21 April 2011

ACEs are back. Be cautious? (21 April 2011)

Yeah... Our long lost friends are here again. These friends are in the limelight again, conquering the lists of most active counters lately. Punters are trading happily because of their relatively cheap price, higher volatility, and most importantly less coverage by analysts. Normally, investment banks did not cover ACE counters due to their not-so-clear business model, hence very hard for them to project their earnings and setting fair value. No estimated fair value means punters can set the "fair" ground themselves.

Most Active Counters in Bursa Malaysia on 21st April 2011

You Jump... I Jump

Of course, some of those ACE counters are there for certain reason, but many of them are there without any material announcement. For example, Tricubes is very active due to its participation in ETP, by investing RM50mil to develop the 1Malaysia email project. But then, why Omedia, IE, Viztel, TDEX also featured in the most active list today? Don't we have better companies to trade lately? And, even for Tricubes, a PN17 (financially-troubled) company, the future was still bleak. Still, it is a loss-making company. How did Tricubes comes out with a whopping RM50mil?

Why should we be cautious?
ACE market counters presumably are lower-graded companies, which get their ways to list in Bursa Malaysia. In fact, this is true to certain extent as Bursa Malaysia did not required past proven track records for aspirant ACE companies. Alternatively, they can be backed up by a so called "sponsor". This sponsor could be a company, investment banks, or venture-capitalist (VC). The reality is market manipulators are "doing" their job again once they see the opportunity in the market, and it is now - hot and spicy market. Of course, these scenario would not last long, maybe days. Then, they will wait for next round.

Sixth-sense tells Finance Malaysia that the market momentum is dying slowly, which could spark a sell-off in the market soon. Would it happened on Good Friday tomorrow?

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