings of Inadequacy - Lack of Courage or Self-Confidence

Fear is prob­a­bly the most sig­nif­i­cant emo­tion for traders. Many traders strug­gle with this emo­tion and fear can demo­bi­lize you from apply­ing your hard learned tech­ni­cal skills.  Sig­nif­i­cant trad­ing losses often lead to emo­tional dis­tress and tur­moil. Unless addressed, the trader may re-experience those painful mem­o­ries in future trades. 

Fol­low­ing anguish­ing losses, a trader may become par­a­lyzed and unable to enter the trade or act in other fear-based ways. After all, traders are human and nat­u­rally fear that which causes pain. Although the desire to trade may be strong, the men­tal response to fear can be stronger. Antic­i­pated pain is side­stepped by not pulling the trig­ger. This is not a sign of weak­ness. It is merely the mind’s attempt at self-protection, though it causes much frus­tra­tion and dis­tress, and works against our inter­ests as traders. 

In day trading, the main fear a trader has is that they are going to make a losing trade and lose money. This is a rational fear as no trader wants to lose money, but it is irrational if it prevents the trader from taking any trades in the first place. As an example, a trader might make a losing trade, and then be too fearful to make the next trade, which of course turns out to be a winning trade, and would have covered the previous loss. 

By letting the fear take control, the trader now has a net loss, even though a winning trade was available. The emotion of fear can be overcome by acknowledging that all day traders have losing trades occasionally, but as long as they are less frequent than the winning trades, there is nothing to be afraid of as there will still be a net profit.

When suf­fer­ing from fear, you may
i) Cut win­ners short in fear of giv­ing prof­its back 
ii) Hes­i­tate in pulling the trig­ger because you fear the prospects of a loss
iii) Hang on to los­ing trades because you fear tak­ing the loss
iv) Jump into unplanned trades because you fear leav­ing money on the table

There are many types of fear that can plague traders
i) The fear of missing a trade
ii) The fear of losing money
iii) The fear of being wrong
iv) The fear of losing face with peers
v) The fear of criticism

There are more than just the ones shown above.  What can you do about fear?  What steps can you take to overcome it?

The possible causes of anxiety and fear are many: conflict, health problems, dangerous situations, death, unmet needs, spiritual problems, false beliefs, lack of self-confidence, lack of faith in the way you have chosen to trade, etc.; but for traders, it is the action of price movement that brings about the greatest amount of anxiety and fear.

We need to create a consistent routine that will enable us to execute our trades according to plan, and without hesitation even after experiencing a string of losing trades. Trading is a business of following rules.
How do you manage your Personal Risk? Below are the 10 points I feel it is important!

PlanningI believe the most important single factor in eliminating fear in trading is for a trader to define and operate from a well-thought out trading plan.  If you are not following your plan or if you don’t have one you will experience the horrors of the market the end result of which will be fear.

Trade With a Clear MindDo not make emotional decisions. Realize that emotions are emotions. What differentiates the successful traders from others is how we recalibrate our reactions to our emotions.

I was watching an interview with a surfer. The interviewer asked him what he does when a big surf comes and he goes underwater. The surfer said it was simple. “If I panic, I only have 3-5 seconds of air to breathe. If I stay calm, I have 45-60 seconds of air.“

What does surfing have to do with trading? If you panic and operate from a place of fear, you could lose all of your capital. However, if you take a moment and think about your strategies, you can have much better results.

Limit Your Input. There are a lot of conflicting points of view. If we want to listen to all of them, it becomes very confusing, and the confused mind does not make a decision. Instead of listening to everybody, pick the top 3 people that you respect and listen to them. This way, you can remain focused and have much better trading results.

Be In Tune With the Markets. Trade the markets as they are and not as you want them to be.
If we are not in tune with the markets and don’t listen to them, we are going to be in a losing game. After all, hope is a lousy hedge.

Quick exits when wrong.  You should have a clear idea in mind of what you expect from price action upon entry into a trade.  If you don’t soon see what you were anticipating exit the trade. Never trade when there is any doubt in your mind.

Use a time stop. Hand in hand with “when in doubt don’t trade,” is the use of a time stop.  If your trade fails to meet your objectives within a certain period of time, exit the trade - win or lose.  There are two ways to be wrong in a trade.  The most thought of way is that of being wrong about direction.  But what about being wrong in your timing?  Doesn’t that count as equally important?  How many times have you been in a trade, been stopped out with a loss, only to see the trade then move strongly the way you originally anticipated?  You were correct about the direction. You were wrong about the timing.

Don’t overtrade.  Don’t overtrade your capital and don’t overtrade your time.  Trading too big risking more than you should leads to losses and fear.  Trading too often does the same thing. No one forces you to trade all the time.  Never feel you must trade and never feel you must trade all day.  Trading that way borders on addiction.

Keep your focus. Fear limits your focus, and this is particularly true in trading. One of the great ironies of fear is that we tend to bring the very thing we fear upon ourselves. Thoughts can create reality; thoughts charged with an emotion such as fear can realize the dreaded possibility with an amazing speed and effectiveness. What happens if you fear loss when you're trading? You’ve got it! You lose.

Study the markets. Studying the markets will eventually bring understanding. Understanding will, in turn, bring success. Success will bring rewards, and suddenly the market will be to you what it actually is: an impersonal arena in which those with understanding get paid to trade. With understanding, you will trade wisely. With understanding, you will see how simple trading can actually be. With understanding, you will garner money from the markets. With the successes you have in the marketplace, you will develop the courage of your convictions. Because trading will give you pleasant experiences, rather than fear. 

You won’t win every trade.  The problem of fear is made much worse if you enter every trade with the "expectation" that it should be profitable.  Be aware! After several winning trades, the feeling of invincibility supersedes being logical. This can lead you ignore a successful strategy and into trades that you normally would not have entered. Finding good trades is "only" accomplished by sticking to a proven plan. But finding poor trades, and ignoring your trading plan, seems to get much easier after a couple of winners. Never mistake genius for profits derived from your trading strategy. Genius loses money. Trading plans make money.

--Trading Market & Educator

Friday, January 03, 2014

2014: Weak Start For Malaysian Shares

PETALING JAYA: The local bourse kicked off the new year on a weaker note, dragged down by steep declines among blue-chip stocks with some investors booking quick profits following a sharp run-up towards the end of 2013.
Regional markets were mixed on the first trading day of the year. Thailand’s SET Index dived 5.2% yesterday to 1,230.77 points on domestic political worries, but stocks were higher by 1.2% in Indonesia and little changed in Hong Kong.
“Last month was a pretty good month for blue chips. Sentiment for blue chips such asTelekom Malaysia, Tenaga Nasional and Public Bank, among others, was pretty high, so investors could have taken the advantage to take some profit,” said Areca Capital Sdn Bhd chief executive officer Danny Wong.
Shares of Public Bank tumbled yesterday after the bank said it would merge its local and foreign tranches into a single counter. Shares in Kuala Lumpur Kepong Bhd led losing stocks, down 58 sen or 2.3% to RM24.32, followed by Petronas Dagangan Bhd down 46 sen, or 1.5%, to RM30.98 and Tenaga Nasional Bhd 20 sen lower, or 1.7%, to RM11.18.
The FTSE Bursa Malaysia KL Composite Index fell 14 points to 1,852.95 yesterday with 1.25 billion shares valued at RM1.35bil changing hands. There were 347 gainers against 406 losers while 302 counters were unchanged.
Pacific Mutual Bhd executive director and chief executive officer Gary Gan said market volatility could also bring about potential opportunities where the use of accumulative investment strategies to ride out violent market swings could ultimately position one’s portfolio for eventual optimum results.
“Looking at the local equity market, although we have seen the index hitting record levels recently, there are still sectors with attractive propositions that should continue to do well in the short to medium term,” he said in a statement.
“The oil and gas, plantations, utility, construction and consumer sectors, as bolstered by positive newsflows from the recently announced Budget 2014, will continue to be the key drivers for the coming quarters but stockpicking will be key.”
Market sentiment for the year is generally positive, analysts said.
Wong said the upcoming expected initial public offerings (IPOs) were a sign of liquidity in the market. However, he notes that investors should be selective in picking which IPOs to participate, based on industry and rationale for the listing.
“Relative to IPOs, it is not so broad-based that everything will go up,” he said.
StarBiz reported in November that at least nine major listings are in the works this year, estimated to raise more than RM18.4bil from the market. These includeIskandar Waterfront Holdings, Medini Iskandar MalaysiaMalakoff Corp Bhd and1Malaysia Development Bhd.
Meanwhile, Areca Capital’s strategy for the year is focused on small to mid-cap stocks that have strong fundamentals, riding on external factors. The US economy, which is recovering on a slow and gradual pace, bodes well for the economies of emerging markets.
Wong said oil and gas companies, export-oriented firms and businesses that benefited from the subsidy rationalisation programme would contribute to the overall positive outlook this year.
“Small to mid caps that were overlooked last year might have their day this year,” he said.