Koon Yew Yin's Blog
Forced sell is a vicious cycle - Koon Yew Yin
Koon Yew Yin
Publish date: Thu, 18 Nov 2021, 10:00 AM
Koon Yew Yin
0 1,428
An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
Only Investment Banks can stop forced selling
Since the Budget 2022 announcement on 1 November, practically all the listed stocks have been dropping because the tax increase. The prosperity tax increases from 24% to 33% for profit exceeding Rm 100 million. That means almost all the larger cap companies will report reduced profit next year. All investors especially institutional and foreign investors started to sell when they saw the Budget 2022 announcement. The slump of the big cap stocks is dragging down small cap stocks even though they are not affected by the additional prosperity tax.
As a result, all the investors who used margin finance to buy more shares are forced to sell some of their holdings to meet margin calls. The more they are forced to sell, the more the share prices would drop. Forced sell is a vicious cycle.
Only Investment Banks can stop forced selling
Currently the banks will pressure the borrowers to sell when the margin exceeds 50%. If forced sell continues, many of the borrowers will go bankrupt and the Banks will also lose. Only the banks can stop the forced selling if they are willing to take on addition risk. If the bank only force sell when the margin exceeds 60% instead of 50%. The Chinese has a saying
晴天打伞雨天收伞
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Discussions
Be the first to like this. Showing 22 of 22 comments
My suggestion to Grandpa Koon, buy the bank! Or just use your own cash to buy stocks! Using OPM is a risky business especially during bear market like now!
2021-11-19 03:26
Haha, I remember KYY once said he only buy uptrend stocks with margin hence forced selling is blessing in disguise to force him to take profit.
So no need to sell land when he only cut win not cut loss.
2021-11-19 06:17
You have full control if you invest in shares using your spare money. In Cantonese, it says don't wear a hat too big for your head.
When you used your own money, you can have patient to wait for the sunshine after the rain. No need the umbrella.
2021-11-19 09:28
there are terms and conditions, right? If you decide to go all in with other people's money, you have to be responsible too. If everyone follow you and dont let the banks to force-sell, then the whole banking industry will collapsed. What a selfish person..
2021-11-19 10:16
Actually, not all companies 110 companies mentioned are affected.
Some companies have pioneer status on tax while others have tax allowance on capex spending for digitalised their biz.
Besides that, there are many tax incentives in many areas where companies can explore. Some companies may choose also to reduce profitability by taking 2022 as a year on greater investment or capex spending elsewhere.
2021-11-19 12:21
When one knows a croc will not hesitate to snap one's limb off, why step into the margins?
2021-11-19 12:46
Or forced sell is a virtuous cycle of creating chip shares for all to buy n make
esi moni ?
2021-11-19 13:15
In the beginning.
Genesis 1 -
(16) God made two great lights—the greater light to govern the day and the lesser light to govern the night. He also made the stars.
Light was mentioned in numerous verses earlier than verse 16.
The greater light is the Sun and the lesser light is the Moon. He also made the stars in the sky. God created the Sun and Moon, his creations. We don't worship the creations but the Creator.
In the future, when this world is ended with darkness, the light from the Sun is to be discontinued, the Light firstly provided by God ( Verse 1 to Verse 15) will be offered to those deserved Salvation from Him, the Creator of the universe.
The Margin financing is good during the market uptrend...force selling.
2021-11-19 14:59
Force selling is also good during the mkt downtrend bcos it creates valued stocks
FASTER ?
2021-11-19 15:59
Kyy is on the verge of force selling. U guys better run before the force selling begins.
Someone eventually suffers massive losses. It is either u, or him.
2021-11-19 21:24
Now u guys see why he tricked everyone to buy on margin in his recent article.
2021-11-19 21:26
This Geezer is a rogue trader. His modus operandi of telling his followers the share he bought to create a bull run in the stock do not work anymore. Most traders are weary of his dirty tactics telling you to buy while he secretly unload. His KARMA cannot be good.
2021-11-19 23:36
UNCLE KYY
STEEL PRICE CRASHED ALREADY
SEE
https://tradingeconomics.com/commodity/steel
PLEASE DON'T PLAY WITH FIRE GO INTO MARGIN NOW
2021-11-20 13:19
margin call is good , it just telling you, the market trend is working against you. cut loss is wise idea.
2021-11-20 17:47
First he says margin financing is man's best friend and then says force selling is evil....dude they come together! Margin financing is only useful is if use it correctly and force selling is the answer to you abusing it! learn hard!!
2021-11-20 19:47
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Old Con kena again....this round no need to sell land..
2021-11-18 13:37