7/28/2019 120315 Letter by Zeng Yuan Chang

1/2

2012

8 5

LTRO2 LTRO1

1

2 24

PE PE

PE PE PE

PE PE PE

PE PE

20120306

: 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.

@@@@MICA (P) 183/09/2011

2012 03

7/28/2019 120315 Letter by Zeng Yuan Chang

2/2

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 enterthe 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 newgood 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 lowbecause 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 lastyears high level, and not to worry too much about it.

06 March 2012

Note: for clarification of translated text if any, please refer to the original authentic Chinese text.