Aboi's Updates For October 2014

Side topic - Why It All Makes Sense. 
My comments to the following articles:
BN raises prices as real fuel cost drops – Rajiv Rishyakaran
No reason to raise petrol price when crude oil price is at a 3-year low – Chong Zhemin

The rise in fuel price looks to coincide right before the tabling of budget 2015. [First] Our revenues would have fallen from oil (Petronas) due to declining crude oil prices which is expected to go even lower when shale oil production kicks in from other big player countries, apart from The United States. [Second] Increasing the price now (aka remove subsidy) could potentially be part of the plan for the new fuel subsidy scheme where lower class people would enjoy cheaper fuel than it is at current new prices [Third] A higher base price (6% of RM2.30 is more than 6% of RM2.10) eventually leads to more taxation when 6% GST kicks in April 2015 thus giving the government more tax revenue to compensate for the loss of oil revenue from Petronas. We either start cycling around or simply earn more $$. This is why it all makes sense.

**You may read back my earlier post: No Suprise - Petrol Likely GSTed

KLSE TECH REVIEW

Here's the link for my last market sense: Aboi's Updates for September 2014

For those who find it hard to follow I suggest reading through my previous posting on how I am using technical indicators as a trend seeker.

1. First Attempt on Tech Analysis Part 1
2. First Attempt on Tech Analysis Part 2

Recap - September's commentary. 
"Ever since Bursa has been trading sideways. Indicators do suggest that the trend will be as such. Until after BNM's two MPC meeting and after Budget 2015 I will not change my end of year Bursa target of 2000 (assuming no major incident). Resistance and support lines are loosely created, I'm not interested as I believe it's gonna trade sideways until our Budget announcement." Bursa did breach my support 1 @ 1860 and thus I've moved it to 1840. I shall define trading sideways as in +2% to -2% of total index points to make it really measurable. The most forthcoming event would be the tabling of Budget 2015 on October 10th. Until then we wouldn't know the winners and losers of the economic sectors so expect it to trade sideways in the next 10 days.

Key economic news and market update from AMP Capital's economic update (FoC, updated every Friday):
1. Geopolitical threats are rising like the Islamic State. 
2. Hong Kong's street protests on universal suffrage. Slight regional impact on shares.
3. Eurozone's and Japan's PMI for September is disappointing leaving recovery being described as losing momentum. More quantitative easing is needed.
4. Reserve Bank of Australia expressed concern that housing market is becoming too speculative but only to extend macro-prudential controls and not raise interest rates until 2015.


Portfolio - Marginal gains, Funds performing
Because much of the weight of the portfolio is invested in Bursa, it has been following the pattern of KLSE - sideways that is. Nevertheless my bonds fund have yielded more positive results and backed by better returns from Aberdeen World fund. I've taken a look into how to adjust my portfolio position. You may read about it in my previous post The Balancing Act.

PORTFOLIO REVIEW

Portfolio target composition. Equities 65%, Bonds 25% and Supplementary 10%.

Targets for returns p.a. Equities 12%, Bonds 5% and Supplementary 3.5%.

Notes
**HwangDBS Select Income fund gross income declaration of RM0.005/unit (reinvested all into 83 new units)

Comments
#1 Portfolio target for the fourth portfolio year @ RM140k for April 2014 has already EXCEEDED. Portfolio target for the fifth portfolio year @ RM152k for April 2015. The TWRR (time weighted annual return rate is now at 9.50% (down 0.08% from Sept'14) vs my target of 9.40%).


What's up for my 2014?
***Please NOTE that KEEP IN VIEW is not the final decision***
[1] Invest roughly 25% of cash balance in Aberdeen's Islamic World Equity Fund. 
        -> Completed. No more new positions.
[2] Par my remaining cash balance to less or equal to 10% level. 
        -> Completed. See portfolio.
[3] Invest in a new mREIT: Time To Revisit mREITS in 2014 when yields are right. 
        -> Ongoing. Second article to be published with more details.
[4] Invest another fund, diversify further into small cap-medium cap companies where I have no exposure. 
        -> Cancelled. Heavy weighted in Malaysia.
[5] Possible buy of gold commodity: Speaking Of Recent Gold Demand Trends. My opinion is that gold will see resistance at $1340. 
        -> Keep in view. Central banks purchases is supporting gold prices making it difficult for me.
[6] Taking a look (not necessarily invest) in Padini holdings. 
        -> Ongoing.
[7] Put some cash into Fixed Deposit. 
        -> Completed. Very small amount. It will be used every 2 years :)


Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.