We have forgotten - Asian Financial Crisis

I guess most of us only remembered the last Great Financial Crisis, starting with the housing toxic securities which the bubble finally burst in 2008/2009. How many of us still remembered the Asian Financial Crisis and how it started. This site here has documented the entire timeline and events if you are interested. Why am I writing this out of the blue.

In the past weeks, after Trump won the US Presidential Election, the USD has strengthened and the regional currencies weakened. Some Asean countries' currencies (Malaysia, Philippines) have dropped in a terrifying speed. Looking back, in 1997, as we all know by now, the AFC was started from Thailand due to the crashed in it's currency by as much as 20%, and situation were further aggravated by the huge infrastructure spending. 

Last week, we witnessed the Malaysian Ringgit devalued about 33% from a norm range of RM3.3 against the USD, and Philippines Peso devalued about 14% from a norm range of PHP43.6 against the USD. Similarly to 1997, these 2 countries were also spending lots of money on their infrastructure. 

Historical events can be an important learning lessons for all of us(that's if you learned something from it), however it does not mean that the same event will happen again(hopefully). But if it does, we should be more prepared this time to capitalise on it. In a lighter note, it's time for more shopping in our neighbourhood country☺.

These high yield blue chips performed well during the US Presidential Election week

It has been an interesting week, but for some, it has been a roller-coaster feeling, the market was behaving erratically during the Presidential Election day and the day after. I was hopping that the market will react drastically downwards so that I can capitalised on it, similar to my purchase of HSBC during the week of BRexit. But as we all know by now, the market crawled back and cover what was lost earlier.

One of the STI component stock I noticed moved against the tide and market. On 9Nov, when the entire market was corrected, the price of this blue chip was resilient and moved upwards. This stock is Yangzijiang.

This stock moved up with huge volumes on the few days of the US presidential election when most of the market is correcting downwards. Is this going to be a reversal of the downward trend for YZJ? Do note the gap between the 50MA and 200MA is still huge, but what's the harm in collecting the about 5.5% dividend while waiting.

The other stock is one of our local bank, DBS. 

We have read many times that if the interest rates is raised, one of the sector to benefit from it, will be the banking sector. This could be one of the reason why investors are making the plunged now to buy the stock. From the chart, can DBS pierce through the $16.2 resistance and continue in a upward trend?

Let me know your analysis of these 2 stocks.

Disclaimer

I am long on both stocks.

Magic formula screen for Singapore stocks

Magic formula investing was derived by Joel Greenblatt, he used it to buy a basket of stocks that has high earning yields and a high return on capital. 

Wikipedia has documented the approach and the formula, you can find the link here. Below is the extraction of the para from the link.

The Formula

1. Establish a minimum market capitalization (usually greater than $50 million).
2. Exclude utility and financial stocks.
3. Exclude foreign companies (American Depositary Receipts).
4. Determine company's earnings yield = EBIT / enterprise value.
5. Determine company's return on capital = EBIT / (net fixed assets + working capital).
6. Rank all companies above chosen market capitalization by highest earnings yield and highest return on capital (ranked as percentages).
7. Invest in 20–30 highest ranked companies, accumulating 2–3 positions per month over a 12-month period.
8. Re-balance portfolio once per year, selling losers one week before the year-mark and winners one week after the year mark.
9. Continue over a long-term (5–10+ year) period.

The Results

Applying the formula on the Singapore stocks, this is what we have. Some of these will definitely be in my watchlist, and let's visit again to see how they perform.

Do you have any of these in your portfolio?

	EY	Rank	ROC	Rank	Score
Rotary Engg	367	1	16	12	13
chew group	26	6	20	8	14
challenger	17	13	31	3	16
UMS	13	17	28	4	21
Ellipsiz	29	4	13	17	21
CSE global	19	11	17	11	22
TaiSin	17	14	20	9	23
Nam Lee	29	5	13	18	23
800 super	13	18	24	7	25
Hai Leck	49	2	11	25	27
straco	11	23	27	5	28
keong hong	17	15	16	13	28
new toyo	22	9	13	19	28
isdn	25	7	12	21	28
Starhub	7	29	239	1	30
singpost	8	28	73	2	30
sinwa	20	10	13	20	30
yangzijiang	23	8	12	22	30
Chemical Industry	32	3	10	28	31
QAF	11	24	19	10	34
Vicplas	13	19	14	16	35
hourglass	12	22	16	14	36
SATS	5	31	27	6	37
Venture	8	26	16	15	41
Wee Hur	19	12	8	30	42
Kingsmencreative	13	20	11	26	46
Cortina	9	25	12	23	48
Lum Chang	13	21	11	27	48
Hock Lian Seng	15	16	3	32	48
uol	4	32	12	24	56
gl	8	27	8	31	58
GP Industries	6	30	10	29	59