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Options

Vol. 411: Intraday VIX Under 10


CBOETV - Dan Deming, KKM Financial, discusses VIX futures and Nov. risk reversal options activity.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Stocks

Highlights of Catalist Stocks with Strongest 5-Year Market Cap Growth


·         Singapore Medical Group, a private specialist and primary healthcare provider in Singapore, registered a market capitalisation growth of 17.4 times, with its market cap rising from S$16.0 million to S$278.0 million in 5 years.

·         Moya Holdings Asia, one of leading private players in Indonesia's water treatment industry, registered a market capitalisation growth of 8.6 times, with its market cap rising from S$32.1 million to S$274.5 million in 5 years.

·         800 Super Holdings, an established environmental services provider for public and private sectors in Singapore, registered a market capitalisation growth of 6.4 times, with its market cap rising from S$34.9 million to S$221.7 million in 5 years.

 

Launched in 2007 and replacing SESDAQ, SGX's Catalist board celebrates its 10th anniversary this year. Catalist provides investors access to smaller-sized, yet potentially fast-growing companies and allows less mature and developing enterprises to raise funds either through equity or debt.

Top 3 Catalist Stocks With Strongest 5-Year Market Capitalisation Growth

Singapore Medical Group, Moya Holdings Asia, and 800 Super Holdings are three Catalist stocks with a  market capitalisation above S$100 million that saw the strongest market capitalisation growth over the past five years (Oct 2012 to-date, excluding reverse takeovers). The three stocks have an average market capitalisation of S$258.1 million and have an average PE ratio of 33.0x. Some highlights include:

 

 

Singapore Medical Group (market cap S$278.0 million)

Stock Performance and Valuations

·         Singapore Medical Group registered +41.4% price gains in 2017 year-to-date. Its market capitalisation grew 17.4 times from S$16.0 million to S$278.0 million from Oct 2012 to-date.

·         From a valuation perspective, the stock currently trades at 37.7x PE ratio and 3.1x PB ratio (both trailing), with a forecasted ROE of 24.3% for FY2017 according to consensus from Bloomberg.

Recent Earnings Release and Management Outlook

·         Singapore Medical Group reported a net profit of S$4.0 million for 1H2017. Revenue of S$30.7 million for 1H2017 was 57.5% higher YoY, driven by the Group's Healthcare segment. The Group also reported a S$11.6 million net cash position.

·         Executive Director and CEO Dr. Beng Teck Liang commented that inorganic and organic growth strategies through acquisitions have contributed to strong 1H2017 results, and focus for 2H2017 will be on integrating their newly acquired entities while driving operational efficiencies in staffing, marketing and space utilisation. The full statement can be read here.

·         On 19 Oct, the Group announced the acquisition of hospital-based paediatric clinic for S$7.9 million, expanding the Group's portfolio of clinics to 36. Click here to read more.

Key Highlights

·         Singapore Medical Group is a private specialist healthcare provider with 25 specialties, 36 clinics and SMG Associate clinics. The Group continues to set sights on inorganic and organic growth as part of their overarching growth strategy. It plans to expand into new segments such as Cardiology.

·         Post their entry into the paediatric discipline in Apr 2017 through acquisitions of Toa Payoh and Bishan clinics and its first hospital-based clinic at Mount Alvernia, the Group plans to further grow this segment and add a fourth specialist by 1Q2018. It is now one of the largest in the private sector dedicated towards women's health and wellness, babies and children.

Moya Holdings Asia (market cap S$274.5 million)

Stock Performance and Valuations

·         Moya Holdings Asia registered +84.9% price gains in 2017 year-to-date. Its market capitalisation grew 8.6 times from S$32.1 million to S$274.5 million from Oct 2012 to-date.

·         From a valuation perspective, the stock currently trades at 48.3x PE ratio and 2.2x PB ratio (both trailing), with a forecasted 8.6% ROE for FY2017 according to consensus from Bloomberg.

Recent Earnings Release and Management Outlook

·         Moya Holdings Asia reported a net profit of S$2.5 million for 1H2017, compared to a net loss of S$0.3 million a year ago. Revenue of S$28.4 million for 1H2017 was 307% higher YoY, mainly attributed to higher percentage of completion achieved for the construction revenue of the build-operate-transfer (BOT) projects and contribution of water sales from the Tangerang BOT project and the Acuatico Group.

·         CEO Mr. Mohammad Syahrial commented that the Group will continue to execute BOT water treatment plants located in Bekasi Regency and Tangerang City to achieve sustainable growth while looking to expand business reach and capacity in Indonesia through merger and acquisitions. Click here to read more.

·         On 11 Jun, the Group announced the acquisition of Acuatico Pte. Ltd. for US$245.2 million. The Group believes the acquisition will increase the Group's production capacity by more than four times and expand business reach. Click here to read more.

Key Highlights

·         Moya Holdings Asia mainly engages in the investment and development of total water solutions in Indonesia which includes collection of raw water, treatment of captured water and distribution of clean water.

·         With the acquisition of Acuatico, the Group believes it to be one of leading private players in Indonesia's water treatment industry with a total water treatment capacity of 13,935 litres per second and the acquisition to contribute significant improvement in the Group's overall earnings.

800 Super Holdings (market cap S$221.7 million)

Stock Performance and Valuations

·         800 Super Holdings registered +28.5% price gains in 2017 year-to-date. Its market capitalisation grew 6.4 times from S$34.9 million to S$221.7 million from Oct 2012 to-date.

·         From a valuation perspective, the stock currently trades at 12.9x PE ratio and 2.7x PB ratio (both trailing), with a forecasted 19.1% ROE for FY2018 according to consensus Bloomberg.

Recent Earnings Release and Management Outlook

·         800 Super Holdings reported a profit before tax of S$20.8 million for FY2017, 11.6% higher YoY. Revenue of S$156.9 million for FY2017 was 0.3% higher YoY, mainly due to the award of new contracts, notwithstanding the completion of certain cleaning contracts.

·         Executive Chairman Mr. Lee Koh Yong commented that the group had maintained stable development of its business in FY2017 and will capitalise on new business opportunities that may arise. He believes that its strong foundations will pave the way for long-term sustainable growth. The full statement can be read here.

·         On 3 Oct, the Group announced the proposed acquisition of Iwash Laundry (Senoko) Pte. Ltd. for S$5.0 million. The Group views the proposed acquisition as beneficial to allow the Group to venture into alternative new growth areas and opportunities. Click here to read more.

Key Highlights

·         800 Super Holdings is an established environmental services provider for public and private sectors in Singapore. Its services include waste management, cleaning and conservancy and horticultural services.

·         The Group's waste-to-energy (WTE) plant at Tuas South, as part of its diversification into downstream waste treatment, is expected to operate by the end of 2017. When operational, the WTE plant will supply green electricity to the Group's on-site operations located in the vicinity and is expected to provide additional headroom for future growth.

 

This article is from Singapore Exchange and is being posted with Singapore Exchange’s permission. The views expressed in this article are solely those of the author and/or Singapore Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice


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Securities Lending

SLB Update: Highest Borrow Fees per Sector


The following table shows the securities with the highest borrow fees per sector on 10/13/2017.

 

The analysis in this article is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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Options

PG: Earnings Reported Before the Market Opened


PG: 88.72-2.87 (-3.1%)Procter & Gamble

The market was implying a ±2.7% move but the stock traded outside of the implied move and moved -3.1%. The 20-Oct-17 straddle is up +20.2%. View Expected Move

MarketChameleon was developed to provide users a fully-integrated suite of powerful analytical tools and downloadable data. https://marketchameleon.com/Premium

 

This article is from MarketChameleon.com and is being posted with MarketChameleon.com's permission. The views expressed in this article are solely those of the author and/or MarketChameleon.com and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


15041




Macro

In Times of Eerie Calm, Don't Neglect Quality


Quality stocks may be out of favor in this environment, but Russ explains the important role they can play in a portfolio.

 

This has been a good but peculiar year for stocks. The fact that global markets are having one of their best years since the financial crisis is not in itself remarkable; the way it has occurred is.

The rally has been led by a strange combination of risk-on favorites—such as emerging markets, secular growers and classic defensive plays, like U.S. healthcare. The year has also been distinguished by low volatility, both upside and downside: There have been few corrections, but also a relatively small number of memorable one-day advances.

Instead, there has been a slow, relentless grind higher. Given this environment, it is not surprising that momentum stocks have dominated, particularly in the United States. The MSCI USA Momentum Index has gained roughly 30%, about twice the gains for the MSCI USA Enhanced Value Index or quality stocks, as represented by the MSCI USA Sector Neutral Quality Index (source: Bloomberg, as of 10/18/17). Given the magnitude of the outperformance, it’s not entirely surprising that we’ve started to witness a bit of catch-up from value and quality.

In previous blogs I’ve made the argument to consider adding some value back into a portfolio. I would make the same argument for quality. To be fair, quality is harder to define. Generally, when investors talk about quality, they are referring to large, stable companies with at least three common characteristics: high return-on-equity, earnings consistency and low debt.

There are two arguments in favor of adding quality to a portfolio—either directly through a stock screen or an exchanged traded fund (ETF). First, there is a strategic argument. Looking at style factors within a broader multi-asset portfolio, quality generally receives a high allocation. Targeting a 9% total portfolio risk, i.e. a typical 60/40 stock/bond blend, a mean-variance optimization(MVO) suggests 9.0% allocation to quality. This is approximately 2.5 percentage points higher than a theoretical allocation to momentum.

Quality can help mitigate risk

The large allocation to quality is not a function of a generous return assumption, but is instead driven by quality’s historical risk mitigating properties. Quality companies tend to be stable, and by extension their stocks less volatile. For example, the one-year volatility (in other words, how much the stocks’ prices fluctuate relative to history) of the MSCI U.S. Sector Neutral Quality Index is roughly 20% lower than for either the respective MSCI value or growth indexes (source: Bloomberg, as of 10/18/17). Which brings me to the second, related argument for quality: The style is arguably most relevant when volatility is rising.

Volatility changes things

Historically, momentum stocks outperform quality. However, this dynamic has flipped when volatility was increasing. Testing this theory, since 1990 in months when the VIX Index advanced by more than 10%, quality outperformed momentum by an average of approximately 25 basis points (bps or 0.25%), or 300 bps annualized.

The nature of quality provides a reason for considering the style within a broader portfolio. The argument may become stronger when you expect a pickup in volatility. And as unusual as that would seem in a year like this one, it’s hard to predict where volatility could go from here.

Russ Koesterich, CFA, is Portfolio Manager for BlackRock’s Global Allocation team and is a regular contributor to The Blog.

Carefully consider the Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.

Investing involves risks, including possible loss of principal.

This material represents an assessment of the market environment as at a specific time; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.

There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics (“factors”). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.

Investments that concentrate in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market.

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©2017 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

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This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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