Which sector should we avoid at this point of time?
Aviation, Hospitality and Travel related.
Is the stock market a V or U shape or others?
I have said before it could be a U shape. I will have more detail on this on Monday 20 May 2020 at 6.30pm.
Will it worsen to depression as what reported by Bloomberg. Roughly how long will it last?
I don’t think it will develop into a depression. I think we will probably have 2 quarters of negative growth and bounce back before the end of 2020. That is my view.
Will it be the same as the previous bear market or more serious.
I don’t think it will be as serious as the previous bear market of 2008?
We have a better footing before the health crisis hit. A health crisis usually doesn’t have a long lasting effect. In the past, it has resulted in V shaped recovery. The previous bear market was due to a mortgage crisis.
Why is the oil n gas counter retreat with the cutting down of the output of oil by OPEC and other countries?
OPEC+Russia lowered production output in order to maintain price. With a lower production, it means lesser revenue for oil producers and also lesser work for oil drillers and refineries. These companies and their downstream support companies will also be affected by the lower volume of business.
What your view on aviation industry like SATS, SIA etc?
Aviation sector is underweight. SIA, SIA Eng, SATS are underweight. ST Eng is preferred by our research.
What to think of aviation stocks like SIA when restrictions are lifted?
When restrictions are lifted, there is likely to be demand. We may see a quick recovery. But when will restriction be lifted? The longer it drags on, the worse it will be for SIA or Air Asia. For Air Asia, how long can it withstand the restriction. In USA, many airlines had to be bailed out by the US government. SIA had to do a cash call.
In regards to Z-scores of less than 1.81, does that mean the companies are in financial distress?
Z-score of less than 1.8 shows a companies’ finances may maybe in distress.
| If AirAsia merged with MAS, would AirAsia share price moved up? I think MAS is in a worse state than AA. If they were to merge, it could dragged down AA’s share price. If both were to merge, it does not solve any problems for both side, who is going to provide additional capital for both companies? |
| In your opinion, is this a dead cat bounce or is the SG market recovering truly? Is this the time to start buying or should we wait for another 2-3 weeks for prices to drop? I think this is a corrective pullback. I dont think many companies share price will move above the cloud, only some of them will move above. Majority are in bearish trend which needs to test the bottom again. |
| Given the current work from home situation, would you say that commercial offices value will drop substantially as people get more used to working from home? As workers work from home, commercial office rental are still being paid. Office lease is usually long term, so the impact is not so great, unless many companies go bankrupt, then it will affect the landlord. As companies and workers get a taste of working from home, there is a danger than in future we may see a trend of workers working from home and less demand for offices. |
| Generally are banks going down, due to the recent oil company going bust? The oil company owes banks a total of US$3.85nb. It was reported DBS was owed US$290m, OCBC US$230bn. But these are small amount compared to these 2 banks loan portfolio. It will not affect the banks that much. |