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Decided to make adjustments on the way I blog & share due to time constraints and other commitments. In the coming weeks you should see them. Short updates but more frequent & concise.

Thursday, December 29, 2016

January Forecast of Pump Oil Price (Ron 95)

**It is easier to forecast the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

December 2016
Oil prices have gained 25 percent since mid-November, helped by expectations for OPEC's supply cut and solid U.S. economic figures that have also bolstered equity prices. Nevertheless the market is still taking a wait-and-see approach on the official start of the landmark deal reached by the Organization of the Petroleum Exporting Countries (OPEC) and several non-OPEC members to reduce their output. The deal is set to kick in from Jan. 1. OPEC and non-OPEC producers are expected to lower production by almost 1.8 million barrels per day (bpd), with Saudi Arabia, OPEC's largest producer, agreeing to bear the lion's share of the cuts. If there's any misstep or any indication of disagreement to (the deal), we would see crude prices dropping back.

The Malaysian ringgit has fallen to its lowest since the 1998 Asian Financial Crisis, as dollar bullishness and domestic economic weaknesses weigh on the beleaguered currency. The US Federal Reserve raised its target federal funds rate to a range of 0.50 to 0.75% on Dec 14 contributing towards Ringgit's weakness. The Fed, which raised interest rates last week, has penciled in three rate increases in 2017. Malaysia's central bank, Bank Negara Malaysia, has also been moving to clamp down on non-deliverable forward trades to curb speculative activity on the offshore market, causing some concerns in the currency trade and prompting outflows. The currency also came under pressure due to the political scandal in the country over Malaysia's deeply indebted sovereign fund. Investigations and court cases were continuing globally into allegations that billions of dollars were looted from Malaysian state development fund 1Malaysia Development Berhad (1MDB).


Aboi's Jan'17 Forecast Analysis

MYR continues to slide downhill yet again (4.32 to 4.46). This time it really is a double whammy as the average oil price went up from $49.12 to $56.69 so the RM/L between November and December weaken: 1.78 vs 2.12. I am forecasting that fuel price to go sky high as much as RM2.20 (up by up to 30 sen) for RON95. This isn't my first with such a big forecast, back in July 2016 the same was made but was slightly raised by 5 sen. Would the coming announcement be the same case? Very...very unlikely.

Below is a table of my previous forecasts since the beginning. My forecasts are based on Tapis crude oil price, performance of Ringgit and domestic political matter.


**It is easier to forecast the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Tuesday, December 13, 2016

It's Dec, Load Up Your PRS and Save RM720 in Taxes!


Did the title grab your attention? :) Well it is true that you can save RM720/RM570 if you are earning at least RM80k/RM60k annual chargeable income before RM3,000 PRS Relief.

Recently Fundsupermart wrote a good article on An Overview of PRS Fund Performance (2 Dec 2016) (see link) which I concur of their analysis. Here's a summary of it and some of my own comments:


Growth Fund
CIMB-Principal PRS Plus Asia Pacific Ex Japan Equity-Class C (highest Sharpe 0.89 but highest volatility 10.2% - China/HK exposure). This fund feeds into 100% of CIMB-Principal Asia Pacific Dynamic Income Fund-MYR. Aboi has holdings in this fund.

Balanced Fund

Affin Hwang PRS Moderate Fund (highest Sharpe 0.56 with volatility 4.7%). This fund feeds into [1] 25% of Affin Hwang Select Asia Pacific (ex Japan) Select Balanced Fund [2] 25% of Affin Hwang Select Bond Fund [3] 19% of Affin Hwang Select Dividend Fund [4] 11% of Affin Hwang Select Asia (ex Japan) Opportunity Fund and [5] 10% of Affin Hwang Select Balanced Fund.

Conservative Fund
AmPRS-Tactical Bond Fund-Class D (75% exposure to MYR denominated bonds, Sharpe 0.66 with volatility of 3.4%). This fund feeds into 100% AmTactical Bond- Class B (MYR).

Others (REIT)
AmPRS - Asia Pacific REITs - Class D (property Asia including Japan). This fund feeds into 100% AmAsia Pacific REITs - Class B (MYR). Aboi has holdings in this fund.


Notes
- The choice of funds have overseas exposure which is better in terms of distributing risks as well as more diversified investment opportunities.

- In lieu of Trump victory and higher likelihood of inflation to return, AmPRS Tactical Bond Fund wouldn't be a good choice given the current investing climate where possibility of an interest rate hike is almost certain. Bond prices have an inverse relationship with interest rates.

- In Budget 2017, our dear Bijan increased the Youth Incentive (see link) from RM500 to RM1000! With an initial investment of RM1000 you can afford to lose 50% and still retain your initial investment. It never occurred to me that our Supreme Leader would actually do something beneficial for the Rakyat.

- Cross checked Morningstar Fund Quickrank for PRS (see link). Public Mutual PRS funds did not outperform any of the above in their respective categories. (3 year period). Sorry agents I know I'm not doing you any sales favour here.

- Public Mutual/Manulife funds have the highest TER (total expense ratio). This actually eats away your annual fund return rate like a virus.

Tuesday, November 29, 2016

December Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

November 2016
OPEC is trying to bring its members and non-OPEC producer Russia to agree on a coordinated cut to prop up the market, beset by a two-year glut in supplies, by bringing production into line with consumption. See link:
http://www.marketwatch.com/story/heres-how-ugly-it-could-get-for-stocks-if-opec-cant-reach-a-deal-2016-11-29. Anyhow I think the oil market is likely to remain oversupplied for some time yet even after the OPEC meeting, especially since U.S. oil production will soon start rising again. Price to remain subdued.

Emerging market assets have tumbled in general in the wake of Trump's upset win, as the dollar surged and U.S. Treasury yields jumped - Malaysian Ringgit is no exception. Also markets have been pricing in Trump's aggressive rhetoric on curtailing global trade with the U.S., which would disproportionately hurt trade-dependent emerging economies. To add salt to the wound our BNM's attempt to use moral suasion to support its currency threatens to backfire, increasing pressure on the ringgit and potentially hurting growth. Perhaps there is not much we can do since foreign-exchange reserves are uncomfortably low after having been run down in 2014 and increasing interest rates right now is politically suicidal for a possible GE14 next year.


Aboi's Dec'16 Prediction Analysis


A Trump victory was not very good news for us and this was combined with a central bank that did not handle Ringgit volatility very well. MYR continues to slide downhill (4.17 to 4.32). Fortunately average oil price went down from $53.51 to $49.12 so the RM/L between October and November strengthen: 1.87 vs 1.78. I will predict that fuel price to be maintained @ RM1.95 for RON95. There is a remote chance it might be reduced by 5 sen.

Below is a table of my previous predictions since the beginning. My predictions are based on Tapis crude oil price, performance of Ringgit and domestic political matter. My total savings to date: RM 50.75. As for YTD: RM 12.00.


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Tuesday, November 22, 2016

Trumponomics 2017-2020


The election is going to have significant long-term consequences for US policies beyond its own borders. Expect the development of new policies in opposite end of the spectrum which should generally be less liberal than before to respond to Trump's core voters a.k.a middle class who were impacted by globalization. This piece is originally from The Edge November 7 2016 but is edited by me with my own thoughts. Let's think of two scenarios: Lite vs Full Trump. 

Plan
Lite: Reality sinks in and he must negotiate his measures with his fellow Republicans and forced to give up part of his original plan. Final proposals are more modest and neutral to the budget deficit. 
Full: He goes full steam ahead in the implementation of all if not nearly all of his campaign promises.

Impact on US economy
Lite: Slightly positive on US growth. No recession.
Full: US growth heading downwards. Expect a recession.

Impact on global economy
Lite: Global GDP growth to be approximately 3%. About 0.5% lower than initial estimates.
Full: Global GDP growth might be lower than 2% or minus if a recession occurs.

Impact on volatility of exchange rate/equities
Lite: Significant which we are feeling right now.
Full: Major. 

Impact on US monetary policy
Lite: No rate rise by fed in Dec 2016 as Dollar is too strong. Might have tightening in 2017 if reflation occurs due to his infrastructure spending plans.
Full: If US growth weakens or worse a recession, tightening will stop and QE4 would no doubt be considered.

Impact on US Treasury bonds
Lite: Increase in long term rates due to expectation of high deficits from his spending plans. Then a downturn.
Full: Same as above.

Impact on US equities
Lite: Selective sectors that benefits from his policies to go up as a knee jerk reaction. Others will go down particular technology sector.
Full: Defense, infrastructure and healthcare sectors to shine. Others no.
*Do not count on international strategies due to his closed door outlook but instead on purely domestic strategies and small-cap equities.

Impact on US dollar
Lite: Positive in short-medium term as investors flocks to long term bond yields that are more favorable.
Full: Negative if the US requires QE4 policy or if fiscal expansions plans are blocked by political gridlock.

Impact on gold
Lite: Purchase if the Dollar's strength means a weaker gold price. Buy if you hold USD physically. Not worth to convert Ringgit to USD as it merely offsets it.
Full: Purchase regardless if very certain of economic, geopolitical or financial stress.

Impact on emerging markets
Lite: Weakened at first by general uncertainty and by the rise of risk aversion.
Full: Weakened by increase in protectionist policies and risk aversion. Major trading nations to be impacted heavily such as China and Mexico.
*Russia might be the only exception since his "bromance" with Putin might result in the lift of US sanctions.

It's going to be a very interesting but at the same time nervous next four years for investors :) Trump is not going to be President just yet but he will on January 20th 2017. I would like to be wrong but until there is more certainty it is better to keep cash and wait for opportunities to present themselves. Signing off folks....

Sunday, November 6, 2016

EPF's Akaun Emas - What you need to know

I am for EPF's move to lock in savings until contributor turns to 60. There is word flying around that EPF will run of out money due to our government's overspending but that is largely bollocks. First EPF is independently run by professionals which has performed well over the years. Second EPF is bound a myriad of rules and regulations that bars it from investing recklessly. Third why on earth would our MO1 KowTow to China for funding if it could easily get it from EPF.

Whether you know it or not Malaysia is heading towards being classified as an ageing society by the year 2035 (only 19 years from now). Ageing here mean that individuals above 60 years make up a larger proportion of the total population (>15%). This is evident as life expectancy is rising (more than 75) and fertility is decreasing (an average family now has 2 kids compared to half a dozen 25 years ago). 

Tightening EPF withdrawal rules is not good enough. Hence the move to establish the Akaun Emas. This was done after following the Members Consultation Exercise last year. A total of 94% of respondents overwhelmingly agreed for the EPF to maintain the Age 55 withdrawal, with new contributions from age 55 to 60 to be locked in until age 60, hence the introduction of Akaun Emas.
Okay even a summarized chart might be technical for some folks. Let me help you with that.

[1] Below 50 and At 50 - no changes. You already know what you know now.
        - Seventy per cent of contributions goes into Account 1 and 30% goes into Account 2.
        - You can withdraw from Account 1 at age 55 only.
        - You can withdraw from Account 2 at any age subject to eligibility.
[2] At 55 - starting next year Jan 1 2017, everything will be transferred to Akaun 55.
[3] From 55 to 60 - you can still contribute while working but to the new Akaun Emas.

***The addition of Akaun Emas does NOT impact what we currently have AT ALL. Please don't listen to false rumours/fake news that govt is extending withdrawal to keep it for themselves - all those are bollocks

Other important notes:
- You will still get dividends from your Akaun 55 and Akaun Emas even when you are aged 56 to 60.
There will be no difference in the annual dividend payout % between both accounts to be fair to all EPF members.
- You can still make a full withdrawal from Akaun 55 from age 55 to 60. You cannot however withdraw any amount from Akaun Emas unless you are 60 years old and above.
- At age 60 both Akaun 55 and Akaun Emas will be combined. Name of account not known.
- If you are terminally ill say at age 58 you can withdraw from Akaun Emas under the Incapacitation Withdrawal scheme.

One short disclaimer. Aboi says that moving forward EPF returns will not likely be as good as it was in the last few previous years. Considering that equities markets around are the world are struggling and most funds are under performing. Likewise the low interest rate regime is likely to stay for many years hence impacting the performance of many pension funds globally, not limited to Malaysia. Fixed income investment instruments used to dish out high yields of 8% during the heydays in the 1990s but now yields on MGS and Treasuries have declined to less than 3.3% now - hence the term low interest rate regime thanks to the Financial Crisis of 2007/2008.

Saturday, November 5, 2016

Alternative: Lego 75155 and 75095 Sets

I continue to add more sets into my portfolio after successfully selling 9462: The Mummy, 9471: Uruk-Hai Army and various other LOTR sets as they mature for more than 3 years with a cool profit margin of 55.82%. Once again I like to use the proceeds to get bigger and badder sets :) This is known as trade up; a term used by real estate investors. One good marketplace for the Malaysian market is here: https://www.facebook.com/groups/KedaiLegoMalaysia/ or eBay for overseas.

The lego shop in Queensbay Mall is having a 30% discount promo for selected sets; mainly Star Wars until 6th Nov 2016. And you will get two polybag freebies for free if you spent above RM350; easily worth RM60 in total!

75155: Rebel U-Wing Fighter
Aboi Says:
- Ship fits in with the aesthetic of A New Hope (episode 4) and has the old classic feeling and colours.
- UT-60D will form an integral part of the coming film based on trailers; may well prove to the most popular of all Rogue One Lego sets.
- Impression selection of minifigures. Jyn will very probably be not unique. Bistan's head is completely unique and the U-Wing's pilot blue suit is nicely crafted.
- On a USD 0.11 price per brick basis this set is considered on the low end of pricing in Rogue One Lego sets.

This ship will be pretty well sought after in the future provided it has a significant presence in the film for it has amazing play features & minifigures. Medium risk level.

75095: UCS Tie Fighter
Aboi Says:
- Most revered of Star Wars offerings a UCS set - Ultimate Collector's Series. It is only available on Lego.com and the Lego brand stores so it is considered very exclusive and hard to find.
- The minifigure of a TIE Fighter Pilot is completely unique to this set - addition of detailed printing on the shoulder, arm and wrist.
- Twice as large as the retired 9492: Tie Fighter set back in 2012. That set retailed at $55 and now it is selling for nearly $100 in the secondary market - a whopping CAGR of 16.12%. And this set is better in every single aspect + being a UCS.
- On a USD 0.12 price per brick basis this set is considered low on the pricing scale.

The ship's design is based of the original trilogy and being a UCS set it will definitely hold on to its value and certainly go up in value over the logn run. Too bad that the [75060: Slave I] was completely sold out by the time I went to the store - otherwise that would be another UCS set that I would get and hold. Low risk level.

And these are the free polybags that were given. Easily worth RM60 in total.




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.

Monday, October 31, 2016

Budget 2017: Gearing For Election

I have stopped compiling my own datasheets (Budget 2016 (see link)) as it is taking too much time. Furthermore it is now the digital age and the same information can be found easily elsewhere :)

Let's look at a few pointers highlighted by The Edge Malaysia (see link).
The numbers: The share of the operating expenditure (opex) of the budget rose to 99% of government revenue in 2013 and 2014, significantly higher than the 79% to 82% from 1998 to 2003 (excluding 91% in 2000). Opex has stayed above 95% of government revenue since 2008, during which there were two election years (2008 under Tun Abdullah Ahmad Badawi and 2013 under Datuk Seri Najib Razak).
What that means: High opex means more money is going to government operations, leaving less for development expenditure (devex). This is akin to a company having less money to grow the business as most of its income is going to administrative expenses. The saving grace is that the RM50 billion devex projected for 2016 is up from RM47.4 billion in 2015 and RM39.5 billion in 2014, although most of it had to be debt-funded due to the high opex.
Aboi: Development as a % to budget allocation is now only 17.6%! During Dr.M's time it was in the mid 30s, Pak Lah's at 20s and now Najib's a pathetic 10s. How low can we go? Revenue only grew 3% and that's after GST's RM30b being added, income tax is not growing as much it means the economy is not really expanding. Spending taxation is not like income taxation.

The numbers: Based on the total government debt of RM655.75 billion as at 2Q2016, Malaysia’s 2016 debt servicing cost is RM26.64 billion — that is RM2.22 billion a month, RM512.3 million a week or RM73 million a day — enough to give RM828 to every Malaysian (RM2.30 a day to 31.8 million citizens for the whole year).
Debt service charges have increased in tandem with rising debt. While the federal government’s debt remains below 55% of gross domestic product (helped by some off-balance sheet transfers), the absolute amount quadrupled in 15 years to RM655.75 billion in 2Q2016 (excluding RM178 billion in quasi-government debt in 1Q2016) from RM165 billion in 2002. In 2008, debt stood at RM306 billion.
Malaysia only saw budget surpluses between 1993 and 1997 when the economy grew 9.5% per annum on average. This year’s GDP is projected to slow to 4% to 4.5% from 5% in 2015 and 6% in 2014. If a balanced budget is only attained in 2020, Malaysia would have had 23 straight years of budget deficits. Budget 2017 is expected to be the 19th straight year, with the fiscal deficit target expected to be 3%.
What that means: While borrowings are usually needed to fund development, debt service charges are generally seen as unproductive. And nearly 12% of government revenue is needed for this purpose this year with debt service charges at RM26.6 billion — enough to buy Telekom Malaysia Bhd, whose market capitalisation is only RM25.1 billion currently and pays dividend of at least RM700 million annually.
The RM26.6 billion is also enough to give every Malaysian a KFC Dinner Plate meal (RM14.90 each) every week for the whole year with RM50 to spare.
If debt and debt service charges were lower, more money could also go towards helping the middle and lower-income groups. Tellingly, BR1M allocations for the five years from 2012 to 2016 totalled RM20.6 billion (allocation had risen to RM5.9 billion for 2016 from RM1.8 billion in 2012).
Petronas has contributed some RM900 billion in oil revenue (including dividend plus taxes) to the federal and state governments in the past four decades. If 15% of that had been set aside, the country would have at least RM135 billion to cushion the tough economic times.
Aboi: In fact we have been running budget deficits for 19 years! And we just broke a new record, 97.76% of the revenue is used for management - paying civil servants salaries etc.. Loan servicing/paying bank interest alone is a whopping RM27b while development's RM46b is funded solely through more debt.



The numbers: Some 40% of government revenue goes to paying the emolument and pension bill. The nation’s pension obligation of RM19.5 billion in 2016 alone is 8.6% of federal government revenue and 9.1% of opex. A decade ago, pension or retirement costs were only RM8.3 billion. It was even lower in 1997 at RM3.6 billion.
Pension obligation will only rise as Malaysians are living longer and healthcare costs for the elderly will also go up. By 2035, one in 10 Malaysians will be aged 65 and above. By 2021, Malaysia will reach that 7% threshold that the World Bank defines as an ageing society — not that far away.
The civil service emolument bill, on its own, too has doubled the past decade, from RM32.6 billion in 2007 to RM70.5 billion in 2016.
What that means: While it is good that employees get a bigger share of the profits of a company, in an environment of slowing economic growth globally, the odds are stacked against the government’s coffers, although it may well want to continue shouldering the rising civil service emolument and pension bill. That means a civil service and public pension reform would have to be on the cards in the medium term, unless Malaysia can successfully expand its coffers.
Aboi: First; the GST and the minimum wage policy is killing businesses so there is no way to expand the coffer. Second; the new perks being added are just the exact opposite of reforms. Computer loan, motorcycle loan, housing loan - more and more hutang! Quarantine leave - fully paid leave, tak payah kerja! And more bonus payouts RM500/RM250 which is becoming like a handout - similar to BR1M!

The numbers: Malaysia has clearly not skimped on education with RM436 billion allocated to it the past decade (2007 to 2016) — the need here is to get the desired quality from the money spent.
Over the same period, however, the country spent RM221 billion on home security and defence — more than the amount spent on healthcare (RM160 billion) and housing (RM12 billion) put together.
While defence allocation was reduced from RM27.1 billion in 2015 to RM26.9 billion in 2016, it is still nearly double the RM16 billion allocated in 2007 and RM6 billion in 1998.
Healthcare allocation was RM21.7 billion in 2016, almost unchanged year on year, but had more than doubled over the past decade from RM9.8 billion in 2007.
What that means: Malaysia is said to be subsidising more than 90% of healthcare costs, but as Malaysians live longer, there is added pressure on public healthcare funding. Adding to that is the prevalence of diseases such as diabetes, hypertension and cancer, which also adds to the cost of subsidising healthcare. Experts expect a public healthcare reform to take place in the medium term to shift more cost to the consumer.
Aboi: Reversed priority and yet our ESSCOM does not seem to be doing its fair share of funding. Ransom kidnappings is a weekly occurrence in Eastern Sabah. Talked about housing where are the PR1MA houses? Sudah 5 tahun tapi belum dapat kunci.

The numbers: Malaysia has cut subsidies for sugar, cooking oil, gas (for cooking) and petrol. The subsidy rationalisation to favour targeted subsidies rather than blanket ones, successfully reduced its subsidies bill. Before fuel subsidies were scraped on Dec 1, 2014, subsidies had reached RM44.1 billion in 2012, RM43.4 billion in 2013 and RM39.7 billion in 2014 — 20% to 21% of total government revenue.
The projection of RM26.1 billion for 2016 (11.6% of government revenue) is just above the RM23.1 billion in 2010 and is still more than double the RM10.5 billion in 2007.
What that means: Subsidies continue to take up just over one-tenth of government revenue. That is not necessarily bad if the money indeed benefits the bottom 40% of the population who need the aid the most. Experts have observed that the government could better stretch every ringgit used for targeted subsidies if resources to help a particular group are pooled, thus minimising agencies’ areas of overlap.
Aboi: We should expect prices of goods to go up in 2017 as the allocation has been halved to only RM10b. My best guess would toll, electricity, cooking oil and flour. Yet our MO1 increased BR1M, in a sense we are shifting and not eliminating subsidies.


This is like a big merry go round. When salaries are being eaten up by higher prices we will have to raise the minimum wage again. The prices will go up again. Why? because employers sufffer higher salary costs and they must recoup the higher salaries. Prices will go up. People will suffer again. Once again the budget is a Kerja Bodoh.

MO1 merely added condensed milk to it and made it an 'Election' budget. He read the budget using a teleprompter just to look good on national TV and he gave out perks/benefits/handouts largely targeting the ruling party's voter base. And lastly he ended his speech drumming up the idea of how there will be an “ultimate victory in the 14th general election to the Barisan Nasional.

November Prediction of Pump Oil Price (Ron 95)


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Sorry I was out on holidays and therefore I missed out the October postingThis is the 13th time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :) My total savings for 2015 is: RM 50.75 and YTD: RM 6.75.



October 2016
Oil spikes as a weekend marathon of talks between major oil producers failed to finalize plans to implement an output cut, threatening the viability of an agreement reached last month to reduce production between by as much as 2%. Again an absence of production cuts from OPEC as they intent to keep market share at a cost to their budget deficits. Prospects for oil to go higher than it is right now appears dim.

MYR is likely fall a little more due to OPEC's internal disagreement over a planned output cut. The speculation that Bank Negara would still lower the OPR by another 25 basis points is still alive and could be as early as 23rd November 2016 as the country's growth remain tepid. Budget 2017 is a letdown in my opinion; RM214.6 for management and only RM46 for development. It is an 'election' budget in which its perks and benefits are largely targeting the ruling party's voter base. Hence investors don't see a big reason why they should pour money into Malaysia - MYR to remain weak for another year. 


Some asked why did the price of crude oil drop in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.
- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.


Aboi's Nov'16 Prediction Analysis

RM/L between Aug and October weaken: 1.62 vs 1.87. Average oil price bumped up from $48.06 to $53.51 and MYR remain continues to remain weak (4.02 to 4.17). Not very good news after the so called 'election' budget. I will predict that fuel price to be increased by up to 15 sen to RM1.95 for RON95. Please fill your tank as soon as possible today before the announcement.

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 50.75. As for YTD: RM 6.75.


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Wednesday, August 31, 2016

September Prediction of Pump Oil Price (Ron 95)


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

This is the 12th time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :) My total savings for 2015 is: RM 50.75 and YTD: RM 3.25.



August 2016
Oil to continue to trade sideways as it faces the heat on several fronts. China's slowing crude demand & speculation of Yuan devaluation due to the soft economic growth. Absence of production cuts from OPEC as they intent to keep market share. The resilience of North American shale suppliers to keep pumping despite crashing prices. Continuing concerns over the effects of Brexit on crude demand. Moreover, a stronger dollar has made the greenback-priced crude more expensive for investors holding foreign currency.

Nothing much on the MYR front. There are speculation that Bank Negara would still lower the OPR by another 25 basis points. Already our growth is tapering, from the initial 5.5% down all the way to 4%. Brexit's impact will only be seen in late Q3 and Q4 for 2016, the heighten anxiety over it coupled with uncertainty makes it very difficult even for experts to gauge the real impact. Malaysia's export market to the UK is only 3% of our total so I would think not much would be felt domestically.

Some asked why did the price of crude oil drop in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.
- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.


Aboi's Sept'16 Prediction Analysis



RM/L between July and August is roughly the same: 1.61 vs 1.62. Average oil price almost remained relatively the same $47.71 to $48.06 and MYR was flattish (4.02). Aboi's is confused as to why the price was unchanged last month as there are no major political happenings or festivities besides the incoming Merdeka Day. Nevertheless I will continue to stick to my guns, I will predict that fuel price to be increased by up to 15 sen to RM1.90 for RON95. Please fill your tank as soon as possible. Worse come I will continue to be confused if the price is unchanged again.

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 50.75. As for YTD: RM 3.25.



**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Sunday, July 31, 2016

August Prediction of Pump Oil Price (Ron 95)


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

This is the 12th time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :) My total savings for 2015 is: RM 50.75 and YTD: RM 3.25.


July 2016
Oil prices went down fueled by persistent global supply glut. Also due partly from Brexit, slower economic growth was revised for the rest of 2016. This factor together with high inventories for crude oil drove global oil prices into bear market territory. It remains that overall oil is projected to be in the $45-$55 range for some time.

Bank Negara made a surprising move to lower the OPR by 25 basis points. Naturally this will cause the Ringgit to be weaker but the impact hasn't been that large or felt. Brexit's impact will only be seen in late Q3 and Q4 for 2016, the heighten anxiety over it coupled with uncertainty makes it very difficult even for experts to gauge the real impact. Malaysia's export market to the UK is only 3% of our total so I would think not much would be felt domestically.

Some asked why did the price of crude oil drop in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.
- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.


Aboi's Aug'16 Prediction Analysis

RM/L between June and July strengthen: 1.72 vs 1.61 (back to May levels). Average oil price tapered from $50.28 to $47.71 (-5.11%) and MYR improved very slightly (4.08 -> 4.02), about -1.47%. Aboi's was right about last month's price increase but not the magnitude of it (missed out the Raya factor). Rakyat's sentiment has to be taken into account in the analysis; that will be the 4th factor after global oil price, performance of myr and politics.

This time there isn't seem to be any saving grace. Festivities are over and the 1MDB issue by DOJ wont be a damper on price so we should see actual prices to reflect this timeI will predict that fuel price to be increased by up to 15 sen to RM1.90 for RON95. Please fill your tank as soon as possible before the ensuing mayhem this evening - go out for lunch now :)

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 50.75. As for YTD: RM 3.25.





**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Sunday, July 10, 2016

WealthPot Page Revamp

I have revamped one of my pages: http://aboiwealthpot.blogspot.my/p/watchlist.html. I will no longer share my entire portfolio details due to privacy concerns. Instead this page will host a brief overview of my portfolio and soon to come watchlist.

The risk rating figure is quoted based on this methodology: http://aboiwealthpot.blogspot.my/2016/04/aboi-defining-risk-rating-methodology.html.

Equities have fallen out of favour recently due to Brexit effect, nevertheless all the funds I have invested in have outperformed the index. Currently I am busy reading The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market.