Friday, June 28, 2019

Daily Leverage Certificate: Basic Knowledge You Need To Know Before Trading It (Guest Post by InvestingNote)

The Daily Leverage Certificate is a product launched by SGX that was offered by Societe Generale since 2017. This product is available for trading on the SGX securities market.

DLCs are slightly complex, moderate risk financial products which give investors a leveraged return
based on the daily performance of an underlying reference index.

DLCs have a finite lifespan and will be delisted on its expiry date. The final exercised
value of the DLCs will be calculated and paid to investors automatically on the expiry
date (which is after 3 years).

Note that: (if the Expiry Date is not a Business Day, then the Expiry Date shall fall on
the preceding Business Day and subject to adjustment of the Valuation Date upon the
occurrence of Market Disruption Events as set out in the Conditions of the Certificates)

What is a DLC?

The Daily Leverage Certificate offers investors fixed daily exposure in the following 3
leading Asian Indices as well as single stocks .

It also allows investors to leverage and
capture amplified movements of the reference index.

Investors can either buy "Long DLC" or buy "Short DLC", as the two types of DLCs allow you to bet on both the rises
and falls of the underlying asset respectively.

The underlying indices that the Daily Leverage Certificate will track are the 3 key indices
in the Singapore and Hong Kong exchanges:

MSCI Singapore Index (SIMSCI)
Hang Seng Index (HSI)
Hang Seng China Enterprises Index (HSCEI)

And below are the some of the single stocks that Daily Leverage Certificates track:

…and more

Hong Kong:
Tencent (700 HK)
PingAn (2318 HK)
Geely Automobile (175 HK)
Hong Kong Exchange (388 HK)
…and more

What DLC does that really attract investors is that it increases investors' returns as it
increases investors' exposure level to the indices.

How Does it work?

The basic principle is pretty straightforward – let's say if the underlying index moves 1%
from its closing price of the previous trading day, the value of a 3x DLC will move by 3%,
and that of a 7x DLC will move by 7%.

DLCs offer a fixed leveraged return of 3, 5 or 7 times of the daily performance of the
underlying asset. 3x simply means it is 3 times leverage and 5x means it is 5 times
leverage (so does 7x) . Leverage amplifies the returns and losses of investors, be it rising
or falling market.

Currently 3x, 5x and 7x are available for indices and only 5x is available for single stocks.

Below is an illustrative returns for an investment of 1 unit of the 3x Long DLC, that was
bought at $2.00 when the 3x Leveraged STI Index was trading at 9,000 and sold on the
same Trading Day.

What are the fees like?

Management Fee per annum 0.40%
Gap Premium per annum
(a hedging cost against extreme market
movements overnight.)

3x : 1.8%
5x : 3%
7x : 4.2%

Who will find it useful?

Of course, DLCs are not meant for everyone. They are meant for sophisticated retail
investors who wants to do short term trades.

It is also suitable for investors who would like to have leveraged returns form the daily movement of the underlying assets.

At the same time, all investors need to be Specified Investment Products (SIP) qualified
to invest in DLCs.

Those who are not familiar with DLCs or do not have high risk
tolerance should not consider trading DLCs. One should only consider trading DLCs if
you have a high risk tolerance.

Special feature: The Airbag Mechanism

With the Airbag Mechanism, now you don't have to worry that there will be a risk that
losses may exceed deposits as each DLC will have a pre-set trigger for its air bag.

Now what exactly does "Airbag mechanism" mean?

For example, if you were to buy a stock on a 5:1 margin, a leverage of 5x is used and the
underlying asset losses 10% of its value, what it does is that the air bag trigger will come
into effect to automatically trigger an intraday reset of the underlying index.

The airbag mechanism will only be triggered if the underlying asset moves in the opposite direction
of the product. For example, if the STI rises by 20%, the airbag mechanism for the 5x
Short STI DLC will be triggered.

But do take note that the air bag will not prevent you from losing your entire investment
where the leveraged movement of the underlying reference index exceeds the value of
the DLC.

For example, a 5x DLC, with an airbag that is set to trigger if the underlying reference
index falls by 10% will become futile its underlying reference index suffers a sharp fall of
20% or more in the course of a trading day, or at opening of a trading day due to
overnight movements.

In a nutshell...

Other than stock market indices as we mentioned earlier, there are also more than 50
DLCs for 20 regional blue chip stocks ranging from DBS to Tencent, as the underlying
asset! Check out the full list of DLCs here .

For investors who want to maximise their short term exposure to market movements,
DLCs can provide the opportunity to increase the exposure by a fixed factor, up to 5

For indexes, you can select a leverage from 3x, 5x or 7x!

Also, it doesn't matter if the market is bearish as well – you can buy a short DLC to
capitalise on a bearish situation.

For the 5x DLC with Venture as the underlying asset, it actually yielded a return of more
than 70% in a week, just back in February!

To have a better understanding, check out the full educational series here .

Last but not least, if you've never traded a DLC and would like to know how, see if you
qualify by taking the Specified Investment Product (SIP) test here .

Guest Post by InvestingNote. "InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.

Tuesday, June 25, 2019

YZJ Shipbldg: Reversal in progress? Price 1.51.

Just about 2 weeks back, after the sell down in global markets and after seeing some stability..

Some stocks began coming into our radar for a potential reversal and,

YZJ Shipbldg was one of them…

It was holding really well above the 1.35 support level which coincides with previous levels and some signs of rebound were spotted

Especially, if we see a move above 1.40 which coincides with the 20 day MA, a potential reversal maybe on the cards…

Hence, some target were drawn as seen below..

Over the past 2 weeks , we have managed to break above the 1.40 level and traded higher…

Manage to see a higher support at 1.45 over the past week which is a good sign too..

Looks like it may attempt some bullish moves above 1.50 soon where the upside can continue…

Target has been reiterated again as per below..

A positive above 1.50 for now… watching to see if it continues to head towards target..

Wednesday, June 19, 2019

ComfortDelgro: Upside reversal still continuing? Price 2.62. Awaiting more bullish actions.

After the heavy selling we have seen in May for Comfort Delgro where it had retraced from a high of 2.70..

Finally, just 3 weeks back,

We started to see some stability and a potential reversal was in sight,

It had approached the 2.40 support after the sell down and we were looking for some bullish reversal actions..

Finally it did happened and was a good confirmation signal for an upside reversal..

Some targets were drawn back up as a result, see what I mean..

We have indeed see the move up over the past 2 weeks and last week had broke above 2.50 resistance too.

Upside target was reiterated to 2.70 again, see below.

It has crossed back above the 20 day MA which can be a positive short term for this counter plus…

the bullish reversal actions spotted earlier on as mentioned, was a good reversal play..

After some consolidation with 2.60 target hit over the past few days, we have see a breached again…

2.70 looks to be on the way where we may see some profit taking near there..

Would be looking for more bullish actions to see if this reversal has more legs to go..

Quite a good reversal caught, see where we are below now..

Wednesday, June 12, 2019

Singtel: Upside Reversal still playing out as per targets? Price 3.32

Just about 2 weeks back, we spotted some upwards reversal actions in this counter Singtel..

It has been consolidating below the 3.20 resistance since Oct last year however..

Over the past few months, we managed to see some bullish reversal patterns taking shape,

Something like an Inverse Head and Shoulder pattern

And there were also some signs of an end to the downtrend with a potential reversal upwards from the trend indicators..

Hence, some upside targets were drawn with a potential move up in the short term when it approached the 3.20 cautiously 2 weeks back..

See what I mean.

Last week, finally the move came..

It broke the 3.20 resistance and buyers were ready to push it higher despite market weakness..

Targets were reiterated again towards 3.55..

Moving averages were looking at some bullish crossovers which can be the start of an uptrend playing out..

Today, we have even cleared above the temp 3.30 resistance..

And a pretty decent close at the day’s high.. Upside can still continue if we can hold above this level..

Will be watching to see if targets can be hit..

May start to see some profit taking along the way give the reversal we have seen from 3.00…

Trend indicators still looking positive for now… let’s see…

Thursday, June 6, 2019

Frasers Cpt Tr: One of the few Stronger Reits despite market weakness. Pushing higher as per target? Price 2.53

Just about 3 weeks back when markets worldwide started selling off due to trade war tensions between US and China escalating…

We spotted a stock which was not ONLY holding firmly but also attempting to push higher

It was one of the few defensive Reits whose uptrend still looks firm…

Trend indicators were still looking positive and an end to the sideways consolidation seems imminent..

Finally, a beached above the 2.40 resistance was seen and looked bullish imo and hence some targets were drawn…

First target as above was at 2.55 and seems like target has been hit today already finally…

However, just last week, we have revised our target higher when buyers attempting to break the temp 2.45 resistance bullishly…

Target to 2.60…

We are still on tracked towards that target which can be revised further…

May expect some profit taking along the way give the rally we have seen..

However, uptrend still look pretty good above 2.50, at least for now…