Uncertainty to markup

 5 Feb 2022

Dear Fellow Investor,

Uncertainty to markup

Daily chart of Dow Jones showing a change in sentiment.

Dow Jones trading on the NYSE reflecting near term mark up.  Most world markets including the KLSE, SGX, Japan and Hong Kong are showing similar patterns.  As investors become more optimistic they reenter the market and the mark up phase begins. This is partially due to the opening of borders and supply chains as Covid infections subside. We are emerging from the panic and hysteria of the pandemic.

On Monday Dolly and I visited Zoo Negara. The parking lot was full and the animal shows were well attended. My favourite animal that is the main attraction of the show is the bear cat or Binturong. It has been trained to walk on a long wooden pole and push a ball.  It is a huge bushy black cat with a long tail and  has been entertaining the crowds for at least 5 years.  I bring this up as it shows an optimistic and happy crowd. Were they investors ? I do not think so but they reflect the current investment mood which is slowly turning positive. Foreign funds are returning.

One of our holdings is Nidec which is the world’s largest maker of micro electric motors. They have been effected by shortages of semi conductors and the rise of copper prices as copper is used in electric motors.  My analyst Mr Phua Lee Kirk reported that:

Most, if not all, the companies in the world will have a lagging effect on rising raw material prices before they can pass through to clients. As long as the company's products are competitive, the cost will be passed through after a quarter or two. Therefore, I do not think we have to worry about such business cycles. The company has been buying back their shares on the recent correction which is positive.

 

On 21 February there will be a Nidec briefing and I will review this for you and find out how they are addressing the semiconductor shortages.  

There was a good review today in the Star of technology shares in Malaysia. The outlook was positive as the importance of semiconductors can not be understated as technology will continue to play a much more significant role than ever before.  Uncertainty and fear still dominates this sector but trading volumes are increasing which shows a sentiment shift. We are positioned in this sector for a potential markup.

 

Take care
Bill

 

The Binturong or cat bear which has been entertaining visitors at Zoo Negara for the last few years.