Any hope for Properties? : Capitaland Limited

Capitaland is one of the largest listed real estate companies in Asia. Headquartered in Singapore, the multinational company's core businesses in real estate, hospitality and real estate financial services are focused in gateway cities in Asia Pacific, Europe and the Middle East. It is one of the 30 component stocks in the Straits Times Index.

The company's real estate and hospitality portfolio spans more than 90 cities in 20 countries. CapitaLand also leverages on its significant real estate asset base, financial skills and market knowledge to develop real estate financial products and services in Singapore and the region.

The share price of Capitaland, like many other real-estate companies, enjoyed a good bullrun from the property boom since year 2003. Share price was around $1.00 (adjusted) in April 2003 and it went as high as $8.60 in April 2007. This registers a whopping 780% increase in a period of 4 years, or 195% on yearly average. Since April 2008, the share price took a dive to $4.38 because of a major correction, almost half from the high in April last year.

This counter has been analysts and investors favourite because of the property boom period. However, in the past few months, analysts have either recommended sell, downgrade, or revise (lower) the price target. How long will the downward correction last, and is the price low enough to be picked up now?

I am only be able to give my humble opinion on the share price of this company using my knowledge in technical analysis (and please read the disclaimer below).

Technically, the share price is still in a down trend (intermediate term). The down trend is a correction of the bull rally (major trend) since 2003. It has corrected or retraced more than 50% of the bull rally and this is a big correction in technical standards because normally a trend would continue after a 38.2 or 50% retracement. Note that 38.2% and 50% is based on Fibonacci Retracement levels.

In this analysis, I will apply Fibonacci tools to determine how low can the correction be or is it already low enough currently. First tool is the Fibonacci retracement tool. The next retracement after the 50% retracement is 61.8%, which is currently at $3.84.

The next tool is by using a Fibonacci expansion tool. The extension tool is used to determine how far can an existing trend extend, and in this case, how low can the intermediate down trend be extended. Calculated from point A,B and C on chart below, the forecast based on this tool is at $3.78, quite close to the 61.8% retracement. Chartists call this a confluence of Fibonacci levels. It means “two (or more) heads are better than one”.

The next thing to do is to look for evidence or confirmation in the chart to support these levels. One of the evidence of support is from the intermediate down trend channel trend lines, which runs in parallel. The bottom line is currently at about $3.80. The next evidence is a pivot support in early June 2006, which its pivot low price at $3.82.


Weekly Capitaland chart as at 29 Ausgust 2008 using NextVIEW Advisor

Therefore, the analysis above shows that the technical support level exists at $3.78 to $3.84 range. With price currently at $4.38, it may provide a good opportunity if the long term up trend is able to hold. As a trader I will look for setups before making a trading decision. A setup is a set of chart patterns or indicators used to confirm an analysis prior to making a trading decision.

Commentary and Analysis by Benny Lee

Thailand Central bank fails to halt baht drop

From www.bangkokpost.com:

The baht fell to a one-year low against the US dollar on Tuesday morning shortly after the prime minister declared a state of emergency, even though the Bank of Thailand intervened in the foreign exchange market.

BoT deputy governor on fiscal policy Ajana Waikwamdee said the central bank began inervening right after the declaration of a state of emergency.

She said the currency was "fluctuating", meaning falling.

At mid-morning, the currency hit 34.52 against the dollar. By early afternoon, it had sunk to 34.58 as the BoT continued to pour foreign reserves in to try to stop the market.

Mrs Ajana said she had not seen any "massive foreign capital outflow" and said it is not yet necessary to set up a capital reserve fund.

The bottom also fell out of the Stock Exchange of Thailand.

At the midday break, the SET Index had dropped 12.21 points to 663.01.


US Dollar against Thailand Baht daily chart since July 2008


Daily USD/THB chart as at 2 September 2008, 3.30pm using NextVIEW Advisor


Stock Exchange of Thailand Index daily chart


Daily SETI chart as at 2 September 2008, 3.35pm using NextVIEW Advisor


Trouble in Bangkok



More about trouble in bangkok. click HERE.

Gold Analysis - Technical Resistance may turn the market back down

Note the down-sloping parallel lines on the gold chart below. The lower channel line “almost” contained the movement of price as it corrected downwards in a six month long ABC correction.

In fact, the recent low of 791.90 was better contained by a confluence of several significant Fibonacci numbers. The market then moved up about 5% to 838.80 and is hovering in this general area as I write.

Resistance may turn the market back down for another test of the 790. region.

At any rate, the 790. area has powerful support. So momentarily, value is hesitating around the 840. resistance area. A fall back from this area will most likely create a trading zone between 790. and 840. If that is the case it will most likely be broken to the upside where it faces new resistance from 880. – 920.

TECHNICALS

The two year old rising trend line could be a down side target where strong support will emerge if the market corrects moves in that direction. A serious downside break of this trend line (not expected any time soon), would target support around 720.


Daily Gold price chart as at 28 August 2008 using NextVIEW Advisor

R1 – resistance around 840.
R2 – the second line of resistance around 880.
S1 – nearby support in a zone between 780.-800.
S2 – 720
MACD – turning up from its’ oversold area.

Commentary and analysis by Don Schellenberg

US Dollar / Chinese Yuan (USD/CNY) Analysis

It’s very slow moving, but the down-side trend of this currency pair continues. My reason for suspecting a down-move, and not a continuation of the short term up-trend (as mentioned in last week’s column), was primarily because the pattern of price on the chart, from July 17th to August 18th, 2008, had more of a corrective appearance than that of a new bullish trend. And so it has been.

Caution should be exercised since there is a possibility of a snap-back test of the resistance around 1.6835 (R1 on the chart), which if it occurs is not likely to do any damage to the long-term downtrend.

Apart from that possibility, the main direction is still down and a new test and probable break of the current low at 6.8004 (S1) is imminent.


Daily USD/CNY chart as at 28 August 2008 using NextVIEW Advisor

NextView RSI – pointing down, but not yet convincingly.
Bollinger Bands – indicates that the momentum is down.

Commentary and Analysis by Don Schellenberg

Euro Dollar / US Dollar (EUR/USD) Analysis

Last week when this currency pair was towering up to 1.4908 after printing a new low at 1.4569, many analysts were exclaiming that the low was in place and the upward trend of the Euro was resuming. At the same time, this column was suggesting more movement to the down side should be expected.

Today a similar scenario is unfolding on the chart. As I write, there is a new low for the market, But there is not a new high. So, until proven otherwise the suspicion remains that more down-side, or at least sideways action will develop during the next week.

For the short-term there will no doubt be some buying opportunities. Last week’s first up-side target stopped the rally, and still remains as a point of resistance to the current up-move. Beyond that is potentially stronger resistance around 1.5000-1.5040.

TECHNICALS

Trend-Line – the market is still a short distance away from the rising trend-line. It may come into play again if the market fails to penetrate the nearby zones of resistance.


EUR/USD Daily chart as at 28 August 2008 using NextVIEW Advisor

R1 – nearby resistance at 1.4900
R2 – resistance at 1.5000-1.5040.
R2 – resistance at 1.5300

Resistance at R1 looks vulnerable. A rise beyond 1.4900 will target at least 1.5000-1.5040. Next significant resistance is at 1.5300.

EMA20 – A close above this EMA should be in place before more aggressive longs are considered.

Stochastic – The positive divergence of this indicator, and it’s rise above it’s oversold zone, implies at least some up-side movement for this pair should be anticipated.

Commentary and Analysis by Don Schellenberg

Oil and Gas: Singapore Petroleum Company Limited

Singapore Petroleum Company Limited (SPC) was founded in 1969 as a refining company and now has expanded to an integrated oil and gas enterprise with presence in Australia, Indonesia, China, Taiwan, Thailand and Vietnam. SPC’s business activities are oil and gas exploration and production. It also refines, distribute, market of refined products. In Singapore, SPC provides quality products and excellent services in the retail market through its fuel stations.

SPC holds a 50% interest in the Singapore Refining Company (SRC), a world-class refinery with a nameplate capacity of 290,000 barrels per day. SRC resides on Jurong Island, the petrochemical hub of Singapore. SRC maintains its reputation as a supplier of quality refined petroleum products through continuously upgrading of its capabilities.

SPC was one of the first companies in Singapore to be granted Approved Global Trader status. Its oil trading activities include the buying and selling of crudes, feedstocks and products to an established network of customers.

The price of crude oil started its bull rally early in the year 2007, where price of crude oil was around US$50 per barrel and in one and a half years later in early July 2008, price of crude oil rocketed to US$145 per barrel. Price of SPC was around SG$4.10 in early 2007 and climbed to a peak of SGD8.80 in October 2008. The price more than doubled in less than a year. When price of crude oil peaked in July this year, the price of SPC was at around SG$7.00.

The price of crude oil then started to decline to US$116 per barrel today (20% decline) and price of SPC in the Singapore Exchange closed at SG$5.36 (23% decline from July’s price of SG$7.00). SPC’s price is heavily dependent on the price of crude oil.

Technically, the price of SPC is in a down trend because pivot highs and lows are getting lower and the price is way below the short to long term moving averages. The short term 30-day moving average is currently at SG$5.97. The momentum indicators like RSI and Momentum are showing bullish divergence. This indicates that the price may have found some support.


Daily SPC chart as at 29 August 2008 using NextVIEW Advisor

However, if we look at the price chart of crude oil, Support level is at US$105 to US$110 and therefore, there is a potential of crude oil price fall to this level. We may expect SPC share price to do the same as well.

Here are some recent fundamental developments for this company. On the 21st of August, Kim Eng Securities suggested a technical buy because of price being oversold. On 7th of August, Merrill Lynch which has a buy call with a SG$10.00 target adds SPC to Asia-Pacific most-preferred oil stocks. On 29th July, SPC announced flat second quarter net profit because higher processing costs and taxes offset improved refining margins. On 28th July OCBC Investment Research suggests SPC to have further downside with support at SG$6.20.

Strong support level is at SG$5.20. If price falls below this level, we may expect further correction. At the meantime, with price near support level, it may be provide good opportunity. Current price is SG$5.36 and since that crude oil price is expected to fall a little more, SG$5.20 to SG5.30 seems to be a lower risk entry price, with SG$5.18 as the support failure level. If price is able to be supported and rally upwards, we may expect it to climb to the down trend resistance level at SG$6.50.

Commentary and article by Benny Lee