Genting Malaysia UK Acquisition Move [Updated]

Genting Malaysia was one of the top losers during last trading week, slumping as much as 10% in value during intra-day trading. What happened? GENM has proposed to acquire Genting Singapore PLC's operations in Britian (Genting UK) and many viewed the investment as pricey in a risky market. Is it really that bad? Read thestar.biz for analysts comments & come to your own conclusions.

Well for me I think it is too soon to tell, it will most probably take two-three years at least to find out if that investment pays off. Given the tough regulatory environment in the UK; higher gaming duties, smoking ban & removal of some category of games & 2008 financial meltdown, it will take years & many efforts by GENM to improve Genting UK. It is therefore important to keep track of Genting Malaysia's financial performance each year by scrutinizing their annual reports. 

Second, GENM is still in surplus cash even if the acquisition goes through. They would still be in a healthy ~RM3 billion and would still be looking out for other investing opportunities. This is another assurance that I can say which makes GENM still a stable company. 

BUT I do agree that they could have utilize that cash in a better way than to buy a "old man" casino in the UK where competition is strive, it's pretty much a red ocean there. Expansion I believed has to come from Asia where the world's economic growth can be clearly seen shifting from western countries to more modern Asia countries like China, Indonesia & Vietnam.

[Updates] Malaysia Finance comment on GENM's move


GENM share slump is a classic example of people reacting negatively & unnecessarily on bad news which is further amplified by most analysts who says that it is a wrong move. It is not a wrong move, just a bad one. GENM has the cash and is utilizing it for the good of the group and to help their sister company Genting Singapore. Fundamentally Genting Malaysia is still fine, this is why if you are a fundamental investor you need to hold your breath and ride through such volatility which is all very common in the stock market playing field.

There is another type of investor who profits using incremental trading strategy. The caveat? You need time, much more time than being a pure fundamental investor. This means selecting the optimum point in time to make a transcation: either to buy or to sell. The "buy-and-hold" strategy is similar with the exception that you buy when time is bad AND usually this strategy has a longer timeframe (buy at bear market or when it is undervalued).


The incremental trading strategy uses fundamental + technical analysis and uses both together as complement one another. Fundamental tells you which companies are sound and worth to invest where else technical would tell you when to invest or divest by looking at volume and price. In other words this form of technical analysis is called volume spread analysis (VSA). VSA is something I look forward to invest my time in the near future. Once you have the basics of fundamental knowledge I reckon that VSA will be the next step in becoming a more successful & adept investor. I will certainly share my thoughts once I feel than I am capable in that area. A very good book to start would be "Master the Markets" By Tom Williams. You can download it here.