FIN552 Report - EQUITIES MARKET TRADING GAME PDF

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INVESTMENT AND PORTFOLIO ANALYSIS(FIN552)INDIVIDUAL ASSIGNMENT(EQUITIES MARKET TRADING GAME)PREPARED BY:EDRIANNA NURUL BINTI RIZAL NIKMAN (2019314205)PREPARED FOR:MADAM NUR SYAZANA MOHD NASIRSUBMISSION DATE11 TH JULY 2020ACKNOWLEDGEMENTAlhamdulillah, I am most grateful to Allah SWT for the completio...

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INVESTMENT AND PORTFOLIO ANALYSIS (FIN552)

INDIVIDUAL ASSIGNMENT (EQUITIES MARKET TRADING GAME)

PREPARED BY: EDRIANNA NURUL BINTI RIZAL NIKMAN (2019314205) PREPARED FOR: MADAM NUR SYAZANA MOHD NASIR

SUBMISSION DATE 11TH JULY 2020

ACKNOWLEDGEMENT

Alhamdulillah, I am most grateful to Allah SWT for the completion of this Equities Market Trading Game Report as one of the requirements that need to be accomplish in the course work assessment for the code FIN 552. Next, I would like to express my greatest gratitude to my lecture, Madam Nur Syazana Mohd Nasir, for the dedication as well as guiding me throughout the course of completing this report. Many thanks too to my fellow course mates who have been helpful and patient in helping me finish this assignment. Their ideas and recommendations have made the process of finishing this report a success. I would like to also extend my gratitude towards the faculty for providing sufficient materials in order for me to complete this report and to anyone that is involved directly and indirectly towards the contribution of this report.

TABLE OF CONTENT

Content Introduction List of Stocks Analysing Stocks Overall Performance Strengths and Weaknesses Transaction History Conclusion References

Page 1 2 3-12 13-15 16 17-19 20 21

INTRODUCTION

Bursa Malaysia provides the daily commentaries on the financial instrument such as Securities and Derivatives Market in partnership with research partners to keep investors up-to-date with the latest market developments. Bursa Malaysia is the bank holding firm that runs the bond bank in Malaysia. It is authorised under Capital Markets and Services Act section 15. Based in Kuala Lumpur, Bursa Malaysia is the stock exchange of the country and serves as a platform that provides a variety of exchange-related products and services to sell shares to the public to businesses, groups and governments. As for Bursa Market Place, it is an online platform that gives people access to information and relevant resources to start their investment journey, Bursa Market Place provides user-friendly features and a simple interface for potential investors. Here you can conveniently access a list of basic information about how to use the resources on the website, training materials, expert videos and brochures. This page is useful for newbies and those wishing to learn more about investing and the different types of investment products on Bursa Malaysia. I've learned ways to play the trading games at Bursa Market Place where it helps me experience the overview of the real-life trading stock situation in Malaysia. For the course of Portfolio and Analysis, I played the game with a capital of RM100, 000 from 16 April 2020 until 11 June 2020. Throughout this report, I will highlight the lists of instruments exchanged, the factors deciding stock price, the most profitable and unprofitable stocks, the performance measurement and the strength and weakness of each stock.

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LIST OF STOCKS Below is the list of stocks that I have traded in:

Ekovest Bhd Star Media Top Glove Corp Supermax Corp MSM Malaysia Holdings Fraser & Neave Cypark Resource AE Multi Holdings Comfort Gloves

Salutica Berhad Lion Industries Adventa Bhd Pos Malaysia Sapura Energy Petronas Dagang Ablegroup Bhd Kossan Rubber

As a trader, I want stocks that have the ability to develop and perform well. I think all the stocks I have traded can yield me high returns. For your information, all the stock I've traded, I made sure I did a research first on the Bursa Malaysia website, which really helps me to know about the stock company's existence. I can analyse prices as well as the chart given from the website. Therefore, I used my understanding of technical analysis gained in the syllabus of Technical Analysis (FIN555).

ANALYSING STOCKS 1) COMFORT GLOVES 2

Formerly known as Integrated Rubber Corporation Berhad, Comfort Gloves Berhad is an investment holding company. The segments of the company are manufacturing, holding investment, and others. The segment manufacturing deals with the manufacture and trade of latex gloves. The segment Investment Holding is engaged in investment holding and managerial services provision. The others segment is engaged in the latex glove trade. Comfort Rubber Gloves Industries, a subsidiary of the company, is engaged in the manufacture and trading of latex gloves.

OVERBOUGHT

Based on the chart above, it shows the movement of the stock price for Comfort Gloves. This movement of the stock price is taken for three months trading time starting from 16th of April 2020 to 11 th of June 2020. On 21st May, I decided to buy about 200 units of Comfort Gloves at RM2.48 each. Experts assume that the price will increase in the future. According to MACD line (blue) above the signal line (red), it gives the signal for buyers to buy the stock.

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I justified based on the histogram chart where it shows the difference between MACD line and signal line that if the histogram chart is above the amount of 0.000, it is a signal for traders to buy the stock while if the histogram chart is below the amount of 0.000, it is the right time for investors to sell the stock. Besides, for the relative strength index (RSI) I analyse based on the line 70 and line 30. On the date that I traded, the line chart is above the line 70 which means it is the best time for investors to sell the stock. I also used the fundamental strategies where I read news about how glove makers is continuing to top the gainers list again as there is still no clear vaccine for the Covid-19 has been found yet which gave me more confidence to buy the stock.

2) KOSSAN RUBBER INDUSTRIES 4

Kossan Rubber Industries Bhd is a publicly listed company, established since 1979 with primary glove manufacturing business followed by technical expertise in rubber and cleanroom manufacturing. The company maintains manufacturing and distribution offices in Malaysia and Hong Kong.

Its subsidiaries are engaged in the manufacture of latex inspection gloves; manufacture and sale of rubber-based parts and goods; manufacture and installation of machinery; trade in latex inspection gloves; investment holding; investment keeping and trading of goods for cleanroom use; distribution, and manufacturing of surgical, procedure and examination gloves, among others. The company's subsidiaries include Perusahaan Getah Asas Sdn. Bhd., Kossan Latex Industries (M) Sdn. Bhd., Kossan Engineering (M) Sdn. Bhd., and Kossan Sdn. Bhd., among others.

OVERBOUGHT

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The chart above shows the movement of the stock price for Kossan Rubber Industries starting from 16th of April 2020 to 11th of June 2020. It shows the bullish trend starting from the 8th of May until 14th of May. Thus, on 12th of May, I bought 100 units of Kossan Rubber priced at RM6.29 each. The main reason I bought the stock is because, according to expert opinions, they assume that the price will keep increasing in the future. On this date, the gainers were led by Top Glove, followed by Kossan Rubber Industries Bhd, up 1.21%, or 30 sen to RM6.15.

Analysts said the coronavirus pandemic has provided producers of gloves with the opportunity to scale up production to meet the growing demand. As disposable rubber gloves are invaluable in the fight against coronavirus, worldwide demand for medical gloves has rapidly increased. Besides, Malaysia is the biggest medical glove manufacturer worldwide.

The MACD line (blue) above the signal line (red) shows the signal for buyers to buy the stock. Based on the histogram chart, it shows the difference between MACD line and signal line that if the histogram chart is above the amount of 0.000, it is a signal for traders to buy the stock while if the histogram chart is below the amount of 0.000, it is the right time for investors to sell the stock.

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3) ABLEGROUP BERHAD AbleGroup Berhad is an investment holding company for a group of companies engaged in the building material industry that involves the production, selling, exporting and contract manufacturing of high quality marble and granite slabs. The business is also involved in land production. The company operates across three segments: segment of building materials, segment of investment holding and segment of property development. The section building material includes the procurement, distribution and installation of stone and tiling works. The category Investment holding is interested in holding investments. The section property development specializes in land development activities.

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According to the percentage shown above, it shows the ownership breakdown of AbleGroup Berhad. Many institutions measure their performance against a local market-approximate index. Typically, therefore, more pay attention to 8

companies included in big indices. Because institutions own AbleGroup Berhad below 5% (blue), many may not have spent much time considering the stock. Not only that, it's usually considered a positive sign when insiders own a significant number of shares in the company which in this company, they own a total of 71.4%. On the 11th of May, I bought 100 units of stocks when the price of stock seems to be increasing from RM0.054 to RM0.061 on the 12 th of May. Thus, this is why I decided to trade the stock.

The MACD line helps me to analyses the stock of AbleGroup Berhad where I took the risk to buy the stock at the marked area. For the RSI line is not over 70, where it is just at the middle area between line 30 and line 70. So it is still save for traders to buy the stock.

4) TOPGLOVE CORPORATION BHD

Established in 1991 and headquartered in Malaysia, Top Glove Corporation Bhd is the world’s largest manufacturer of gloves. It operates through five regions, namely Indonesia, Thailand, China's People's Republic, and the British Virgin Islands, among others. It provides products in three material forms, for example latex, nitrile and vinyl. The Company supplies its products to various industries such as aerospace, automobile, cosmetics, food, home care, medical or healthcare laboratory, semiconductor and others/general. The products include latex powdered gloves, latex powder-free gloves, soft nitrile powdered / powder-free gloves, nitrile gloves, stretchy vinyl powder-free gloves, medical gloves, household gloves, cleanroom gloves, cast polyethylene (CPE) gloves, high-risk industrial / long gloves, thermoplastic elastomer gloves, 9

medical nitrile gloves, double dressing surgical gloves and thermoformed film packaged surgical gloves.

On the 5th of May, I bought 500 units of TopGlove stocks (red). Even though the price is decreasing, I believe it is the perfect time to buy the stocks since it is at the lowest amount and it has potential to increase in the future. This is because, due to the Covid-19 pandemic, the demand for rubber gloves is increasing tremendously and TopGlove being the world’s largest manufacturer, buying the stocks is a relevant decision.

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However, based on the article above, I found that the financial markets fluctuated wildly as a result of the Covid-19 pandemic and warnings of an imminent global recession were soaring louder than ever. Hence, I decided to sell 200 units on the same day to avoid incurring higher losses. As for the relative strength index (RSI) I analyze based on the line 70 and line 30. On the date that I traded, the line chart is above the line 70 which means it is the best time for investors to sell the stock.

5) SALUTICA BERHAD Salutica Berhad is a vertically integrated, Malaysian manufacturer of electronics with headquarters in Ipoh, Perak. Salutica is specialized in the design, production and manufacture of consumer and business electronic product technology such as Bluetooth stereo headphones, smart watches, and optical touch screen 11

interface precision light guides. Salutica is mainly an original design maker, and its clients include large American, European, and Japanese IT and electronics firms. It provides integrated solutions for the fabrication of electronics and plastics. The in-house services range from product design, injection of precision engineering materials, secondary cosmetic treatment, and assembly of printed circuit boards to development of electronics products. The Group operates under the brand name FOBO.

I bought 200 units of Salutica Berhad stocks on the 3 rd of May. The reason I bought the stocks is because I realized that the price is dropping but I believe that it will increase in the future. However, I have to admit that I made the wrong decisions by investing in this stock.

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The main reason I realized that it is not a potentially good stock is because of the article above which states that experts cut their earnings expectations and now predict a year-on-year decline due to disappointing performance and expect an even poorer remainder of the year as the third and fourth quarters for Salutica are seasonally weaker quarters due to off-season declines in headphone output. On the other hand, the line RSI is not over 70, where it is just between line 30 and line 70 in the middle area. So traders are still save to buy the stock if they want. I justified on the basis of the histogram chart where it shows the difference between MACD line and signal line that if the histogram chart is above 0.000, it is a signal for traders to buy the stock while if the histogram chart is below 0.000, it is a good time for investors to sell the stock.

OVERALL PERFORMANCE

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Total Game Value : RM 104,574.96 Total Investment : RM 100,000.00 Total Profit:

= RM 104,574.96 – RM 100,000.00 = RM 4,574.96

Total ROI:

= Net Profit / Total Investment = (RM 4,574.96 / RM 100,000.00) x 100 = 4.57%

For Overall performance, I manage to gain profit compared to loss. However, in the beginning of stock trading, I suffered some losses due to the lack of knowledge and skills. Not only that, I also made a few wrong decisions the first time around. Fortunately, the new knowledge in the syllabus has guide me to gain the profit in the middle of the game and not incur ant losses. By the end of the trading game, I was able to get a total profit worth RM 4,574.96 with the total investment of RM100, 000. My profit gained is not high as compared to others since I traded in a small unit. Regardless, I am satisfied with my performance because I did not gain any losses. In terms of return of investment (ROI), I was able to get 4.57% which is a good and sufficient value. If traders are able to generate more profit and higher initial margin, the ROI will be in positive value or otherwise, it will be in negative value which means they did not gain any profit and is experiencing loss.

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I used two basic types of analysis in this game which are Fundamental Analysis and Technical Analysis. Such two methods are the best analysis, especially when it comes to determining which stocks are the best in which to trade. The most profitable trade I made was Topglove where I manage to gain RM4, 176 in profit or 191.74%. I used the fundamental analysis method to trade this stock where I keep myself updated with the latest news regarding the current issue of Covid-19 which helps a lot in boosting the production of gloves. Since Topglove is the world’s largest producer of rubber gloves, trading stocks from them is very relevant because of their increasing production during this global pandemic. Fundamental analysis focused on source data, including financial statements, annual results, company assets, and market share. In order to perform fundamental analyses on a public company or industry, investors and analysts usually analyse metrics on the financial statements of a company, including the balance sheet, income statement and cash flow statement. Usually, an analyst can test the metrics of a company's productivity, liquidity, solvency, performance, and leverage while running stock analysis on a company's financial statement. Looking at the balance sheet, a stock analyst may want to learn about a company's current levels of debt. For this case the debt ratio will be used by a stock analyst, which is determined by dividing total liabilities by total assets. Usually, a debt ratio above 1 means a corporation has more debt than the assets. Therefore, if the company has a high degree of debt, a stock analyst may assume that a rise in interest rates, increases the profitability of the company from going into default. As for the most unprofitable trades, is Salutica Berhad where I suffered losses of (-RM13.00) or 0%. The main reason I did not gain profit is because I did not use the technical analysis efficiently. I made wrong decisions as well as I did not interpret the information received properly. Technical Analysis focuses on analysing past market behaviour to predict possible changes in prices. Economic analysts evaluate the stock market as a whole and concentrate mainly on price and volume, as well as the influences of demand and supply that drive the market.

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Technical stock analysis is only when the dynamics of supply and demand affect the analysed market level. Analysing stocks using technical analysis cannot be effective when external factors are involved in a price change. Definitions of factors capable of influencing a stock price include stock splits, mergers, monetary policy and others. Both fundamental and technological analysis may be carried out separately or together. Many researchers use all analytical approaches while others stick to one. So, because I'm still new to this investment trading game, I used both of those analyses.

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STRENGTHS AND WEAKNESSES I have gained a few strengths and weaknesses while carrying out this trading game, such as; A) Strengths i.

For this trading game, I can adapt the concept of technical analysis, as it helps me analyze the graph very well.

ii.

I manage to get profit from the researches I've done about the stock as well as information gained from friends about a potential stock.

iii.

I am a risk-taker in which I evaluate how much I could lose before joining a trade and place a 1 % loss if I am incorrect.

iv.

I never get bored with trading, as it gives me some knowledge that I can use in the future.

B) Weaknesses i.

I didn't manage well in using the 100 trades provided in these games because I was only able to do 45 trades in total.

ii.

I'm too afraid of large-scale trade, because I'm afraid I might lose a lot.

iii.

I don't have enough time to keep track of stock price patterns.

iv.

Often, I get so impatient that I get into positions with decent entries so early, instead of waiting for better odds for great entries.

v.

As I am still a trading newbie, I still lack a lot of information on this trading operations.

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CONCLUSION Investment in stock is different than investment in other commodities like bonds, real estate and others. It is because in stock exchange, I face the higher risk where the price movement can change anytime due to news and technical factors. However, the fluctuation of price movement in stock market also give the highest return than other commodities. Return can be in two forms whether gain profit or loss. Investment is important to achieve individual goal. Investment means we have money, then we need to make analysis to invest the money and expect to get return in future. Apart from that, first things first we must set an investment plan to make a successful investment. From that, we can assume what we will face in future, what’s...