Chart 1: KLCI chart from August 1998 to March 2000. Lowest 261.33 points (01/09/98), highest 1021.20 points (18/02/2000).
As shown on the chart 1, the KLCI rebounded strongly at 261.33 points after the Asian Crisis of 1997, and the KLCI started a bull market thereafter, and reached a peak of 1021.20 points, up a total of 290%. This shows that the best opportunity to invest is right after the end of the bear market, and this opportunity is only available for those who are well-prepared.
Last week, we mentioned Public Bank, for most of the time, banking stocks are usually the market leader when the stock market recovers, and therefore, it will be a good idea to include a banking stock in one's portfolio. Take a look at the following stock chart of Maybank during the market recovery in the year of 1998.
Chart 2: Maybank chart from August 1998 to March 2000. Lowest RM 2.73 (14/08/98) and highest RM 18.10 (18/02/2000).
Below is the Technical and Fundamental aspect of Maybank:
Chart 3: Maybank chart as at 20/03/09, closing price : RM 4.36.
As indicated by A, price of Maybank consolidated above the RM 5.00 support level for nearly 5 months. Theoretically, a support will form after a prolonged consolidation, as investors begin to accept the price and start accumulating their positions. However, as indicated by B, price of Maybank broke below RM 5.00 on the 2/03/2009, and started making new lows. In other words, for those who had bought their shares of Maybank above the RM 5.00 level, they are now making losses. Therefore, their previous consensus of RM 5.00 support is now becoming their 'break-even' level, thus a resistance level. This is because if price should return to RM 5.00, many of these loss making investors will be breaking even.
As shown on chart 3, price of Maybank rebounded at RM 3.90 level, and therefore, the latest support for Maybank is at RM 3.90. Since price of Maybank is still below the falling 14, 21, 31 EMA, the rally is only considered as a technical rebound, now a reversal. On the other hand, if price of Maybank should break below RM 3.90, then it would be another new low; therefore, investors should consider cutting loss. In short, price of Maybank must form a higher-low together with the broad market recovery, then only it is considered to be a reversal signal, thus a better timing to buy.
Here are some fundamental information of Maybank:
| Share Holder | Shares | % | |
| 1 | Amanah Raya Nom-Skim Amanah Saham Bumiputra | 2,180,681,634 shares | 44.67% |
| 2 | EPF Board | 500,281,336 shares | 10.25% |
| 3 | Permodalan Nasional Bhd | 320,776,808 shares | 6.57% |
| 4 | Kumpulan Wang Persaraan | 137,195,625 shares | 2.81% |
| 5 | Lembaga Kemajuan Tanah Persekutuan (FELDA) | 124,622,156 shares | 2.55% |
Latest financial figures:
| Dividend | Dividend Yield | Net ProRatio | |
| 2008 | 52.5 sen | 7% | 18.13% |
| 2007 | 80 sen | 6.5% | 20.95% |
| 2006 | 85 sen | 7.49% | 22.07% |
| 2005 | 102.5 sen | 9.4% | 22.31% |
| 2004 | 60 sen | 5.94% | 23.04% |
Based on the current closing price of RM 4.36:
| Price Earning Ratio | 8.14 times | Dividend Yield | 12.04% |
Table 1:
Based on the above information, Maybank is considered a high dividend yield stock while its Net Profit Ratio is consistently high as well. Therefore, it is most likely a favorable stock for long term investors, high yield investors and conservative investors. In addition, based on the major share holding listing, Maybank is a major GLC (Government Link Counter), and therefore, if the market should recover as a whole, it would be one of the leader.
Negative news on the acquisition of BII (Bank Internasional Indonesia), coupled with negative market sentiment across the globe, causes the fall of Maybank share price. However, these negative impact has been reflected on the price of Maybank. This is a basic theory of Technical Analysis, which believes that price discount everything. As for when is the best time to buy Maybank, we will still have to look at the formation of any of the following reversal patterns: 1. Higher low. 2. Double Bottom. 3. Rounding Bottom.
Conclusion:Based on the current market sentiment, together with a 0.5% GDP for the year of 2009, chances for the KLCI to return to 1500 points is less likely. While the market maybe at its bottom, the important point is that investors should get prepared and ready for the reversal, and know how to pick market leaders as the market reverses.
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