Every Dark Cloud Has a Silver Lining

The revised RPGT is sure to dampen speculation in the property market. While this is good for home-occupier buyers and genuine investors, the same cannot be said for speculators. 

 Property prices have been going up and up since 2008 because of speculative demand. I bought a fully furnished corner lot in Aseana Puteri Condo at Bandar Puteri for RM380,000 in 2010. This unit can easily fetch RM650,000 presently. In 2006, this unit could be booked for RM280,000. 

The RPGT is now revised as follows:

 1. A property sold within 3 years after acquiring it, the gained tax is 30%

2.  A property sold within 4 years after acquiring it, the gained tax is 20% 

3.  A property sold within 5 years after acquiring it, the gained tax is 15% 

4.  Beyond 5 years, there is no gain tax for individuals, but for corporates, there is a

     gained tax of 5%.

Looking at the above taxes, it is hard to believe that speculation in the property sectors will not be dampened. One has also to factor in the transaction costs such as legal fees, stamp fees and brokerages. 

Once speculation is curtailed, demand will slow down. This will stabilize prices. 

It may even cause prices to drop substantially. 

What is of concern is that when demand slows down, developers will scald down their operations. This will hurt their bottom line. Companies involved in building materials will also be affected. 

For those companies that have good lands in fast-growth area like the Iskandar region, what they should do is to switch to high-end buildings that sell above RM1 million because foreigners are only allowed to buy properties priced above RM1 million. I think it is good for the country if more foreigners buy our properties as this simply mean an influx of foreign funds and foreigners who are financially sound.

Security means everything to every everybody. It is heartening to see that the government is cognizant of this fact, and have taken steps to beef up our military force and the police. When a country is not safe, not only tourism will be greatly affected, overall business will be affected as well. 

Every dark cloud has a silver lining. When speculators in the property market find it hard to make a fast buck, they may turn their attention to the stock market. Is this the silver lining? Let's wait and see what happens.

GST Vs SST

Even before budget 2014 is read out, one of the most talked-about subject is the GST. What exactly is GST? Well, it simply stands for Goods and Services Tax. Is the GST good or bad for you? This depends on who you are and your life style. As for the government, it will rake in RM20 billion more each year once it is implemented. So, definitely it is good for the government. It will also be good for the people provided the money collected is used wisely and with integrity.

Indonesia introduced GST in 1985, Thailand in 1992, and Singapore in 1994. For Malaysia it is announced to be in April 2015. So, we are the laggard in this respect.

Do not be overly concerned with the GST as some may actually benefit from it. Accordingly to Tan Sri Dr Fong Chan Onn, the GST will replace the SST (Sales and Services Tax). Presently, the sales tax is 10% and the services tax is 6%. This means that when the GST comes in,  the SST will be replaced and no longer applicable.

The purpose of the GST is to cast the tax net wider so that more people will pay taxes. Presently only about 1.7 million people pay income tax out of a population of 29 million. 

Most welcome about the GST is that some 40 basic food necessities such as rice, flour, sugar, milk powder, edible oil, wheat and oat are to be listed as zero tax items. Essential services such as healthcare may also be classified as tax-exempted.

If you wish to benefit from the GST, one way is to dine out less, and prepared your own food more often. Other ways include buying only what you need and avoid wastage. 

Cypark More Upside On The Card

This daily chart of Cypark shows the trend of the stock after this morning session. Even for the half day, volume has exceeded the volume of the previous full day. This is clearly an indication that demand for the stock has come in. It closed at RM2.21, up 4 sen. I think there is more upside for the stock.

Cypark Resources Berhad (CRB) is an integrated environmental engineering and technology provider.

Transforming dump sites, an environmental bane to an economic and environmental boon is the raison d’etre of our business. To read more, click here.

Budget 2014 A Boost to the Market?

Uppermost in everybody's mind must be Budget 2014. Najib has to put in place a people-friendly budget if he wants to have a good chance to win back the electorates. Cutting spending is not a good choice as many businesses will be affected. Increasing taxes to mitigate our debts is also not advisable as this is considered to be not people friendly.

We all know that our nation is in great debt because of corruption & cronyism. Once these are addressed, our problems are solved. Things such as a screw driver costs RM250 when it should be RM2.50 or a contract that can be done at RM10 million, but costs the government Rm100 million be must stopped.

I am sure Najib knows where our problems are. But has he really the capability to curb corruption? Let's wait and see.

My opinion is that this budget will emphasize on developments, curtail wastages, and restore credibility in the government.  

I believe that immediately after the budget, the stock market will turn bullish. This is my opinion.  I may be wrong but I have a good chance to be right. 

PKR Demand Improves

PKR completed minor round bottom with higher volume than those of the last few days. MACD has turned positive with its golden cross. The stock is likely to go higher.

BURSA UPGRADED TO RM10.10

The above daily chart of BURSA shows that the stock is in a gradual uptrend since hitting a low of RM6.90 and closing at RM7.05 with a doji on August 28, 13. It then went up to a high of RM7.65 before a minor correction brought it down RM7.40. Since then the stock has been trending up. The overhead resistance is at RM8.10. This is a important level. Once this level is decisively breached, the stock will trend higher.

HDBS Vickers Research analysts have upgraded the stock from "fully valued" to a buy with a target price at RM10.10. They predicted that Budget 2014 is likely to benefit BURSA in some ways.

Magni All Set For Higher Ground

Magni has a strong balance sheet with zero borrowings. Going by the chart, the stock is likely to trend higher.

The importance of trends & volume

Volume is an important indicator in a chart. Many people look at the price without paying any attention to the volume. This is a grave error.

A chart without volume is close to being useless. Volume signifies interest. Thus, the more volume transacted the more interest and more people being involved. This is a logical assumption. 

Buyers want to buy as low as possible while sellers want to sell as high as possible.

Sometimes there is wide spread between the two. 

When a buyer is  eager to buy, but finds that sellers are not willing to sell at a certain price, he will bid at a higher price.

The higher price will entice the sellers and some will sell. If the buyer wants to buy more but sellers have dried up, he will bid a little higher again. This process will continue until his wants are satisfied. This is how we can have an uptrend.

On the other side of the coin, a seller with a large stock wants to liquidate his position, but finds that his order has no buyers. So he lowers his price. The lower price will bring in some buyers. The price will keep on coming down as long as he is more eager to sell than the buyers are eager to buy. So here is how we have a downtrend.

When you want to buy a stock and find that the stock is in a downtrend, don't be impatient. Wait and watch closely. Wait until the downtrend has abated. When a downtrend has abated, it does not mean that an uptrend has begun. The stock can go into a side trend that may continue for a long time before a new trend develops. This new trend can either be up or down. You only buy when the new trend is up. If you have studied Japanese Candlestick, this will help you immensely to determine whether the trend has reversed.

So, when is it a good time to enter a trade? Here are some recommendations:

1. Buy at major support. (A major support is an important historic low.)

2. Buy at the beginning of an uptrend after a prolonged downtrend.

3. Buy when the stock is very much undervalued. Benjamin Graham said, "Buy dollar notes for 50 sen a piece."

4. Buy in a panic sale and sell in a panic buy.

5. The doji is an important candle. If you see one after a long downtrend, it the time to buy, and if you see one at the top after a long uptrend, it the time to sell. If you have no idea what a doji is, find it out at Investopedia.com.

Good luck, and Happy Trading.

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Inari turns bullish

After a very small correction, Inari turns bullish. It looks like a good time now to buy the stock. The market is always uncertain. We just have to change with the circumstances. I bought at RM1.16 this morning. You listen to me at your own risk.

Inari likely to drift lower

The above daily chart of Inari does not look good. The stock was rising well until Khazanah said
that it was not taking any stake in the company. If you are thinking of buying the stock, I think you should wait for the price to drop until you see a buy signal.

Support is at 98.5 sen, and then at 92.5 sen. This is from the technical point of view.

You listen to me at your own risk.