Genting falls on Genting S'pore rights share plan ... really?!!

Genting share already corrected since 8 Sept when it hits the top resistance channel. Is the market efficient to price in this news of Genting Singapore plans for rights issue or purely a correction? The Edge Malaysia is surely wrong saying price dropped due to Genting Singapore rights issue when correction kicked in yesterday.

The share is about 46% above its 200-SMA which is one heck of bullish. From trading perspective, I will wait for next 9 - 14 days(see chart below on the basis) to let the overbought situation to neutralize first. Any sign of rebound from lower resistance channel will be a good trade set up - around RM 6.30.

(TheEdgeMalaysia)KUALA LUMPUR: GENTING BHD []'s share price fell the most in more than a month during afternoon trade on Sept 9 after Genting Singapore announced its rights issue to raise S$1.63 billion at 80 cents each or 32.8% below the previous day's closing price.

It closed 30 sen lower at RM6.87, the most since July 29. There were 16.4 million shares done.

Genting Singapore's proposed rights issue involves up to 2.04 billion new shares of 80 cents each and it would be on the basis of one rights shares for every five held.

"The rights issue is expected to raise gross proceeds of up to S$1.63 billion and is undertaken to pro-actively strengthen the balance sheet of the company and its subsidiaries (the group), enhance its financial flexibility and competitive position and facilitate future business expansion," Genting Singapore said in a statement to the Singapore exchange.

Genting Singapore, which is about 54% held by Genting Bhd, is building one of the city-state's two integrated casino resorts. It is also the largest casino operator in the UK.

Genting Singapore will resume trading on Thursday, Sept 10.

Why would someone sells Genting Malaysia from fundamental point of views?

• Genting Singapore rights exercise is diluting earnings.


• Genting Malaysia got no chance to get rid of their non-core or non-gaming assets(power assets, plantation, O&G and etc)

Fundamentalist will definitely lose out in this round of tug of war. Trader will be in control of this battle, RM 6.00 - RM 6.30 will attract vultures again. Cracking below this level, you can expect it to go back all the way to RM 4.75 - RM 5.00.

Good luck on your trade set-up if trade you must -- and don't forget your cut loss target.