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| Outlook 2001 |
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by William Wermine
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"Hedge your bets, be nimble, learn technical trading , there will be many interesting opportunities in
2001 for those who are prepared."
These are some comments by local analysts and fund managers for their 2001 market outlook.
Kok Chee Leong, a futures broker representative and hedging specialist with Phillip Futures made this
comment.
"The year 2001 could be an interesting one. Sectors like telecommunication, media and technology will
have a big impact on the Malaysian equity market as the nation is trying to transform into a knowledge
based economy. The market will keep a close eye on the demand for PC and semiconductors."
"Technically speaking the weekly chart of the KLCI is still down with relatively low volume. The market
is waiting for positive divergence on the weekly chart to have a broader base and sustainable rally."
Qini Ren, a COMMEX broker and trader with Phillip Futures remarked:
"The KLSE will be range bound between 650 and 900 for the next few months. Hard corrections will give
opportunities for picking up quality issues while sharp rallies should be sold. If you buy support near
the bottom of a range you must be quick to exit with a small loss should the rally fail. This means you
must define your risk before entering the market. If the market moves in your favor you must be quick to
exit when the market trades up to resistance."
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This quarterly chart of the KLSE shows strong support at 650. The market broke out of congestion in 1994
and appears likely to retest this support. It might be a lifetime buying opportunity.
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Lawrence Lau, proprietor of Market Pulse, a Malaysian share market advisory says there will be many
trading opportunities in the coming year.
"Look for shares that are showing more than average daily price volume. These shares may have a
significant move."
Market Pulse reports every week on shares with more than average daily price volume. Of the many trading
methods being used, the price and volume method is one of the best. It is especially well suited for the
Malaysian market.
Above all get knowledge, improve your self, depend on no one.
Study and apply technical analysis. My team conducts a Beginner's Technical Analysis Workshop every
month. This is a dynamic interactive workshop where you will physically with your own hand construct a
price chart with trendlines and a simple moving average. You will practice trade from this chart so the
methods become part of you.
Although this is a beginners workshop, the methods taught are used every day by professional traders.
Mr Andy Lim Say Kiat, fund manager with Phillip Capital Management recommends investors to attend
technical analysis workshops.
He is a firm believer in technical analysis and has assisted in presenting the technical workshops at
Phillip Futures.
Phillip Capital Management, the Malaysian asset management arm of the 25 year old Phillip Group
International uses technical analysis to time entry and exitafter short listing them through fundamental
analysis.
Andy told me "there will be an abundance of trading and investing opportunities in 2001 For our long
term investor under the EPF investment for Members Savings Scheme we recommend them to stay with liquid
large cap quality stocks. Many of these stocks have an established trading range.
"A good example is Sime Darby."
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"To enhance portfolio performance in 2001, which is expected to be volatile, a trading strategy would
probable work better than the traditional buy and hold method. Buy and hold works in a trending
environment."
Volatility will be extreme in 2001. External factors like oil prices, currency fluctuations, US interest
rate policies, Nasdaq and US market trends will impact the KLSE.
Knowledge and application of the hedging process can insulate your share portfolio from the raging storm
of world markets.
Mr Fo, a hedging specialist with Phillip Futures, advised,
"Only a small minority of KLSE investors escape from the massive market corrections. The ones who hedge
their shares by selling KLSE futures escape disaster and prosper."
Contact him or Mr Kok at 03 2711 2681 or any on our team for further information on hedging. We are
happy to advise you.
The KLOFFE exchange promotes hedging with an excellent brochure. The brochure shows a lighthouse and
a violent, raging sea. The investor who hedges can enjoy the safety, mental peace and security of the
rock solid lighthouse.
Once the storm subsides, the investor can venture safely again.
For the venturesome who can accept high risk for a potential high reward, Crude Palm Oil and US grain
markets offer an extraordinary opportunity.
Wheat, corn, soybeans, soy oil and soymeal have been trading at 20 year lows. Palm oil has not escaped
low US grain prices and is at depressed levels.
Should there be any weather problems in the US or South America, grain prices could explode.
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In the drought of 1988 Soybeans rocked from 5.00 a bushel to over 11.00 offering 30,000 US per contract
for an initial margin risk of less than 1000 US.
There are only 2 companies in Malaysia licensed by the Malaysian Securities Commission to deal in
US grain markets as well as Crude Palm Oil. They are Okachi Futures and Phillip Futures. These are
the only 2 companies in Malaysia that can insure that your money will not be stolen when you invest in
US commodities.
I would like to warn readers of this article to only deal with Malaysian securities commission licensed
commodity brokers.
Following crude palm oil and US grain markets can help you find shares that benefit with the rise and
fall of these markets.
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A run to contract highs at 2600 from current levels could earn a profit of over 40,000 RM per contract
for an initial margin of 1500 RM.
Another high reward opportunity is the recently launched options contract linked to the KLSE futures
index.
You should be very wary of trading this contract unless you fully understand the dynamics of options
trading.
The KLSE library located in the exchange building behind Maybank headquarters toffers many good books
and video tapes on options trading.
Please call my office for recommendations.
In summary, be prepared for a volatile year, learn to trade, learn to manage risk. Get knowledge.
William Wermine is a licensed futures broker representative with Phillip Futures Sdn Bhd. He is
associated with a team licensed brokers and fund managers including Kok Chee Leong, Qini Ren and
Andy Lim. You may call him or other team members at 03 21666205/ 03 27112681 or email
to williamwermine@pd.jaring.my. You may visit him at his website www.tradethetruth.com for his workshop
schedule and free charts/ trading information.
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