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Business Times - 22 Aug 2001
Doom and gloom? Yes, but there are bright spots
By
R Sivanithy
ARE there any stocks worth buying in a market as bad as this? It's a question observers must be asking themselves, with buyers reluctant to commit, sellers refusing to sell and most fund managers choking on large slices of humble pie.
Surprisingly though, the answer is yes. Some stocks have bucked the overall downward trend, whether for fundamental reasons such as superior earnings or dividend yield, or speculative reasons such as a possible takeover.
Since the start of this quarter on July 1, the Straits Times Index has surrendered about 95 points, or 5.5 per cent, while, for the year, it is down 15 per cent or 16.1 per cent in US dollar terms.
It has been a gradual slide that some believe would have been worse if not for bank mergers that have helped inject at least some interest.
Yesterday's 4.72-point gain for the STI to 1,631.64 was a good example of the trying conditions brokers have to deal with - it was largely due to movements in a handful of stocks and wasn't representative of the broad market, which registered 112 rises and 128 falls.
Volume excluding foreign currency issues remained low at 187 million units worth $286 million, compared with last week's already-poor daily average of $350 million.
Dealers half-heartedly pointed to the US Federal Reserve's latest interest rate meeting as a reason for the quietness, with many readily admitting the market's problems run too deep for any interest rate-related solution.
'How can anyone in good conscience buy or recommend a buy on stocks when earnings are collapsing,' said a dealer. 'This is the dilemma brokers face - to survive, we need clients to trade, but it's simply not possible to encourage them to do this.'
Still, amid such doom and gloom there have been stocks that have either outperformed the STI or held up well - something that should give hope to those who believe careful stock-picking can beat the odds.
One such stock is Hong Kong's TPV Technology, a computer monitor maker listed here and in Hong Kong.
The TPV counter has doubled to around 40 cents since early April and has held its gains since the start of July.
This has largely been because of its exposure to the blossoming China market and the fact that it appears to be attracting the attention of more institutions than its penny status would suggest. ING Barings was the first to call a buy when the stock was around 30 cents and JP Morgan is the latest on Aug 15, thanks to an 'exclusive' factory visit that left its analyst 'impressed with the TPV's overall management and plant operation'.
Another worthwhile performer is Want Want Holdings, a Taiwanese snack food maker whose shares have appreciated 6 per cent this quarter, thanks to better-than-expected interim results and its position as a potential China play.
The China theme has been a popular one that has underpinned stocks such as People's Food, Tianjin and Unifood - all of which rank among the market's stellar performers this year.
As one dealer said: 'When the market is very bad, you need a very good theme to convince buyers.'
But perhaps the most interesting theme has been 'buy stocks with as little risk as possible'.
These low-risk stocks include Inchcape Motors, which promises a high dividend yield, and takeover counters like Tibs Holdings at $1.41, when the takeover price is $1.40 plus a 3.5 cents dividend.
In addition, interest has picked up recently in DBS' non-convertible preference shares which now trade above par at $100.40, mainly because DBS is set to pay the first half of a 6 per cent coupon in November.
Copyright © 2001 Singapore Press Holdings Ltd. All rights reserved.
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