7 August 2021
Dear Fellow Investor,
Bright Spots
Last week the KLSE dropped marginally due to increased Covid cases and political uncertainty. The technology index however made a new high.
KLSE Technology Index
The technology index has performed well due to strong exports and demand trends. The pandemic has motivated businesses to adapt and innovate which technology companies facilitate.
Our holdings in KGB- recently split 2 for 1 with a free warrant - is a manufacturing company who developed a gas to make semiconductors in China. They leveraged on their expertise with rarefied gasses to support China in their efforts to manufacture semi- conductors. The management of KGB used to be with Malaysian Oxygen and are well established with many years of specialized knowledge of industrial gasses. With the technology sell down in China, KGB was not effected. They keep a low profile and have good relations with the authorities.
From Tong’s Edge portfolio Saturday: Malaysia is aggressively vaccinating its population and will hit 50% fully vaccination by end of August. On reaching this milestone the country should relax mobility restrictions quickly and allow economic activities to resume.
His Malaysia portfolio reflects this view as he continues to hold quality companies with pricing power and recovery potential. In his overseas portfolio he holds Singapore Air for recovery. We hold SATS and Comfort Del Gro for the same reasons.
Based on consumer surveys, market sentiment is still extremely negative. We are at 2000 levels of 62.2 % based on a recent CGS CIMB report. Reality does not support this number.
From the Saturday Edge: The pandemic is still unfolding and while the number of infections remain high due to mass testing, around 98 % of these cases are asymptomatic or with mild symptoms. As vaccinations are ramped up the hospitalization rate is expected to decrease which will improve our healthcare system to respond.
If you are holding quality shares do not sell- enjoy your dividends and earnings growth. If you have spare cash consider to shop for bargains . If you wait for recovery prices might be much higher.
Keep safe
Bill
Malaysia and Singapore offer numerous benefits compared to New York and many big cities. Taxes are relatively low. Crime is limited- gun violence is virtually non existent. Business is free to operate with minimal regulation and there is no tax on capital gains related to equities or fixed income.
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