Investors hum to frenzied beat of the IPO gold rush

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#1
Possibly yet another indication of impending exuberance? Huh

Business Times - 08 Nov 2010

Investors hum to frenzied beat of the IPO gold rush


Brokerages report rise in opening of new accounts as new listings bring buzz back to market

By JOYCE HOOI

(SINGAPORE) The ground floor of brokerages across the CBD have been livelier than usual, as walk-in clients clamour to part with their money, keen for a piece of the initial public offering (IPO) gold rush. But already, it is evident that some prospectors will do better than others.

With blockbuster offerings from Mapletree Industrial Trust and Global Logistics Properties (GLP) making splashy starts this month, remisiers have seen a surge in new account openings by novice investors.

'I've had 10 new accounts opened in a two- week period. For the majority of them, it was because of the IPOs,' said Shane Ng, a remisier with Kim Eng Securities.

CIMB Securities has also seen a jump in the opening of new trading accounts. 'For the months of September and October, clearly things have picked up a fair bit,' said Malcolm Koo, head of sales at CIMB Securities.

'As a whole, on a year-on-year basis, we are seeing growth in terms of new accounts being opened. It has been a good double-digit growth for us every month,' he added.

While most of them tend be new believers in the gospel of stockmarket recovery, others are born-again investors who have gained renewed faith in stocks.

'We have seen reborn investors who have not been trading for decades coming back because of the IPOs, and we've got enquiries that have been a lot more frequent since September,' said Albert Fong, a remisier at OCBC Securities.

'They are investing also because the interest rate offered by banks is almost zero,' he added.

Over at Phillip Securities, the revival has been resounding. 'I've seen 50 accounts being reactivated over the last one or two weeks,' said Henry Tjoa, a remisier there.

On the whole, the numbers have appeared compelling as well. Since June, total monthly turnover on the Singapore Exchange (SGX) has risen rapidly, from a volume of 22.6 billion shares in June to 45.4 billion shares in September.

While the numbers for October are not out yet, they are bound to be higher than September's. The greater mystery, however, is whether the players that stampeded into the market in October will still be there by year-end.

Already, brand-new accounts have seen little action beyond the flurry of IPO-flipping, which usually happens within three days of a successful application. 'Most of them are fresh graduates with not a lot of money to invest anyway,' said Kim Eng's Mr Ng.

In a market that had been starved of IPO action for the first part of the year, some brokers and investors have begun opting for a scattershot approach, now that offerings are abundant. 'I just tell them to apply - doesn't matter what stock. I mean, GLP? Who really understands logistics? I don't even read the financial statements,' one remisier said.

Another remisier with two decades of experience has his reservations about the IPO euphoria. 'They like the government-brand stocks like GLP. Whether or not it's a good choice remains to be seen,' he said.

In what could cast doubt on the underlying fundamentals of the market, some of the smaller issues have already been priced below their offer price, as investors do a hit-and-run with IPO applications.

XinRen, which was 4.3 times oversubscribed earlier this month and had a euphoric adjective placed right before 'debut' to describe its first day of trading, saw its share price drop to 53 cents the day after - below its offer price of 55 cents.

Oxley Holdings, which listed last week, did not even have a debut worth writing home about because it felt the fickleness of the punters before its first trading day closed, leaving it 1.5 cents below its 38-cent share price.

And poor Anchun International Holdings, which listed last Monday with an offer price of 28 cents, ended the week at 23.5 cents.

Some remisiers, however, believe that the good times for the market are here to at least visit for a while. 'The market will still perform for the next 3-6 months. It's not at a frenzied point yet,' said Phillip Securities' Mr Tjoa.

Others think that, good times or not, it is the turbulence that will separate investors from punters.

'On a long-term basis, it will be on an uptrend but in between, there'll be some pullback here and there,' said OCBC's Mr Fong. 'The fear used to be prevalent among the small-time investors but the confidence is coming back. I just hope they don't get carried away.'

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
(08-11-2010, 07:23 AM)Musicwhiz Wrote: Possibly yet another indication of impending exuberance? Huh

Not quite, not quite.

My personal warning indicator is when you hear all those Taxi drivers, Uncles at Kopitiam, Fish seller, Butcher, Cleaning lady, Kopi lady, aunties, uncles and mothers telling you how to pick stocks.

That's really the time to start being worried. This is more like people going to buy $5mil dollar TOTO. Prize too big too ignore to pass up a chance to take a punt. The scary part is when non-investors start becoming 'experts' too.

That's when you know the Greater Fool Theory has run out of fools.
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#3
(08-11-2010, 09:34 AM)kazukirai Wrote: Not quite, not quite.

My personal warning indicator is when you hear all those Taxi drivers, Uncles at Kopitiam, Fish seller, Butcher, Cleaning lady, Kopi lady, aunties, uncles and mothers telling you how to pick stocks.

That's really the time to start being worried. This is more like people going to buy $5mil dollar TOTO. Prize too big too ignore to pass up a chance to take a punt. The scary part is when non-investors start becoming 'experts' too.

That's when you know the Greater Fool Theory has run out of fools.


Agree with you.
We could be at the start and not the end of the exuberance phase.

It can take a pretty long while 1~2 yrs? for this phase to build up and inplode on itself.

Once, I encountered a taxi uncle who talked to me on Graham and P/B value and the value traps behind them. You dun get this kind of taxi uncles ard everyday. Think i could learn more from him. LOL


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#4
the other day i was coming back from NTUC and lugging a whole trolley of groceries (not the NTUC trollies mind), it was slow-going as i manoeuvered up the slope to my house. so happen this family got stuck behind me coz i was trolley-hogging the five-foot-way. lo and behold, they were talking about investing in shares and the main topic going back and forth was about buying into IPOs. so i decided to eavesdrop a little to hear what was being discussed. essentially, the daughter of the family was talking about how easy it was to make money off IPOs recently. the mother as usual was cautioning her to be careful, coz the stock market burns quite rapidly. the daughter countered by saying that it was safe and that STI was increasing everyday and also how her friends and colleagues were all doing it as well. she also mentioned that she played it "safe" by buying into those GLCs like the recent GLP.

does that count as over-exuberance? lol... well, it did make me sit up and take a good look around... what does everyone else think?
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#5
(08-11-2010, 11:23 PM)Jon-san Wrote: the other day i was coming back from NTUC and lugging a whole trolley of groceries (not the NTUC trollies mind), it was slow-going as i manoeuvered up the slope to my house. so happen this family got stuck behind me coz i was trolley-hogging the five-foot-way. lo and behold, they were talking about investing in shares and the main topic going back and forth was about buying into IPOs. so i decided to eavesdrop a little to hear what was being discussed. essentially, the daughter of the family was talking about how easy it was to make money off IPOs recently. the mother as usual was cautioning her to be careful, coz the stock market burns quite rapidly. the daughter countered by saying that it was safe and that STI was increasing everyday and also how her friends and colleagues were all doing it as well. she also mentioned that she played it "safe" by buying into those GLCs like the recent GLP.

does that count as over-exuberance? lol... well, it did make me sit up and take a good look around... what does everyone else think?

Similar encounter in Times Bookshop yesterday. (that made me recall I had a similar encounter at another Times bookshop in yr 2007 that I related in old Wallstraits forum)

Kid A was telling Kid B how to buy shares and with some credit due to him, Kid A introduced Kid B the Philip Fisher's Common Stocks, Uncommon Profits.

Not that he made a wrong recommendation but the way Kid A put across to Kid B on the easiness of buying investment was like.. very amusing.

Still.. I maintain exuberance is not yet visiting us with full force.
I recalled distinctively Yr 2006 ~ Yr 2007 the air was filled with so much more excitement.

Perhaps when nobody write about exuberance in this forum anymore and then it comes along stealthily like a thief in the night.

Just another personal opinion coming across my mind.
I realised too many youngsters looking at Reits as a "safe play". Something about their mentalilties makes me very uneasy. Hopefully they know how to manage their portfolios.

I know there are many dividend investors around at this point of time and I am not intending to put down this investment strategy. But if dividend play becomes growth strategy.. that would be akin to "yin and yang are inbalance?" Dodgy

Cheers.

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#6
(08-11-2010, 11:52 PM)arthur Wrote: I know there are many dividend investors around at this point of time and I am not intending to put down this investment strategy. But if dividend play becomes growth strategy.. that would be akin to "yin and yang are inbalance?"

arthur, your comment interest me. I am curious why do you say this ? Do you mind to say a little more because I do not think I quite understand its meaning. Thanks.
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#7
With respect to what Jon-San and Arthur said, I think the interest in the stock market is slowly building up. This kind of interest, to me, is always built up slowly but steadily, through the newspapers proclaiming new highs and pundits announcing that equities are "safe". So it's more of a gradual phenomenon which will build up into a crescendo of exuberance, and will eventually lead to a bubble being formed.

So here and there we can see/hear signs of people jumping in with both feet without even testing the temperature of the water. And laymen will start to believe that it's so easy to make money, all the while ignoring the fact that a rising tide lifts all boats.....

It may be a while before the interest in the stock market hits fever-pitch, but in the meantime we can continue to watch and learn; and to be extremely careful about how we allocate our hard-earned capital.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#8
So when should we get off the boat??

With the recent QE2... the rally should go on for some time...

Wait till China burst their bubbles ?
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