While the FBM KLCI remained resilient in the 1H2011 period, key global and regional indices went through bouts of profit taking towards the lows seen in March this year. In fact, FBM KLCI was among the best performer in 1H2011, in regional perspective. Fast forward to the 2H2011 period, we remain optimistic that the benchmark index will scale new highs for the year premised on 1) improved economic visibility; 2) easing concerns over Euro region’s debt issues; 3) stabilizing commodity price; 4) strengthening ringgit and rising foreign fund inflows; and 5) rising confidence in Malaysia’s ability to realize targets set under the Economic Transformation Programme (ETP).
Among The Best
The FBM KLCI was among the top five indices in the Asia Pacific region
having expanded by 3.4% YTD. It was firmly behind NZX 50, Sri Lanka,
Jakarta Composite Index for most of the 1H period and only
underperformed Jakarta among key regional bourses.
Downside Risks
Our bullish view could be scuttled by 1) delays in implementation of ETP related projects that will affect domestic expansion; 2) slower than expected external demand; 3) faster than anticipated inflationary pressure that leads to tighter monetary discipline and rising costs; 4) political instability in case of unexpected outcome from a possible snap election.
Buy/Sell Stock Picks
Our top 10 buys picks are predominantly the beneficiaries of domestic expansion and ETP related projects in the Banking, Oil and Gas, Construction and Property sectors. Two of the four Sell picks are the victims of a stronger ringgit and high raw material prices in the technology and glove sectors while the other two Sells are mainly due to lofty valuations.
DISCLAIMER
The information contained herein was obtained from sources believed to be reliable. However, we do not guarantee the accuracy and completeness of the report. Opinions expressed herein are subject to change without notice. This report is for information purposes only and should not be construed as an invitation, offer or solicitation to purchase or sell any futures product referred to herein. The Author may from time to time has an interest or position in the futures products or stocks mentioned. There is a risk of loss in trading stocks,futures & derivatives like products.
HAPPY TRADING
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