We buy before the crowd

18 December 2017

Dear Fellow Investors,
Last week I bought for all EPF and private managed accounts Hong Leong Bank Bhd.

I bought during a period of market uncertainty and pessimism. Malaysian banks have been congesting with a downside bias for the last few months but value is emerging.

I sold Nestle which in my opinion is overvalued and over hyped. Nestle PE is over 35 with a dividend yield less than the money market rate. Nestle insiders have been heavily selling near the highs. Revenues and profits have been dropping

In contrast, Hong Leong Bank has a PE of  12.7 and is off the radar screen of most investor.

I also like their focus on fintech.  The Star  noted that Hong Leong Bank is the pioneer in implementing cognitive banking in Malaysia in partnership with IBM Watson. 

“This combines a machine learning interface and big data analytic, and paves the way for more
customised products and faster customer servicing turnaround time.”

It’s official! Hong Leong Bank’s fintech startup programme goes live in Malaysia, 17 Mar 2017

Photo - (From left): Nazrin Hassan, Group Chief Executive Officer of Cradle Fund Sdn Bhd;  Dr. Sivapalan Vivekarajah, President of Malaysian Business Angel Network; and Domenic Fuda, Group Managing Director and Chief Executive Officer of Hong Leong Bank Berhad

Singapore banks including OCBC, DBS and UOB  have had a good run this year and one reason has been their fast adaption to fintech.  Fintech reduces headcount, increases efficiency, and increases profits.

Malaysia is catching up and that is our opportunity. We buy before the crowd.

There are tailwinds: Bank Negara  is on course to raise interest rates perhaps in the 1st quarter of 2018 and that will increase profits for the banks.

Loan growth is gradually picking up and the election is around the corner. Malaysian growth  also has increased to 5.6 %. Oil prices have picked up and this improves  bank balance sheets.

Banks are the foundation of any economy. An economy will not recover unless the banks recover.

Singapore is an example. Singapore has recovered from a grinding multi month bear market as banks and property were hit.  

Sentiment turned and with Trump winning the election  Singapore banks have lead the SGX to multi month highs and property in Singapore is recovering.

Will this happen to Malaysia ?  My bet is Malaysia will recover and buying banks is a low risk way to participate. Caveat: Be selective.

Invest well and grow your wealth,
Bill

Today there are 12 critters: Father resembles a Thai Ridgeback, He has a blue/grey coat. Mum is short haired tan/ light brown with white paws, both intelligent, Born 9 December 2017 Grey 1 female/ 1 male. Black 3 female, 2 male and white 2 female and 3 male.

If interested to adopt, please whats ap me 012 685 1207 and I will reply with the name of the   owner and contact number.  The owner lives near the Securities Commission in Damansara.