Friday, February 08, 2013

A Swinging Year Of The Snake Ahead

PETALING JAYA (Feb 7, 2013): The coming lunar Year of the Snake is expected to bring persistent volatility in the local equity market, with good fortunes likely to rub on industries linked to Earth, Metal and Water elements such as property, construction, petroleum and banking, said HwangDBS Vickers Research Sdn Bhd.

"Against a turbulent market backdrop, the benchmark FBM KLCI could swing between 1,500 points and 1,750 points going forward, and probably settle at our fundamentally-driven end-2013 target of 1,690," said the research firm in a thematic report on what to expect in the Year of the Snake yesterday.

"Hence, investors should view any market dips as buying opportunities to ride on the subsequent recoveries."

In keeping with the two dominant elements for the year, Water and Fire, HwangDBS said businesses that could flourish in the coming year include property, construction, petroleum-related and mining, banking and finance and shipping, transport, courier and communication.

"At the current market level, we believe there is more downside risk than upside potential in Malaysian equities," said HwangDBS.

The research firm also listed eight stocks which it sees to have their fortunes tied to symbolic prosperity meanings or belong to the auspicious sectors in the Year of the Snake.

They are Malayan Banking Bhd (Maybank), RHB Capital Bhd, SapuraKencana Petroleum Bhd, IJM Corp Bhd, SP Setia Bhd, KLCC Property Holdings Bhd, WCT Bhd and Pos Malaysia Bhd.

HwangDBS said notwithstanding its favourable celestial readings, its stock picks are also backed by solid fundamentals. Their valuations are attractive with exciting growth prospects, it said.

The firm also said the presence of the Fire element (which represents the stock market) in this lunar year is expected to fuel equities to higher highs as well as send them to lower lows.

It added that the recurrence of an economic fallout in the US or a financial blow out in Eurozone could force a downward spiral in investors' confidence.

Advocating a defensive stance, HwangDBS said investors should flock to sectors or stocks that generate strong operating cash flows and pay appealing dividend yields such as Pos Malaysia, Maybank and KLCC Property.

HwangDBS also said lady luck is expected to smile on people who are born in the Year of the Rat, Ox, Horse, Rooster and Dog, animal signs that are in harmony with the Snake.

"But fear not if you do not belong to any of these signs, as wearing the lucky colours of purple, blue and green will supposedly bring you good fortunes, too."


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