Light at the End of the Tunnel

 14 November  2020

Dear Fellow Investor,

Light at the End of the Tunnel

In the last 2 weeks, world stock markets including Singapore and Malaysia have staged impressive recoveries.  Commodities including crude oil, gold and palm oil have performed well. Our shares are recovering.

The main catalyst includes a Covid vaccine developed by Pfizer which has shown good results.

Below is a headline from the Guardian news in  London:

Scientist behind BioNTech/Pfizer vaccine says it can end pandemic

Exclusive: BioNTech’s CEO Uğur Şahin says he is confident vaccine can ‘bash the virus over the head’

The immediate reaction from this news was positive for value shares.

Recession lock down shares such as Zoom and Amazon were hit while there has been a shift into value shares.  

A good example of a value share which we hold is SATS which is an airline caterer listed in Singapore. A month ago price was at  2.80 and insiders of SATS were heavily buying anticipating a return to normal. As of Friday it has advanced to 3.80. Most of SATS business is in Asia and Asia is gradually opening up. Even Singapore Air has caught a bid.  Singapore and Malaysian banks which have been under stress are recovering from multi year low price to book valuations will benefit from a lessening of pandemic fears.  

The results of the US election are still uncertain. The media has declared Biden the winner but legislative power as to who controls the senate( upper house of congress) is not decided. Without control of the senate, Biden can not get his socialist agenda approved including massive tax increases and phasing in his Green agenda. Odds favour he will not get control.

Foreign funds bought Malaysian shares and bonds last week for the first time in 7 weeks, Singapore and Hong Kong have also seen large inflows of foreign funds.  These funds are buying heavyweight undervalued blue chips.

EWH traded on the NYSE contains blue chip Hong Kong shares most of which have China exposure. It benefits from China growth and pandemic recovery. Notice the 10 % jump in the last 2 weeks.

 

EWM is the Malaysia Fund traded on the NYSE. It holds blue chip value shares. It broke out from a multi month congestion last week showing foreign fund inflow .

Take care

Bill

The benefit of the MCO is it allows us to explore Malaysia without hoards of foreign tourists. A favourite place of mine is Port Weld near Taiping. It is famous for their eagle sanctuary tour.