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MICA (P) 183/09/2011

2012 03

2012 8 5 LTRO2 LTRO1 1 2 24 PE PE PE PE PE PE PE PE PE PE

2012 03 06
: www.ycchan.net : http://sg.finance.yahoo.com/indices email@ycchan.net 20 Kramat Lane #03-01 United House Singapore 228773 Copyright 2011. Published and Printed by ProActive Media Pte Ltd.

Dear Friends Stock market has been continuously rising for two months since coming into 2012, but seemingly facing some strong resistance at this level. From technical analysis viewpoint, the STI is now in the same situation as on 5 August last year from whence the market plummetted. From herd psycology viewpoint, since the market has been continuously rising for two months without any noticeable technical adjustment, small investors dare not enter the market. Everyone thinks the market, having risen for two months it should adjust; and everyone is waiting for the market to adjust before making a move. Again, analysing from external fundamentals, the European Central Bank has rolled out LTR02, and together with LTR01, has released into the markets more than 1 trillion Euro. With so much currency notes being rolled out by the European Central Bank, the European debt crisis is thus subduced for the time being, which is good news to the markets. However, there are people who think since all the good news have been exhausted, there will not be any more new good news in the near future. Peoples Bank of China again lowered the bank deposit reserve ratio on 24 February, and is not likely to lower it again this month. Would there be any fresh good news in the near future? Yes; I think we overlook good news in that for the time being we are not going to have any bad news. The market is now lacking stimulating news. For want of fresh news to stimulate the market, we might as well focus on news of indivdualcounters. Now is the time for listed companies to publish their results; we can rely on their results to evaluate their investment worthiness. On the whole I trust most of the blue chip counters, even the last yearss results of most 2nd and 3rd liners should be alright. A good result lowers a companys PE ratio and raises its net worth. We can now compare which counters PE ratio is more attractive. The lower its PE ratio is the better. By low it means compares against the companys own past PE ratios, not against other companies PE ratios as some companies PE ratios are low because of high risk. Beside PE ratios, we can also evaluate a companys net worth with its share price.to see if there is any big discount between the price and the net worth, the bigger the discount the better. Similar to PE ratios, if a share price shows a big discount compared to its net worth over a long period, it is because of the high risk. We may now take our time to select good stocks; the worst situation is over. Notwithstanding the market has continuously risen for two months, it is still far from last years high level, and not to worry too much about it.

06 March 2012

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