Thursday, February 27, 2014

Malaysia Stock Market A Safe Haven

KUALA LUMPUR (Feb 27, 2014): Global bank Citi still considers Malaysia's equity market as a safe haven for investors in 2014 despite preferring developed markets over emerging markets and picking North Asia to perform better than Asean.

"Malaysia market has been a defensive market and it has done well in times of volatility. If you are looking for a safe haven, Malaysia may well be the place," said Citibank Bhd CEO Sanjeev Nanavati.

The bank's top picks are Malayan Banking Bhd, SapuraKencana Petroleum Bhd and Sime Darby Bhd, while remained positive on the oil and gas sector, as well as infrastructure and construction sectors.

Investors may also want to look at other index constituents, said Sanjeev, as the benchmark index FBM KLCI sees modest upside.

"Today the KLCI is trading at the price-earnings ratio of 15.6 times and it is expected to rise to 16 times, lower than the historical average of 18 times. So, we might see a flattish and slight upside this year," he told the reporters in a media conference here yesterday.

On a broader perspective, Citi Asia Pacific chief investment strategist for Wealth Management Haren Shah said developed markets are preferable to emerging markets, cautioning investors that North Asia (Hong Kong, China, Korea and Taiwan) may outperform the Asean region on tapering fears.

"If we look at the way the macro-environment is evolving, be it US tapering action or shifting in liquidity, the developed markets will do better," said the Singapore-based visiting investment strategist.

Within emerging markets, investors should focus on the countries that are showing value and current account surplus, said Haren, suggesting that Asean markets is less attractive than North Asia from valuation perspective.

"North Asia is 30% cheaper than Asean markets. If the money were to come into this part of the world, you always want to chase where things are cheaper first," he said.

Generally, the investors are advised to keep their strategy simple and straight forward, as 2014 is about growth and global recovery, while the financial markets will remain volatile as it adjusts to these factors.

"Volatility comes from the news and information that the people react to it. We should look at the big picture, but not to get over-influenced by short term events because risks come and go," said Haren.

"Stay consistent in your investment policy and approach. Just keep things simple and don't let all the noises out there confuse your investment philosophy," he added.

On global recovery, Haren said the US economy is strengthening and there are signs that other major economies are stabilising and showing relative strength. Meanwhile, the Eurozone will look more towards growth rather than austerity in 2014.

As for China, reforms could result in slower growth in the first half of the year, but the global economy recovery will help it revive growth.

"We will continue to face headwinds and uncertainties from liquidity fears, rising bond yields, European debt, Chinese reforms, as well as geopolitics tensions between Japan and China, North Korea and more recently, Ukraine," said Haren.

On another note, Sanjeev said the Malaysia's foreign direct investment (FDI) sentiment is good and likely to stay positive in 2014.

The FDI in 2013 was healthy, he said, as the investment in local electrical and electronics sector continued, while the investing trend has also shifted from China to South East Asia.

"Overall, Malaysia's FDI will be a good story. There is no reason to believe that 2014 is not a good FDI year," he said.

Commenting on the local economy, Sanjeev said Malaysia's gross domestic product (GDP) is expected to grow at 5% this year. However, a rebalancing of growth engine is expected to happen, shifting from domestic demand to export-oriented.


Wednesday, February 19, 2014

THHEAVY: Be Prepared

Good show! My old time mate THHEAVY! I remember last time most of the time I fail to court her and ride with her. Either I abandon her or she chase me out! Later instead I courting others as replacement. Really I have an emotional feeling! Hahahaha.. :-)

Today THHEAVY traded with high volume after consolidated for some times since July. Now she has awaken. Ready to charge higher. I foresee she can chase up ALAM (my ex-mate) price which is in the range of RM1.40 to RM1.60. Those who miss the boat can collect below RM1.00. As long as the upside support 0.95cts stay intact, we should not be worry about.

Good Luck. Happy Trading and Cheers!

Thursday, February 13, 2014

Malaysia's Growth Intact

Malaysia's growth intact, GDP boosted by rising exports and investments

PETALING JAYA: Malaysia’s economy grew 5.1% year-on-year in the final quarter of 2013, exceeding market expectations of a 4.8% rise.

Economists were encouraged by the set of data released by Bank Negara and theStatistics Department yesterday and attributed the improvement in the health of the economy to the exports and continued strength in private investments.

They felt this development boded well for the country’s outlook amid volatility in the capital markets over the last six months.

For the entire year, economic growth as measured by the gross domestic product (GDP) rose 4.7%, matching market expectations. Compared with the preceding quarter, GDP grew by 2.1%. The national current account, reflecting the balance of trade, continued to improve.

“We’re very encouraged by the rise in private investments, as this underscores the fact that private sector investments will continue to be a big contributor to GDP for years to come,” CIMB Investment Bank Bhd economic research head Lee Heng Guietold StarBiz.

He said the main drivers of investment growth continued to be the implementation of the Economic Transformation Programme projects and relatively low borrowing costs. “Yes, we expect interest rates to gradually move up this year, but it will still continue to be supportive of growth,” Lee added.

According to a statement by the central bank, private investments rose 16.5% in the fourth quarter (from 15.2% in the third quarter) on account of higher capital spending in the services and manufacturing sectors, while public investments continued to fall, declining 2.7% year-on-year in the fourth quarter from the 1.3% drop in the previous quarter. Overall, gross fixed capital formation grew 5.8% in the fourth quarter versus 8.6% in the previous quarter.

Alliance Research chief economist Manokaran Mottain (pic) said that on balance, most economists had been overly bearish, especially when the national current account narrowed in the middle of last year.

“We should not be overly concerned with blips in leading indicators in a given month, as one month’s worth of data is not enough to seriously impact economic performance,” he pointed out, explaining that a drop in purchasing managers indices (PMIs) in a given month should not be a cause for alarm. PMIs are leading indicators for manufacturing activity.

On the trade front, exports grew 2.4% last year to RM719.81bil, while healthy domestic demand stemming from manufacturing activities, capital formation through growing investments as well as higher consumption ensured imports rose 7% to RM649.19bil.

Due to the growth in exports, the national current account balance improved to RM16.2bil in the quarter under review (from RM9.8bil in the third quarter) versus the median expectations for the balance to improve to RM17.5bil.

Manokaran expects the ringgit to end this year at 3.30 to the US dollar, with periods of volatility around Federal Open Market Committee meetings when statements on further cutbacks to the quantitative easing programme would be announced. To-date, the US Federal Reserve has cut back US$20bil from the US$85bil-a-month programme.

Economists expect private consumption to moderate this year on the back of further fuel subsidy cuts, following the rise in electricity tariff rates and the abolishment of the sugar subsidy. “Consumer spending will still hold this year although households will continue to adjust, but we don’t expect consumption to pull back sharply,” Lee said.

For the fourth quarter, private consumption moderated to 7.3% from 8.2% in the previous quarter, while lower government spending on emoluments saw public consumption moderate to 5.1% from 7.8% previously.

Bank Negara said on the supply side, growth was supported by the major economic sectors, with services growing in tandem with the improvement in trade and manufacturing activities. The manufacturing sector expanded further, supported by higher growth in both the export- and domestic-oriented industries.

Activity in the non-residential and residential sub-sectors continued to support construction sector growth, but the commodities sector weakened due to lower production of rubber, palm oil and crude oil.

Credit Suisse AG economist Santitarn Sathirathai expects another year of robust GDP growth this year, although the mix in contribution to growth would likely shift towards investment and away from consumption.

He noted that in order for real GDP growth to hit 5% this year, quarter-on-quarter growth would need to average 1%.


Thursday, February 06, 2014

Asia Stronger, Able To Deal with Volatility

CONFIDENT: Economists respond to concerns that Argentine peso plunge may lead to contagion of currency crises
THE plunge in the Argentine peso last week has triggered fears of a currency crisis contagion, but economists are confident that Asia is now fundamentally stronger and able to deal with market volatility.
The vulnerability of the Asian markets has taken centre stage again as fears of a currency crisis contagion arise akin to the Asian financial crisis in 1997/1998.

The Argentine peso plunged by more than 15 per cent last Thursday after the country's central bank appeared to withdraw support for its currency.

This has sparked concerns about the risk of a currency crisis contagion in emerging markets.

CIMB Investment Bank said this is pertinent, given the current environment of capital reversals with the United States Federal Reserve starting to reduce its monthly bond purchases this year.

"While the policymakers cannot stop the capital reversals, a reality check for the Argentinian and Asian economies shows that Asia is fundamentally stronger and is well-positioned to deal with the market volatility," says CIMB Investment Bank.

Asia, it said, is still offering decent economic growth against Argentina's subdued growth while the inflation level has not reached alarming levels as that of Argentina (where inflation had reached double digits).

"Asia has a strong war chest of foreign reserves, while that of Argentina has depleted to a low level, prompting strict capital controls to stem capital flight."

The Asian economies, it added, have adopted flexible exchange rate regimes or managed float exchange rates, which enable the central banks to implement monetary policy without having to worry about defending the exchange rate at a particular level.

"As such, the exchange rate will adjust to two-way capital flows, allowing the system to better cope with external shocks."

Credit Suisse said the combination of renewed Chinese economic and financial stability concerns, ongoing US quantitative easing tapering and Argentina's peso devaluation have triggered another "wobble" in emerging markets. 

"No one yet knows if this will turn into a financial storm of the sort witnessed in May-September last year, or a short-lived squall."

In its comparison on the macro vulnerability, the research house concluded that "the extent of the damage" for a given shock is likely to be less for countries like Malaysia, the Philippines and Thailand.

India and Indonesia have both narrowed trade deficits while interest rates have also been raised.

"Nevertheless, we still worry about the high level of foreign bond holdings in Malaysia, the political situation in Thailand and low real interest rates in both Thailand and the Philippines."

China, Hong Kong, South Korea and Singapore have better trade positions now, while Argentina, Turkey and South Africa are worst placed according to the Credit Suisse's criteria.

As to the exposure of the countries to the vulnerable economies in Latin America and EMEA (Europe, Middle East and Africa), Credit Suisse said the importance as export destinations is very small across the board.



Monday, February 03, 2014

INSAS, KNM: What Now?

Happy New Year, Gong Xi Fa Cai and Happy Holiday to all! Bursa Malaysia Kong Hei Kong Hei by giving us a heavy selling for the past weeks :-). The good news is not all counter follow the same rhymes.

Some strong bull and upside counter are giving us an opportunities to enter with bargain price and some are selling down to cheaper price and will not rally as it already in bear mode. I have cover 3 counters previously GPACKET, CENSOF and INSAS. Which is still bull and which is bear?
Well, of course INSAS is still in bullish mode :-) GPACKET and CENSOF are out of my sight now. GPACKET has falling all the way down from its critical support 51/52 as well as 45/46. CENSOF still in defensive mode with trading between 50cts to 60cts. But I can sense it may drift lower to 40cts and take longer period for recovery and moving sideway within this band.

INSAS already hit my target of RM1 and retrace. Now is moving sideway and it will mostly breakout from the major resistance of 90cts in coming weeks. The important now is look at the critical support at 65cts. The price may drift lower to 70cts before it can breakout 90cts convincely. If the breakout succeed, do stay tight and look for new target of RM2! :-)

How about KNM? It has been in limelight recently with high volume and price breakout. Indeed it is interesting to see it charge more higher. KNM now is on the bullish mode and has been a confirm reversal from long downtrend overhaul since 2008. We can see more price upside for KNM and expect it to see more surprise game going forward. In order for KNM to be bullish the price need to stay above 60cts. If this is confirm than charging towards RM1 will not be a problem!

Cheers and Happy Trading and Investing.