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Q1

I’m choosing Dutch Lady Milk Industries BHD (3026.KL) as the company that I am interest for it. Dutch
Lady Milk Industries BHD (3026.KL) actually is the top 20 stock in Malaysia 2016. According the
performance of Dutch Lady Milk Industries BHD (3026.KL) in this 10 years, we can know that this stock
is blue chip. When 2006 February their price is only RM7.65 per share but nowadays the share price
is increase to RM58.90 in September 2017.

[24 August 2017]

This article is first appeared in The Edge Financial Daily on August 24 2017. The article show that the
second quarter financial year 2017 (2QFY17) has grew up 5% of sales because of higher demand for
dairy products on Hari Raya festivities. But the gross profit level is influence by higher raw material
prices in the current quarter. Besides that, the unfavourable forex and milk powder price is influence
the margin price while consumer demand is increase. Although the demand is increase, the weakness
of the forex, so that influence the volume of the stock from 11600 (23 August 2017) decrease to
3000(24 August 2017). Besides that the closing price also drop RM0.02 which from RM59.20 (23August
2017) decrease to RM59.18 (24 August2017).

[02 May 2017]

The article show that Dutch Lady Industries BHD is pinched by high cost commodities. Gross margins
fall to 41% owing to higher milk prices which means that the price of milk powder have increase 40%.
The system was upgrades invested by the Dutch Lady Industries BHD which is cost-saving initiative so
that the operating profit was declined by 7.4%. In addition, as the market will continues to prove
softness, the expenses may have influences. Although gross profit is decrease 6% but the margins are
arising to 0.6 points. The volume of stock from 19600 (28 April 2017) decrease to 4700(2 May 2017)
and the closing price is increase 20 cents which is from RM57.60 (28 April 2017) to RM57.80.
[28 April 2017]

The article show that Dutch Lady’s first quarter financial year 2017 (1QFY17) profit slipped 6% on
higher material prices. The current economic look is the biggest problem for Dutch Lady Industries
BHD. The highest raw materials price and the weakness of ringgit will give a big challenge to Dutch
Lady. Although the current economics is a big challenge but Dutch Lady promises will focus and
commit to leveraging the strength of the brand and also will keep the quality offerings to Malaysian
consumer. The volume of stock from 16000 (27 April 2017) increase to 19600 (28 April 2017). The
closing price is increase 60 cents which is from RM57.00 (27 April 2017) to RM57.60 (28 April 2017).
Q2

(a)

Exchange-Traded Funds (ETF) is an index fund that holding a diversified portfolio of securities, priced
and traded on public exchange. An investor can buy or sell ETF anytime at the current price during the
trading day. ETF can buy on margin which means borrowed fund or sold short if prices are expected
to decline. ETF will diversified exposure which mean ETF will hold a basket that made up of shares,
bonds or commodities. The basket of made up will depends on the index that the ETF is based on.

This is the five of Exchange Traded Funds that are currently listed on Bursa Malaysia:

Exchange Trade Funds Stock Code Benchmark Index Closing Price (RM)
(ETF) 31-March-2017
ABF Malaysia Bond Index Fund 0800EA Markit iBoxx® ABF 1.137
(ABFMY1) Malaysia Bond Index
FTSE Bursa Malaysia KL CI ETF 0820EA FTSE Bursa Malaysia 1.82
(FBMKLCI-EA) KLCI Index
CIMB FTSE/ASEAN 40 Malaysia ETF 0823EA FTSE/ASEAN 40 Index 1.91
(CIMBA40)
MYETF Dow Jones Islamic Market 0821EA Dow Jones Islamic 1.09
Malaysia(DJIM)Ti-tans 25 Market Malaysia Titans
(MYETFDJ) 25 Index
MYETF MSCI South East Asia 0825EA MSCI Malaysia IMI 0.928
Islamic Dividend ETF Islamic High Dividend
(METFSID) Yield 10/40 index

(b)

This is the five of Real Estate Investment Trusts (REITs) that are currently listed on Bursa Malaysia:

Real Estate Investment Trusts Stock Code REITs Manager Closing Price (RM)
(REITs) 31-March-2017
AmFirst REIT 5120 Am ARA REIT 0.81
(AMFIRST) Managers Sdn Bhd
Tower REIT 5111 GLM REIT 1.2
(TWRREIT) Management Sdn Bhd
UOA REIT 5110 UOA Asset 1.8
(UOAREIT) Management Sdn Bhd
Sunway REIT 5176 Sunway REIT 1.72
(SUNREIT) Management Sdn Bhd
Pavilion REIT 5212 Pavilion REIT 1.74
(PAVREIT) Management Sdn Bhd
Q3

(a)

Diversifiable risk also can called as unsystematic risk. Diversifiable risk is refers to the risk that is
associated with random causes that can be negative through diversification. It also can refer to the
risk which can be prevent and control for example strikes, lawsuit, regulation actions and others factor.
Basically this kind of risk will due to specific to an industry or factory which like labour unions, product
category, pricing, and market strategy etc. Diversifiable risk is control by investors and cannot be
cannot be mitigated to a large extent. Diversifiable risk can be eliminated through asset allocation and
it will affects a large number of securities in market.

Non-diversifiable risk also can called as systematic risk. Non-diversifiable risk refers to the relevant
portion of risk attribute to factors that affect by war, inflation, political events and other event that
can’t be control by human. It cannot be prevent and control. It can be mitigated to a large extent and
it cannot control by investors. The market will not make compensate any loss for non-diversifiable risk.
Non-diversifiable risk can be eliminated through portfolio diversification and it also affects securities
of a particular company.

In fact, the diversification is the key to management in portfolio risk because it can allow investor to
consequence lower the portfolio risk without adversely affecting return. The Markowitz demonstrates
that the standard deviation of portfolio is typically less than the weighted average of the standard
deviation of the securities in the portfolio. Portfolio risk is not simply can weighted average of
individual security risks. So almost half of an average stock’s risk can be eliminated if the stock is held
in well-diversified portfolio.
(b)

If investors get an extra returns (risk premium) bearing the diversification risk, it will become a
diversified portfolio of stocks and large amounts of diversification risk will give greater return than
equally risky portfolio with less diversification risk. Investors can grasp the opportunity to have higher
returns, bidding up the price of the stock with diversification risk and sell stock with beta but reduce
the diversification risk. This process will continue to the expected return of stocks and shares the same
beta were balanced, no risk premium may gain bearing the systemic risk. Any result would not
conform to the existence of an efficient market.

Non-diversification risk can’t be calculate because that it refer to those can’t control and prevent the
situation. There has a formula for total risk which is diversification risk plus non-diversification risk,
but actually in the current situation we can’t use the formula to justify the compensation. If every risk
can get the compensation, then the insurance company will loss or bankrupt. Insurance company will
depend performance of investor and the performance of the company to define the compensation.
So that’s why not every risk the investor can get the compensation. Sometimes the performance of
company will be influence by natural disasters that can’t be expected will happen. Company cannot
prevent the natural disasters when will be happen. So that’s the reason why the investors do not
receive compensation for all the risks associated with an individual stock.
Q4.

[06 Sep 2017]

RAM rating points out, about 10000 megawatts of capacity will be added to the grid in Malaysia in
2021, based on the energy commission data and our ability to forecast in Sabah and Sarawak. Capacity
expansion of the outlook remains advantageous industries, will be largely by fossil fuel plants, it will
still be the core of power generation in Malaysia, although to promote renewable energy. Electric
power industry's outlook in its special comments Malaysia - charging ability remain stable, support
department's regulatory framework. All RAM - rated green paper issued by Islamic bond, in addition
to a, now has a stable outlook. Our power demand is expected to increase by about 2% a year -- 3%,
in harmony with the country's economic growth elasticity. RAM is Malaysia's GDP will grow by 5.4%
this year (4.2%) in 2016.It reflects the Tenaga Nasional Berhad (TNB) and Sarawak Energy Berhad
(controlled by the Sarawak government) which are vertically integrated utilities which is receive
support from the federal government. Malaysia in 2016 provides another strong performance of the
electric power industry, power demand rose 5.6% from a record, mainly by the commercial part, partly
due to the increase of electricity consumption of cooling in the middle of the warming influence of el
nino.At the same time, the country's market debut for the first class h combined cycle gas turbine
plant by TNB energy co., LTD. North Sdn Seberang Prai (1071 MW), the company and the headlands
energy Sdn coal-fired power plant 1000 MW ultra-super critical in Johor. Considering the graduation
ceremony and retired plant belongs to the utility company, Malaysia's total installed capacity of about
29000 megawatts of end - 2016. In the meantime, subsidies for rationalization is still a focus. The
regulated price of natural gas has been increasing every six months, per mmbtu RM22.70 in peninsular
Malaysia (from July 1 to December 31, 2017 valid).TNB are still under neutral fuel costs change of any
fluctuation will be passed on to consumers incentive-based regulatory framework. We expect the
price upward pressure on the trend of rising fuel costs.

[28 Aug 2017]

RAM ASEAN - 10 national outlook and stable growth momentum, China, India, Japan and South Korea,
in 2017.At present, all countries in our Asian sovereign investment portfolio has a stable outlook, in
addition to India, a positive outlook. Nevertheless, downside risks remain. Infrastructure spending -
which is the core of the reform program - Indonesia, the Philippines and Thailand have gain traction,
continuous efforts to improve the business environment of the long-term economic sustainability.
Other parts of the frontier economies, Cambodia, Laos and Myanmar is still solve the structural
constraints in the physical infrastructure and human capital development with multilateral and
bilateral funding support, although they are still vulnerable to external shocks. RAM, points out that
the export-led economies of Japan, South Korea, Singapore, Malaysia, Thailand and Vietnam are riding
on a cyclical rebound electronics and solid commodity prices. RAM of Asian sovereign credit 2017 is a
reference point views all the ten ASEAN countries, China, India, Japan and South Korea. Users can
through this link to retrieve a complete publication or through our website, www.ram.com.my.Non-
subscribers can purchase report RM530 each copy (including GST).

[22 Aug 2017]

RAM rating inflation is expected to ease further in July 2017, the fourth consecutive month of decline
3.2% (June: 3.6%).Our opinion is based on the fuel continues to moderate inflation pressures during
the month retail fuel prices lower, and the basis of low dissipation effect. The average retail price
RON95 refused RM1.96/ litre July, in violation of the low RM2.00/litre before June this year, thus
reducing transport components the contribution of overall inflation. RAM has maintained its expected
overall inflation rate was 3.8% in 2017.We expect food and transport fuel remain the main driver of
overall price growth this year. While the current momentum of rising prices is still the main cost - push
- driven, may have more potential demand-pull inflation is becoming more common, according to the
current recovery to promote the pace of GDP growth. Therefore, we believe there is room in overnight
rates by 25 basis points by the end of this year.
Q5

Efficient Market Hypothesis (EMH) is the proposition that the stock market are efficient, with the price
which can reflecting their economic value. Efficient Market Hypothesis (EMH) has significant
implication for investor. It will direct affect one views of the investment process and it also can make
decision for investment. Under the efficient market hypothesis (EMH), you can buy or sell at any time
and this will be a game of chance not depends your skill. This is depends your logical, for example if
the market are efficient, the price will reflected the information, so there’s no way to get the lower
price for buying a stock.

Weak form is the one of the most traditional types of information which is using market data to refer
all past price and volume of information. Weak form efficient will show that no value in predicating
future price change because the price data is depends of past history of price information is less or no
value. Tests of the usefulness of the price data is call weak-form test of the efficient market hypothesis.
The evident that I found is testing the market form of efficient market hypothesis in Nigerian capital
market written by Mayowa Gabriel Ajao. According the investigation result, he get the conclusion that
the price change of stock traded on the floor of the Nigerian Capital Market are independent and
random so that’s the reason of the efficient is in the weak-form. Understanding the nature of stock
market efficiency is important for investors seeking to find whether there is the chance that the excess
returns in a given stock market. If markets are efficient, no arbitrage opportunities can usurp the
excess profit, all of the available information in the current price discount. The results of the study
show that the Nigerian market follow random walk, so weak efficient. Means, expect to overvalued
or undervalued stock prices in the market is ruled out. Investors therefore is a waste of time and
continue to learn and charts to find undervalued stocks in the stock market in Nigeria.

Semi strong form is a more comprehensive level of market efficiency using not only known and publicly
available market data, but all publicly known and available data such as new product development,
earnings, dividend, and accounting changing etc. Semi strong also known as part of the efficient
market hypothesis stating that prices reflect all publicly available information. Semi strong are
numerous but more diverse in their findings. The evident that I found is Efficient Market Hypothesis
in Emerging Market - a Conceptual Analysis written by Hamza Zubairu Kofarbai, M.Phil. In the form of
the semi-strong efficient market hypothesis assumes that current stock prices reflect not only the
historical information, and the new public information, such as dividend announcement, economic
and political news. So according to Investopedia (2014) the semi-strong efficiency theory follow the
form of faith because all public information is used to calculate the current price of the stock, investors
cannot use technology or market fundamental analysis to gain higher returns. Those who subscribe to
this version of the theory is that only information is not easy for the public can help investors to
improve the level of return for a performance is higher than the general market.

Strong form is the most stringent form of market efficiency which means that prices reflect all
information which is private and public. Strong form of EMH states that stock prices immediately
adjust and reflect all information include public and private. The way to test is examine the
performance of groups presumed to have access to information. The evident that I found is Testing
the Strong-Form Efficiency of the Namibian Stock Market written by Johannes Peyavali Sheefeni
Sheefeni. Therefore, the hub of the stock market traders, buyers and sellers, etc., to generate returns
of capital market. In many cases, many investors try to go beyond the market. If the market operating
efficiency is low, this can only happen implies the friction on the transaction efficiency and effective
operation of capital market is the key and basic of the development of modern economy. Especially
the centre of the stock market from a savings financing capital allocation and transformation of new
investment opportunities and then create more wealth. In this respect, two kinds of model estimation.
Research results show that the existence of market efficiency in Namibia weak form efficiency and
capital market, but not the strong form. This suggests that the current value no memory, so the past
values cannot be used to predict the current value. Namibia, the weak form efficiency of capital
market can be attributed to its correlation is also found that the weak type of effective market
investigation. Research suggests that Namibia need to develop financial markets and create
investment opportunities in China in order to retain funds (reduce capital outflows), and address the
problem of thin trading, because it is optimal to realize the full benefits, and an effective capital market.