FACULTY OF BUSINESS AND MANAGEMENT

BACHELOR OF BUSINESS ADMINISTRATION (HONS.) ISLAMIC

BANKING (BA249)

INVESTMENT AND PORTFOLIO ANALYSIS

(FIN552)

INDIVIDUAL ASSIGNMENT

PREPARED BY:

NURIEN SYAHIRAH BT MOHD NIZAM

2018653494

GROUP:
BA2494B

PREPARED FOR:
MADAM NURA LINA MD ELIAS

SUBMISSION DATE: 10th JULY 2020

 ACKNOWLEDGMENT

Alhamdulillah, most grateful to Allah SWT for the completion of this individual assignment as
one of the requirements that need to be accomplish in this course work assessment for the code
FIN552.

Special thanks to my parents in supporting me to complete this individual assignment. This

assignment has been prepared with the support from many people especially my friends and
classmates. Not to be forgotten to my beloved lecturer, Madam Nura Lina Md Elias for
instructing on the subject of Investment and Portfolio Analysis. Without them, I would not be
able to complete this individual assignment.

Lastly, to those who had involved to this assignment, I am very grateful to them for the effort.
Thank you so much.

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 Table of Contents

ACKNOWLEDGMENT............................................................................................................................2
1.0 INTRODUCTION................................................................................................................................4
2.0 INVESTMENT OBJECTIVES...........................................................................................................7
3.0 INVESTMENT STRATEGIES..........................................................................................................8
4.0 SUMMARY OF STOCK TRADING...............................................................................................10
5.0 PERSONAL EXPERIENCE............................................................................................................12
6.0 CONCLUSION..................................................................................................................................13
REFERENCES........................................................................................................................................14
APPENDIX..............................................................................................................................................16

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1.0 INTRODUCTION

In 1918, an influenza pandemic also known as Spanish flu has hit United State, France, United
Kingdom and other countries. This outbreak has infected more than one-third population in this
world which is 500 million and has caused about 50 million people deaths. This pandemic
occurred in World War I. At the time of outbreak, economic data were unobservable and there is
limited data available. Economic researchers have decided to study after the outbreak. They
see the impact of the economy through the available data. The only source at that time to see
some economic impact was on the print media. The economic effect on influenza pandemic
were relatively short term. During that time many businesses like service sector and
entertainment industry suffered losses. While, healthcare product industry is increasing in
revenue. Some academic research show that this pandemic has led to reduced labor and higher
wages (at least temporarily) for workers although there is no justifiable reason has been made
that could benefit more than the high cost of loss of life and overall economic activity. Stock
market returns also hard to acquire. The impact of Spanish flu in stock market are minimal. The
stock market unaffected with any three waves of Spanish flu, but there is a little effect of stock
market during second wave (fell 10%) which is on October 1918 even though the second wave
is the worst Spanish flu wave. By the end of third wave which is on February 1919, the stock
market could see 50% increase which lasted until November 1919.

Second historical case is Asian Flu which this pandemic that occurred on 1957 until 1958. This
influenza first identified in East Asia which is originated from China in February 1957 and later
spread the countries around the world. Asian Flu was the second major influenza pandemic that
occur in the 20th century. The outbreak has caused an estimated over one million deaths
worldwide and is widely recognized as the least serious of the three 20th century influenza
pandemics. During 1957, The economic impact and financial market during this outbreak was
relatively low. The second and largest wave of the Asian Flu hit the U.S hard in November 1957
and Dow Jones fell 15% from July 1957 to end of the year. Yet, because of the recession that
coincided with the pandemic, the recession was largely due to inflation and high interest rate.
Ultimately, by 1958, after both the pandemic and the crisis had ended, stocks had risen up to
new highs.

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Today the world is plagued with an epidemic called COVID-19. COVID-19 was first identified in
Wuhan, China in 31 December 2019 and has spread globally. Many countries were affected
including Malaysia. The virus spreads primarily among people during close contact, most often
through small droplets formed by coughing, sneezing and speaking. There are large number of
deaths around the world due to this outbreak. Economic and financial industries very impressed
due to current situation. There are several impacts to the global and Malaysian stock market. In
Malaysia, Bursa Malaysia has recorded its lowest in a decade, falling 20.52% since the
beginning of the year. Some stock markets have been hit hard by the outbreak as there was no
demand during the period of Movement Control Order (MCO). Among them are airline industries
and more. For instance, Air Asia Group Berhad’s stock fell 63% since January 2020. However,
there are also healthcare stock markets such as Top Glove Berhad that are rising because of
their products are very importance during this global virus outbreak.

The world’s major stock markets responded in early February, as it became clear that the
pandemic is spilling over and the most serious is facing by Italy, Iran and South Korea. The local
benchmark indices responded more pronouncedly, with cases reported in Latin America. The
changes in the stock market represent the industries most affected like travel and leisure, food
and catering and so on. Movement of the Dow Jones Industrial Average between December
2019 until March 2020, revealing the all-time peak in February and the drop during the COVID-
19 pandemic in February and March. Overall, stock markets declined over 30% by March 2020.

Fiscal policy is government’s measure to change government spending and tax structure to
affect aggregate spending level in economics. Malaysian government use two main instruments
of fiscal policy which are government taxation for revenue collection and expenditures for the
purpose of spending. During recession or deflation, government will increase spending like
spending more on infrastructure and increase borrowing. Government increase on their
spending to creates an injection of money to an economy and create a job to prevent the
problem of unemployment in Malaysia. Increasing in demand aggregate can help country out of
recession. Government also can cut tax rate. Those tax includes service tax, import duties,
export duties, income tax and more. Reducing corporation tax can raises the ability in the
investment. Therefore, an increase of aggregate spending could solve the problem of
unemployment.

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Bank Negara Malaysia (BNM) play an important role monetary policy making body in Malaysia.
Monetary policy is the central policy adopted by the Central Bank which is Bank Negara
Malaysia to regulate money supply and interest rates to influence aggregate spending levels to
reach employment levels and control inflation. By using monetary policy, BNM can increase or
decrease money supply together with interest rate. During the recession, government
implement expanding monetary policy which are increasing money supply and decreasing
interest rate in market to increase aggregate spending to solve the problem of unemployment.
Low interest rates led to increase in consumption, investment and net exports.

Started on 18 March 2020, Prime Minister of Malaysia and Health Director-General

implemented Movement Control Order (MCO) in order to break COVID-19 chains to reduce the
number of people infected. Any activities outside like gathering, mass movement, class and
more are not allowed. During MCO, all government and private companies are ordered to close.
Only for those involved in essential service like food supply, health, water, electricity and others.
The implementation of MCO are affected several sectors of the economy, education,
transportation and particularly the small industries like small-scale traders. Many people losses
their jobs especially self-employed and some of the company’s employees because their
employers are unable to pay their salaries. The effect on the country is the high unemployment
rate and the inability to pay the loans. The country's financial system is also burdened by the
fact that some borrowers are unable to pay during this Movement Control Order because of that
factor.

International Monetary Fund (IMF) predicts that the economic recovery will slow down following
this crisis unlike any other. The IMF also predicts that longer lockdowns will have an additional
impact on economy activity in countries struggling to control infections. While the World Bank
expects the Malaysian economy to be on the path to recovery by the end of 2020 and will
rebound in 2021. This is because Malaysia is one of the countries that has the lowest cases of
COVID-19 compared to other countries. The number of cases and the implementation of the
Movement Control Order in Malaysia is one of the factors of economic movement in a country.

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2.0 INVESTMENT OBJECTIVES

Objective of investment is the purpose a particular investment or combination of investment

serves the financial objectives of the investor. When, the target market is set, the investor must
identify a specific asset and type of investment security that they will buy, sell or keep to achieve
the purpose of the portfolio. This objective is very important especially in the event of an
unexpected future. There are two main investment objectives that I want to achieve which is
current income and capital gain.

Current income involves investing in stocks that offer a stable and strong dividend, as well as
some top-quality real estate investment trusts (REITs) and high-rated bonds, since these items
produce daily current income. This objective refers to cash flow which are anticipated in the
short-term. Investors who concerned with current income should consider investing in blue-chip
stocks, which are shares of big, successful firms with a long record of growth, high and stable a
dividend payout. Such companies have shown that they can survive economic downturns like
current situation of COVID-19 and still thrive, so they are usually a safe option for investor.
Among blue-chip stocks in Malaysia that investor can invest due to COVID-19 are Genting
Berhad, Sime Darby, Telekom Malaysia and more which safe for investors.

Capital gains are entirely different from yield because they only realized when security is sold
at higher price compared to price at originally purchased. Sale at a lower price is called profit
loss. Consequently, investor seeking capital gains are not likely need a fixed and ongoing
source of return on investment from portfolio, but they are seeking the possibility of longer-term
growth. Capital gain is most closely linked to the purchase of common stock, especially growth
securities, which offer low yields but a significant potential for value growth. Common stock
among the riskiest of investment because the return depends on what will happen in the future
like an uncertain future. So, blue-chip stock can deliver the best from all worlds by providing fair
stability, moderate profits and capital growth opportunities created by long term rises in
corporate income and earnings as the firm matures. Among stocks that can earn profits are Top
Glove Berhad, Ajinomoto, Axiata Group and more. Buying these stocks especially blue-chip
stocks are safer even under the unexpected situation like now.

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3.0 INVESTMENT STRATEGIES

Investment strategies is systematic plan that guides decision taken by an investor for allocating
financial assets among investment options such as bond, commodities, real estate, stocks and
more. Such plans take into several factors such as economic trend, inflation and interest rate.
Others considerations include the level of risk tolerance and goals for short or long-term growth.

In investing, investors need to be wise to find the right timing. Before investors want to make an
investment, they need to be aware of the current situation as the differences in the situation will
lead to the stock market declining or rising. COVID-19 is an example of a current situation. Due
to current situation, investor should make a selection on industries. This is one of the investment
strategies before investors proceeds on buying stocks process. Among industries that can be
selected by investor are food and beverage industry, healthcare industry, technology industry
and more. Investor can choose these industries as they are very important and necessary to the
situation. For instance, Top Glove company is one of few companies that produces medical
glove. As we all know, medical glove is very much needed by the front liners. According to Top
Glove Corp Berhad, the demand for medical glove estimated increase by 12% per year in the
post-COVID-19 environment. In addition, stock from industries that are severely affected like
Airline industry and tourism industry are not encouraged to buy. However, stocks selection may
change depending on the seasons such as Ramadhan and Eidulfitri. Food and beverage
industry, tourism industry and transportation industry have high demand during that seasons
even though Malaysia implemented Conditional Movement Control Order (CMCO). So,
investors can invest in that industries during that seasons.

Next strategy is buy at low price and sell at high price. It influenced by the nature of stock
market cycle. This strategy is where investor buy low priced stocks or shares and sell the stocks
at a higher price. Stocks price decrease during a stock market crash due to several factors like
global events (COVID-19), perceived share risk, inflation and market economic power. This
situation is the right time to buy at a discount using the knowledge to determine the best stocks
to buy. As the COVID-19 recovers, stocks price is rising again, so they can increase the value of
purchased stocks while the market is weak. For those who looking to buy at low, they have to
keep up with stock price volatility, industries or the overall market. This is because it is a signal
and general direction for them to buy at a lower price.

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The last investment strategy is investor can short selling stocks. Short selling is the act of
borrowing and selling stock on the market and investor believe that the value of the stock would
fall and if they sell the stock today, they will be able to buy it back at a lower price at some point
the future. When they do so, they will make a profit consisting of the differences between selling
and purchasing price. Taking COVID-19 situation as an example. Stocks of some of the
industries affected by the COVID-19 can be short sells such as airline industries, tourism
industries, transportation industry, oil and gas and others. Then, they can buy back stocks from
the affected industries once COVID-19 is fully recovered or when the cases start to decline.

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4.0 SUMMARY OF STOCK TRADING

COVID-19 pandemic has hit many countries including Malaysia and because of that in the first
three months of the year, stock markets around the world experiences unprecedented declines
amid a massive sell-off tied to the coronavirus. In a current situation, many companies in
Malaysia with different industries are affected whether the effect is positive or negative. As a
trader, we need to choose the suitable industries in Bursa Market Place that can be selected
such as non-cyclical stocks, utilities and healthcare. These industries are very important
because it comprise businesses that operate in sectors that perform well during economic
downturns. If these industries can survive during the economic downturn, it is not impossible as
these industries are able to endure this pandemic. Food and beverage, utilities, healthcare and
others have a high demand during this situation because execution of Movement Control Order
which causes all people to stay at home.

In this platform, we can create maximum three portfolios based on our investment objectives. I
created two main portfolios under my market which is current income portfolio and capital gain
portfolio. I divide it so that I can achieve my investment objective which is to enjoy capital gain
and current income. There are two support function in order to assist investor’s trading which is
Mirror, Learn, Trade (MLT) and Screener. I would prefer to choose screener to assist my stock
trading. By using screener, we can choose and buy by using several financial parameters like
types of industries, dividend yield, price over earnings ratio, analyst recommendation and more.
If trader seeking for capital gain, they can look at the p/e ratio. But if the trader seeking for
current income, they can look at dividend yield. However, if we filter dividend yield and we
choose above 5%, it means company pay above 5% dividends to investors each year relative to
the net income of the company. The use of analyst recommendation is more important as
investors can know and filter which stock to sell, buy, outperform and underperform. If the
stocks outperform the market, it means the stock performing well and vice versa.

After do some filtering, it shows the results of a number of companies that match the filters. We
also can filter the listings of companies by the ratings. The highest rating means the companies
have the strong confidence level. Before I want to proceeds of buying stocks, I use watchlist to
put the stocks that I interested. In watchlist, we can divide into maximum ten parts based on our
objectives. The function of watchlist is to help trader filter and select the potential stocks before
they want to buy. Besides, we can keep an eye on the trends of the stocks that they wish to buy

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in the future. By using watchlist, we also can know if there is any stock that is not performing
well so that we can avoid from buying the stocks.

Lastly, we can choose how much unit stocks to buy. The maximum total capital available for
trader is RM150,000.00. We can buy or sell stocks using the money provided. Currently, I
bought two stocks for current income portfolio and eleven stocks for capital gain portfolio. If we
buy the larger unit of stocks, the greater the stock return and risk we will get. In addition, we can
analyze for stocks with lower buying value to get more profit in investing. If the purchasing value
is higher than intrinsic value, there is a possibility investor will be at a loss. So, we need to do
some strategies when it comes to investing.

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5.0 PERSONAL EXPERIENCE

At first, I was very excited to get know the existence of this platform. For me, this platform is
very interesting because it is suitable for future investors who want to start an investment
journey but have no capital especially for a student. This platform allows me to gain access to
useful information and relevant tools to begin investing journey since I am newbie and
inexperience in this platform.

My personal experience using this Bursa Market Place is I am very delighted to see my portfolio
in Bursa Market Place. I opened this Bursa platform almost every day so that I can see the
growth of the stock I bought whether I am at loss or profit. I had a profit over than RM1000 on
June 29, 2020. As a new user, I am very excited to buy other stocks after seeing the profit and I
need to be prepared to take any risks in the event of a loss. But I was a little disappointed that
the several stocks weren’t profitable. I have to get along with the losses due to current situation
and I came with some strategies like avoiding low demand stock.

To be honest, I want to enhance my knowledge in investment by using this platform as a

starting point so that I can become a successful real investor someday. Make an investment is
my financial goal because it could benefit the future so, I will use this platform to more venture in
stock trading. Not only that, I will introduce this platform to my friends who are unaware of the
existence of this platform and tell them benefits of using this platform.

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6.0 CONCLUSION

When it comes to investments, there is no investment that is no risky. There is always risk
involved no matter that the risk is high or low. Nevertheless, the key is to manage the risks
effectively over time and to make well-informed decisions based on information. There are many
strategies needed by an investor. The best strategies are those that work best with the goals
and risk tolerance of the investor.

The best strategy that can be used by investor is buy and hold stocks. Buy and hold strategies
are based on the company that the markets tend to rise in the long period. Investor buy stocks
and hold for a long-term period even though the market is fluctuation. This strategy require long-
term hold stocks are less trading compared to other strategies such as buy low, sell high
strategy. As a result, trading costs are less and it can increase the overall net return on
investment. Not only that, this strategy also has less risk. When there is less trading on
investment, it also reduces the risk. Although this strategy is low-risk, it can still generate a lot of
profit. For instance, investor buy affected stocks during global events and hold them for a long
period.

My prediction for post-COVID-19 stock trading strategy is I will buy stocks related to travel and
tourism industries like airline industries, energy and resources and more. For instance, Malaysia
Airlines and Air Asia. These industries greatly have a quality and high demand when the
economy rises. As we all know, some countries are ordered to lockdown and Malaysia
implemented Movement Control Order that take months. But due to this pandemic that limit the
movement of the people throughout the country, those industries are very impressed and has a
low demand or no direct demand. So, I will buy back stocks related to that industries. I am
convinced that these industries have a high demand after this pandemic. So, after this
pandemic, people will back to normal life and routine like travel, work and more. As a result, this
will increase the demand of the stocks and this is a right time for investor to buy the stocks.

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 REFERENCES

 Chen, J. (2020, February 4). Short Selling. Retrieved from Investopedia:

[Link]
%20investment,by%20experienced%20traders%20and%20investors

 COVID-19: Recovery will be slower following ‘crisis like no other’, IMF predicts. (2020, June 24).
Retrieved from UN News: [Link]

 Investopedia. (2019, May 21). Basic Investment Objectives. Retrieved from Investopedia:
[Link]

 KAUR, D. (2020, March 18). Effect of Movement Control Order on businesses. Retrieved from The
Malaysian Reserve: [Link]
order-on-businesses/

 Lango, L. (2020, March 26). How 5 Pandemics Before Coronavirus Impacted the Stock Market.
Retrieved from Investorplace : [Link]
coronavirus-impacted-the-stock-market/

 Li-Lim, J. (2020, May 12). Everything You Need To Know About COVID-19 In Malaysia [Updated].
Retrieved from [Link]: [Link]
malaysia#section4

 Lin, W. E. (2020, June 2). Post-Covid-19, glove demand to grow 12% a year — Top Glove.
Retrieved from theedgemarkets: [Link]
demand-grow-12-year-%E2%80%94-top-glove

 Litte, K. (2020, February 11). Four Investment Objectives. Retrieved from thebalance:
[Link]

 Lusk, V. (2020, May 20). Buy Low, Sell High. Retrieved from Wealthsimple:
[Link]

 Monetary And Fiscal Policy Monetary Policy Economics Essay. (2018, November). Retrieved from
UKESSAYS: [Link]
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 Taylor, B. (2020, February 27). The Spanish Flu and the Stock Market: The Pandemic of 1919.
Retrieved from globalfinancialdata: [Link]
the-stock-market-the-pandemic-of-1919/

 TheStar. (2020, June 8). World Bank: Malaysia's economic recovery to begin end of 2020.
Retrieved from TheStar: [Link]
malaysia039s-economic-recovery-to-begin-end-of-2020

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 Thomas A. Garrett. (2007, November). Economic Effects of the 1918 Influenza Pandemic.
Retrieved from [Link]
development/research-reports/pandemic_flu_report.pdf

 Thune, K. (2020, March 26). What Is Buy and Hold? Retrieved from thebalance:
[Link]

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 APPENDIX

Current Income (BMP)

Capital Gain (BMP)

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MLT HISTORY

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