FLOW OF HOT MONEY - HOW MARKET BEHAVES : Reposted by Calvin Tan Research

Hi guys/gals
I am reposting one article long before i joined any forum
See

FLOW OF HOT MONEY COMES LIKE AN INCOMING TIDE BY WAVES UPON WAVES.

Posted on August 4, 2013 by Calvin Tan

In Year 2007,  A Powerful Flood Of Foreign Money Came Into Singapore  Like An Ocean Wave And Lifted Up The Prices Of Properties In Prime Location Like Orchard Road. Prices Broke All Previous Records And Surged Upward Due To This Infusion of Hot Money!

Yes, we should go for Properties In Prime Location. Since Location! Location! Location! Is The Mantra In Property Investments. But Like All Other Types Of Investment, we can Overpay Above The Intrinsic Or Actual Value Of A Thing! The People That Blindly Bought At The Peak in Orchard Road suffered A Collapse in 2008 When Lehman Brothers’ Crisis Hit. Until today, prices have not recovered to 2007 level.

That’s What Happened To Tokyo in the Late Eighties, when Prices Skyrocketed Into The Stratosphere.  Land in Tokyo was valued at 350 times more than Manhattan. The Land Beneath the Imperial Palace of Tokyo is more valuable than The Entire State of California! When The Property Bubble Burst in The Late 1980s, prices crashed for many years. Till this day, prices have not returned back to the Prices of Those Lofty Peaks.

The Next Wave Sent Property Prices To Move Up In Holland Area – By- Passing Those At The Peripheral Like Bukit Batok or Jurong area. For the people of Jurong, the Wave didn’t arrive till much later.

Finally Development Comes To Jurong. At the last Tender For Executive Condo (EC) Land in Jurong – prices reached a New Record!

You see, Prices Surge In Waves. First The Center, then It Spreads To  The Circumference. When The Tide Comes In, Big Ships Or Vessels Are The First To Rise, Then As The Waves Reach The Shore All Other Smaller Vessels Will Also Rise. A Rising Tide Lifts All Boats Ring True.

That’s Why When Foreign Hot Money Comes In, Blue Chips, Well Capitalized Share  Prices Are The First To Rise. Then Followed By Second Liners. And When Third Liners Or Penny Stocks Finally Come Into Play – they say That The Bull Run In Share Prices Is Almost Over. So the First Wave – being the Strongest lift up Blue Chips. The Second Wave Moves The Second Liners & The Final Weakest Wave, Moves the Lightweight penny stocks.

What About Iskandar? There was an Initial Surge Into Gated & Guarded Properties Like Horizon Hills, ADDA Heights, Nusa Duta, Bukit Indah, Setia Indah, Mount Austin, Taman Laguna, Taman Molek, KSL Bestari Heights, Senibong Cove   & Other New Prime Properties In Gated & Guarded Locations.

This Is The First Wave! Not Many Singaporeans Are Here Yet. Almost All On Offers Are LANDED PROPERTIES, with a sprinkle of Condos.  And This Constitute The Very CREAM OF THE BEST INVESTMENTS FOR THOSE BRAVE SOULS WHO BOUGHT EARLY!

Older Houses In Locations Like Taman Perling, Taman Pelangi, Taman Johor Jaya, Taman Bukit Kempas, Taman Iskandar, Taman Desa Harmoni & Other Tamans Or Gardens Started To Move, Albeit, slowly but steadily. This Is The Second Wave! Developers Have Raised Prices Drastically In The Second Phase Due To Red Hot Demand.

At ADDA Heights, a Buyer returned a Unit Booked just Above RM420,000 For A Semi Detached Cluster House. Unfortunately, his loan was rejected by the bank. So he returned the Unit  to ADDA Heights. Demand was so hot that ADDA Heights immediately raised  the price of   this last available returned unit to RM480,000! It was SOLD IMMEDIATELY!

Same Thing Happened In NUSA DUTA. For The Those Priced Around RM700K The Last Unit Was Sold At RM788,000! You See Prices Subject To Changes According To Market Demand! In This Case Demand Far Exceeds Supply, So Prices Must Surge Upward!

At Bestari Heights, KSL, Semi-D Cluster Houses Were First Lauched At RM550,000. The Prices Kept On Rising As The Stock Dwindled. And The Last Few Units Were Sold Above RM700,000!

For Senibong Cove, First Phase Was Sold At RM500K. For Second Phase Semi-Detached with slightly bigger land and built up, Prices Jumped To RM1.2 Millions!

UNLIKE SHARE MARKET & UNLIKE SINGAPORE, PROPERTY PRICES IN ISKANDAR  SURGED STRONGER & EVER MORE STRONGER AT SUBSEQUENT LAUNCHES.

FINALLY, WITH PRECIOUS LITTLE LAND BANK LEFT, DEVELOPERS ARE MAXIMIZING LAND USE BY BUILDING SKY HIGH CONDOMINIUMS!

At The Same Time, At Property Auctions, Even Houses In Faraway Places Like Kota Tinggi, Pekan Nenas, Kulai, Kota Masai, Ulu Tiram, Pontian Are Coming To Life! The Third Wave Finally Reaches The Properties At The Fringe Of Iskandar.

NOTE: LATEST UPDATE ON 18TH SEPTEMBER, 2013
ECO WORLD (Own By Ex Directors of SP Setia) has Taken Over Focal Aims for An Offer Price of RM1.40 according KLSE Bursa News. Focal Aim has over 1,000 acres of Freehold land at the fringe of Iskandar. 2 Years Ago Focal Aim Shares were traded as low as 25 cents a piece.

The Spectacular rise of Focal Aim Share Prices indicate that the BEST IS YET TO COME For TAMAN KOTA MASAI, TAMAN PASIR PUTIH< TAMAN AIR BIRU, TAMAN SCIENTEX & TAMAN NUSA DAMAI. Taman Nusa Damai has over 600 Acres Freehold land and is Owned by MP CORP. Surprisingly, MP CORP Share Prices only moved slightly to end at 40 cents even though Taman Nusa Damai has a better location than Taman Kota Masai. THE ENTIRE ISKANDAR IS NOW IN HOT DEMAND! AND BY THE WAY, ALL THE RULES THAT WE LEARNT FROM EXPERTS OR BOOKS ABOUT PROPERTY INVESTMENTS  ARE ALL  BROKEN! WE WERE TOLD TO AVOID BUYING HOUSES WITH THE UNLUCKY NOS. 13 OR ANY NUMBER THAT ENDS WITH 4 (Four Means Death In Chinese), NOT TO BUY ANY HOUSES FACING T-JUNCTION, HOUSES NEAR SEWAGE OXIDATION POND OR NEAR HIGH TENSION POWER CABLES ARE NO! NO! AND DON'T BUY PROPERTIES FACING NOISY HIGHWAY, BIG DRAIN OR GRAVE YARDS!! I TELL YOU - ALL THESE STUFF OR CRITERIA  YOU KNOW ARE ALL THROWN OUT OF THE WINDOW!! Chinese Are Fighting Over Houses With No. 4!  I Lost One House Facing A Big Chinese Grave Yard In Auction! THIS IS THE BOOM TIME IN ISKANDAR!! THE SUPER BULL RUN IN PROPERTY CRAZE IS ON!!  EVERY TIME AT AUCTION,  PRICES ARE BREAKING ALL PREVIOUS RECORDS!! COMING OUT OF THE AUCTION COURT ROOMS YOU FREQUENTLY HEAR EXCLAMATIONS LIKE "CRAZY PRICES" "SUDAH GILA!! (Malay For MAD ALREADY!)  SEOW LIAW (Chinese For "GONE MAD!) MORE AND MORE POWERFUL WAVES OF FOREIGN PARTICIPATION IS COMING!

QUOTABLE QUOTE:- “SUSTAIN YOUR PATIENCE,  GREAT MOVEMENTS TAKE TIME TO DEVELOPE…”

Calvin comments (March 17th, 2016 for i3 Investors' Forum):

Yesterday Top Gainers Were Blue Chips like Tenaga, Genting, several Banks & 2nd Liners. This is the indictation that Foreign Funds are Trickling back into KLSE.

With Euro & Japan going into negative interest rates, Hong Kong now given a negative rating, Singapore with anemic growth of only 1.9%, China struggling, Arab Banks in possible bankruptcies there is really few other places to invest monies other than Oversold & Very Undervalue KLSE!

Malaysia will still be growing a decent 4% to 5% in a World of minus, zero or no growth.

More so as Fed Yellen remarked that the entire US Economy is too weak to justify raising interest rates for the foreseeable future.

THIS IS IT!

EXPECT MORE FOREIGN FUNDS TO RETURN BACK TO MALAYSIA AT LONG LAST!

SO INVEST EARLY BEFORE PRICES REBOUND AND THEN ONLY START CHASING

AS THE SAYING GOES, "THE EARLY BIRDS GET THE BEST JUICY WORMS. SO THOSE WHO ACT NOW GET THE BEST BARGAIN STOCKS!!"

 

THIS IS THE PATTERN OF FUNDS FLOW :

FIRST

THE BLUE CHIPS OR HIGH END HOT PROPERTIES

THEN

THE SECOND LINERS OR SECONDARY PROPERTIES

AND FINALLY

THE PENNY STOCKS & THE LOWER LINERS OR HOUSES AT THE FRINGE OF THE BOOM

See how Funds Flow Back To Malaysia

Record funds flow into emerging markets

 

 

The US tax overhaul will boost corporate earnings.

In fact, companies over there are planning to reward their employees with higher pay while the listed ones are also looking to reward their shareholders.

The most recent data show that low unemployment, higher wages and business investments continue to drive the US economy with analysts indicating that plans to spend on infrastructure will boost growth.

The US corporate earnings season has begun and indications are that its looking good.

That is being reflected in the US equity indices.

Year-to-Jan 25, the Dow Jones Industrial Average (DJIA) is up 6.77%, the S&P 500 has risen 6.20% and the technology-heavy Nasdaq has gained 7.36%.

S&P 500 companies are expected to see earnings rise well above 10% for the last three months of 2017 while technology companies are looking at double-digit percentage growth for profit and revenue.

Investors can be forgiven for their exuberance when taking into account that profit at S&P 500 companies grew 15.5%, 10.8% and 7.1% in the first, second and third quarters respectively.

And its not just US companies, European companies are also looking at a better year ahead after earnings recovered last year.

Analysts say margins are improving while, especially for the eurozone, the economic outlook looks good.

Private consumption is driving growth, the jobless rate is declining while a tight labour market is pushing wages higher and boosting household incomes.

Emerging markets bonanza

A weaker US dollar and persistent hunt for yields continue to drive funds into emerging markets with fund investors’ emerging market exposure reaching the highest level since April 2015, says the latest report from the Institute of International Finance.

 

 

 

 

 

 

 

 

 

Confidence in a positive spillover effect into emerging markets from the mature markets have also been a driver of these flows as many emerging-market economies are tied into the supply-chain that ultimately feeds into the mature markets’ consumers.

Corporate earnings should improve with better demand from these consumers.

 

 

“Emerging market fund flows amounted to some US$35bil since mid-November – a rise of more than 50% compared to the previous two months. Inflows have been particularly strong in recent weeks. Over the first three weeks of the year, funds investing in emerging market bonds and equities have attracted US$8.8bil and US$11.5bil, respectively,” it says.

The flow of funds has supported emerging market equities and currencies. A Jan 24 Maybank Investment Bank Research report show that foreigners remained net buyers of Malaysian equities in the first three weeks of January, at RM2.4bil, after buying RM900mil worth of equities in December.

But its not just equities, foreigners were also net buyers of Malaysian bonds, which saw RM2.7bil in net inflows last month after RM6.7bil in net flows in November as they wrote on the momentum of ringgit strength and the widely anticipated interest rate hike by Bank Negara, which was announced on Jan 25.

Maybank’s fixed-income research team expects foreign flows to remain positive in the local bond market despite the maturity of RM2bil worth of Malaysian Government Securities (MGS) this month. The team believes that the risk of maturity-driven foreign selling in the domestic bond market is reduced, citing net foreign buying of RM6.6bil between September and October despite RM24.8bil of MGS maturing in the same period.

The yield differentials also remain attractive for bond investors, with 10-year MGS closing with a yield of 3.92% on Jan 25 compared to similar duration US Treasuries, which closed at 2.63%. The difference in yield is 129 basis points.

Technical analysts see the local bourse continuing the positive trend, with the benchmark FBM KLCI gaining 8.82 points on Jan 25 supported by bank stocks and rising another eight points to end the week at 1,853. The index is just 40 points from all-time high of 1,896 that was achieved in July 2014.

Maybank’s forex research team also expects the ringgit to strengthen against the US dollar to 3.95 by the end of this year and average 4.05 for the whole year, after ending 2017 at 4.05 and averaging at 4.30.

Calvin comments:

FROM HERE WE CAN SEE THAT FUNDS HAVE BOUGHT UP PUBLIC BANK, MAYBANK, NESTLE, F&N AND OTHER BLUE CHIP STOCKS.

NEXT WILL COME 2ND LINERS

ONE TOP PICK OF CALVIN TAN RESEARCH IS MRCB

WHY MRCB?

COMING UP SEE NEXT POST.

http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/145918.jsp