Monday, August 29, 2011

DJIA: To Retest Weekly Resistance At 11530 And 11684 If Close Above The 10-Days SMA

Wall Street Recap: Dow Jones ends 135 points higher after tumbling 221 points intraday
The Dow Jones up 1.2% to record a robust 4.3% gain wow (its first winning week in five) after plunging 221 points intraday following Bernanke’s lack of a clear signal on additional stimulus measures and a sluggish 1% 2Q11 GDP number (consensus:
1.3%).

However, Dow Jones recouped all the losses and jumped 135 points as Bernanke said the recovery is likely to improve in the 2H11, and he reassured investors and the public that U.S. growth is safe in the long run. Bernanke said the FOMC would consider its options at its next meeting on 21 September.

Wall Street outlook: Another challenging week ahead
After staging a commendable 4.3% rebound last week, Wall Street will be heading for another challenging week ahead of the Labor Day holiday weekend on 5 September), marked by the effects of Hurricane Irene and anticipation over the upcoming economic figures i.e. July consumer spending (29 August); August ADP job data (31 August); Aug ISM (1 September) and August jobs report (2 September).

While August is still setting up as a lousy month for Dow Jones(-7.1%), last week’s strong rebound may have removed the fear of a further free fall. If the Dow Jones can record another weekly gain this week, the Dow is expected to see brighter days ahead.

Technically, positive indicators and a close above the 10-d SMA could spur further upside to retest weekly resistance at 11530 (17 Aug high) and 11684 (30-d SMA) levels). Weekly supports are situated near 10801-11000.

Dow Jones Daily Is Building Base Around 11000 Points Before Heading Higher
DowJones29-08-2011

Dow Jones Weekly Shows Signs Of Bottoming Process
DowJones29-08-2011a



Source: StockCharts.com

Sunday, August 28, 2011

FBM KLCI: Lacklustre Trade In This Holiday-Shortened Week

Bursa Recap: KLCI down 20 points last Friday for a 39-point decline wow
Asian markets ended mixed as investors await the outcome of Bernanke’s speech in Jackson Hole last Friday.

FBM KLCI fell almost 20 points to 1445, copying the weak regional markets, on a slew of lacklustre corporate earnings and continuous foreign selling (particularly on banking shares) ahead of the long holidays this week. Bursa Malaysia will close by 2H today and reopen only on 2 September.

Lagging movers were CIMB (-21 sen to RM7.04), GENTING (-32 sen to RM9.46), PETCHEM (-27 sen to RM6.03), IOICORP (-17 sen to RM4.61) and MAYBANK (-6 sen to RM8.67). Market breadth was negative with 168 gainers against 640 losers.

FBM KLCI Outlook: Lacklustre trade in a holiday-shortened week
FBM KLCI lost 2.6% wow, mainly attributed to renewed liquidation pressure amid a long break this week (with major markets stay open) and a slew of sluggish corporate earnings, in addition to persistent unresolved worries from U.S. and Europe.

Technically, indicators are sending out oversold signals, implying that local bourse is likely to stage a technical rebound in the short-term, but the upside is likely to be muted as most of the measurements remain negative (except a possible divergence in the weekly slow stochastics) and the 5 & 10 day SMAs continue
to head southbound.

Weekly support levels are situated at YTD low of 1423 points and 1411 (50% FR) and 1400 psychological mark. Weekly resistance zones are 1466 (5-d SMA) and 1482 (10-d SMA).

Daily KLCI Shows Bearish Indicators Could Spur Index To Retest Year-To-Date Low At 1423 Points
FBM KLCI 29-08-2011

Weekly KLCI Shows Index Should Find More Solid Floor Within 100-Days And 120-Days SMA Supports
FBM KLCI 29-08-2011a



Source: HLeBroking

Friday, August 26, 2011

Market Value, Prices & Volatility

Amidst much panic and volatility in the market, equity market prices have been falling globally. Has the equity market really lost its value? Or is there another explanation behind it?

Key Points
* Disappointing data from the US and Europe couple with negative investor sentiment have dealt global markets pain.

* Global Markets are whipsawing with wild and deep intraday swings.

* Markets are starting to behave irrationally, fear has crept back into investors.

* Focus on value, don't be affected by a nominal price.

* Investors who keep calm tend to benefit from short term market volatility and panic as mispricing takes place.

Over the past few weeks, investors encountered significant turbulence as various shocks have hit global capital markets. The tiresome sovereign debt crisis in Europe came back in July to haunt not only the peripherals, but Spain and Italy as well. Compounding weakness in the markets thanks to these indebted nations was the release of Eurozone as well as German GDP results for Q2 2011 this week. The numbers disappointed with growth coming to a standstill for the both the bloc and Germany. Over in the US, on the 5 August, Standard & Poor’s downgrading of the US’s credit rating from AAA to AA+ following the closure of markets had no visible negative effects on the yields of US issued treasuries the following week (chart 1).

CHART 1: TREASURY YIELDS DECLINED POST-S&P DOWNGRADE
TREASURY YIELDS DECLINED POST-S&P DOWNGRADE

In the equity markets last week, investors were seized by panic selling and intra-day whipsawing, reminiscent of the dark (blood-red) days of the meltdown in financial markets during the unravelling of the Great Financial Crisis. The equity markets in the US and Europe bore the brunt of the sell off with the Stoxx 600 and the S&P 500 ending up losing -0.52% and -1.64% respectively, with most of the losses for the week being erased by wild intra and inter day swings (chart 2).

CHART 2: INTRA-DAY MARKET SWINGS
INTRA-DAY MARKET SWINGS

This week, the Philly Fed index’s (an indicator of manufacturing activity in the US) freefall into negative territory (signalling a drop in manufacturing activity), a rise in unemployment insurance claims as well as a downward revision of US GDP data, saw the S&P 500 with a loss of -5.25%, while worries over in Europe saw the DAX lose -6.96%, and the broader Stoxx 600 lose -4.62%, for the week as of 18 August. The VIX index, commonly known as the ‘fear index’, saw its levels spike by 105% from 3-5 August and 35% on 18 August. With such volatility and uncertainty plaguing the markets, we go back to the basics to remind investors of an important concept whilst market sentiment is gripped with fear.

Intrinsic Value & Prices
According to the Portfolio Theory by Markowitz, investments are a trade-off between expected returns as well as risk (chart 3). With markets reacting in such a volatile and thus risky manner, investors are demanding higher returns for investments during a period such as this. The efficient frontier represents a portfolio which provides the best risk-reward ratio.

CHART 3: MODERN PORTFOLIO THEORY & THE EFFICIENT FRONTIER
MODERN PORTFOLIO THEORY & THE EFFICIENT FRONTIER

What Is Value?
The question is then, given that we now know markets are at substantially elevated levels of risk, are the required/demanded higher returns based on market discounted prices sufficient? While prices of assets are the form with which one calculates nominal returns, many tend to ignore the returns yet to be unlocked from the intrinsic value of an asset. The intrinsic value of an asset is fundamentally calculated by the sum of the future income generated by the asset after discounting it to a present value (the time value of money effect). Thus, value would be the difference between the intrinsic value and the market price.

Prices Do Not Always Reflect Value
As market prices of assets drop, intrinsic values rarely decline at the same frenetic pace with which the prices of assets do during periods of market panic. Thus, with heightened volatility in the markets, there is a greater opportunity for higher returns, albeit with added riskiness as the disparity between the figures which market prices an asset at and its intrinsic value fluctuate significantly. These fluctuations create opportunities which investors could take advantage off, depending on their risk appetite and market expectations.

Within a longer-time frame, the actual values of assets are usually reflected fairly by market prices as the mispricing gradually eases. Thus, in the long run, investors who keep their cool tend to benefit from short term market volatility and panic as mispricing occurs due to irrational behaviour and fear.



Source: FundSuperMart
Author : iFAST Research Team

Europe Zero Percent Growth - What is the Impact?

With soft economic data and weak investor sentiment, Europe's equity markets have been saddled with additional worries apart from the on-going sovereign debt crisis. We assume a scenario of 0% annual GDP growth, as per our analysis on the US, for 2011 and 2012 to stress test European earnings by proxy of the Stoxx 600.

KEY POINTS:
* Recent economic data point to a significantly more moderate pace of growth for the continent.

* We think growth will ease, but do not expect a full-blown recession.

* To account for recent soft economic data, we stress-test Europe earnings on the basis of zero percent economic growth in 2011 and 2012.

* Our stress-test indicates that even if growth stalls in 2011 and 2012, Stoxx 600 earnings will only be 3.6% below its all time high recorded in 2007.

* Even after revising down earnings estimates on non-existent economic growth, we see fair value (at the end of 2012) for the Stoxx 600 at 321.5 points, a hefty 35% above current levels.

* Europe's equity market valuations remain attractive despite soft economic data and weak investor sentiment.

* We maintain a 4.0 star “attractive” rating on the European equity market.

STOCKS DECLINING ON RECESSIONARY FEARS
Consensus estimates for US economic growth for 2011 have been downgraded on the back of high uncertainty about US domestic demand, still-depressed housing prices, weak labour market and the threat of a double-dip recession. With the recent downgrade by S&P on the credit rating of the US, financial markets are rife with volatility (the VIX index, a measure of volatility, rose as much as 105% from 3-5 August) with equity markets across the globe declining in an unprecedented free-fall fashion since the Great Financial Crisis.

Similarly, Europe has seen similar indicators of a slowdown in economic growth amidst the worrisome sovereign debt crisis and high commodity prices. Forward looking indicators such as the Purchasing Managers Indices (PMI) have fallen to its lowest levels in the core European nation of Germany where the PMI for manufacturing is at its lowest level since October 2009 and its PMI for services at its lowest level since February 2010. Other forward looking indicators such as business confidence and economic sentiment have also been falling in Germany and France, where in the former, the IFO business climate index is at a 9 month low and the ZEW economic sentiment survey experienced 5 straight months of decline.

With such doom and gloom plaguing the markets, we assume a similar scenario of 0% annual GDP growth, as per our analysis on the US, for 2011 and 2012 to stress test European earnings by proxy of the Stoxx 600 which fell as much as -8.09% since the US credit rating got downgraded by S&P on 5 August 2011.

AN ECONOMIC SLOW DOWN? WE TRY A TOUGHER SCENARIO
With much pessimism over the state of the global economy, we stress test the European economy at large, assuming 0% annual GDP growth for 2011 and 2012, as compared to consensus estimates (table 1). With Real GDP growth of 0.84% on a quarter-on-quarter (QoQ) basis for Q1 2011, in order to derive a 0% annual growth, we had to assume negative quarterly growth rates for Q2-Q4 2011 between -0.80% and -1.10% as seen in table 2. (Q2 2011 GDP was released on 16 August 2011, the Euro Zone grew at 0.2% QoQ, missing consensus estimates of 0.30%)

Table 1: Consensus Estimates
Consensus Estimates

Table 2: Stress Test
Stress Test

Taking a peek into the major components of GDP and ignoring market noise, household and capital formation actually grew in Q1 2011 on a quarter-on-quarter basis, with rates of 0.22% and 1.88% respectively. While household consumption is currently around its 6 year average, capital formation is still below its previous peak as well as -9.1% below its 2005-2007 average. (chart 1)

CHART 1: CAPITAL FORMATION REMAINS BELOW AVERAGE, HOUSEHOLD CONSUMPTION STABLE
Aggregated Accounts

With capital formation remaining below pre-crisis levels, we believe this signals potential room for growth in corporate investment on the backdrop of lesser than normal fixed capital investment. Similarly, household spending has room for expansion given the abatement in high commodity prices. Conversely, we do not believe that government expenditure has room to grow given the austerity measures being passed across Europe as countries scramble to reduce their budget deficits and rebalance their sovereign balance sheets in order to either fly under the radar of traders looking to punish them via higher yields, or, to gain funding and support from the European Financial Stability Fund (EFSF) and European Central Bank (ECB).

Regardless of the possible upsides to European GDP, given the market panic of a possible recession in the US and weak economic data emanating from Europe, we assume a worst case scenario of 0% GDP growth for the continent due to the potent combination of persistent sovereign debt issues and reduced external demand stemming predominantly directly or indirectly from the US, whose effects would be felt globally.

ASSUMING GDP GROWTH STALLS IN Q3 AND Q4 2011 – THE EFFECTS
With the assumption of GDP growth stalling, we adjust earnings estimates to account for the slowdown in economic growth by assuming that revenues, not only stand still at their current levels, but actually decline for the Stoxx 600, while we reduce the profit margin for additional conservatism. For simplicity, we assume revenues decline/grow at a similar rate to GDP (QoQ) as per our stress test in Table 2 with the results seen in Chart 2.

CHART 2: STOXX 600 REVENUES
Stoxx 600 Revenues

As for the Stoxx 600’s profit margins (chart 3), we discount them due to a potential increase in the lending rates by banks in Europe, a by-product of the current on-going sovereign debt crisis, affecting corporations through higher interest expense as well as potential increases in provisions for various write-offs. The actual impact of a significant slowdown in the US will also affect the net margin of corporations with significant earnings derived directly or indirectly from the US. All in all, we discount profit margins for Europe by -13.00% for 2011 based on the above mentioned factors.

In 2012, we discount the profit margin by -5.00% , based on expectations of an implied increase in funding costs (which are already artificially low) as well as mild inflation through rising costs of inputs such as labour as well as commodity prices (which have declined significantly) yet again. It is also based on the expectation that profit margins normalize and eventually revert back to levels slightly below its high just prior to the financial crisis.

CHART 3: STOXX 600 PROFIT MARGIN
Stoxx 600 Profit Margin

EARNINGS - RESPECTABLE IN THE FACE OF STRESS
Despite our stress-test scenario depicting gloom in Europe, the projected Stoxx 600’s earnings hold up in the face of scrutiny (chart 4). With earnings per share (EPS) of 21.14 and 25.72 for 2011 and 2012 respectively, our EPS for 2012 remains a mere -3.59% below its all time high of 26.68 back in 2007 prior to the crisis. While lower than consensus estimates, it should be remembered that our stress test literally puts Europe in a recession and as such, a difference of -7.45% between the optimistic consensus estimates and our pessimistic scenario is acceptable.

CHART 4: STRESS-TEST EARNINGS
Stress Test Earnings

RESPECTABLE UPSIDE DESPITE TOUGH SCENARIO
While economic indicators spell headwinds for Europe, our stress test attempts to put the continent through a rain of pain. Recent earnings results from the 331 companies to have reported earnings during April – July had an average earnings growth of 8.90% compared to a year ago. With 190 out of the 331 companies posting positive surprises, it is clear that the majority of companies are in good shape. The positive surprises were hampered by the financials which had earnings growth of -11.89% with 37.5% of companies within the troubled sector posting negative earnings surprises, a result of the on-going sovereign debt crisis.

On these conservative assumptions and at 12.5x 2012 earnings, the fair value for the Stoxx 600 is at 321.50 points based on stress test data, representing a potential upside of 35.17% over the closing price of 237.85 on 15 August 2011. From our base case scenario, we are projecting an upside of 66.5% with the Stoxx 600 hitting about 396 points. Investors who have a long time horizon for investments may consider Europe, through a Regular Savings Plan which utilises the concept of dollar cost averaging, which is a great tool for reducing the chances of buying at a peak in price during volatile times like these.


Source: FundSuperMart
Author : iFAST Research Team

Wall Street outlook: All eyes on Bernanke, 26-08-2011

Wall Street Recap: Dow Jones retreats 171 points, snapping three straight gains
The Dow Jones initially jumped as much as 86 points to 11406 after Berkshire Hathaway’s announcement to invest US$5 billion in Bank of America. However, sentiment turned sour following Finland's demand (that Greece put up collateral for its share of loans) threatened to derail the latest Greek bailout.

The Dow Jones continued to head southbound and fell 177 points at 11150 on profit taking activities, amid higher-than-expected weekly jobless claims and investors await the outcome of a central bank symposium in Jackson Hole tonight.

Wall Street outlook: All eyes on Bernanke
After surging 6% from 10801 (19 Aug low) to yesterday’s high of 11406, the Dow Jones retreated 177 points to 11150 on profit taking activities as investors are looking ahead to Bernanke’s speech tonight for indications of whether the central bank will embark on further stimulus, especially when there is persistent policies deadlock between Obama’s administration and the Republicans.

Technically, a fall below the 10-d SMA yesterday and the failure to surpass the mid Bollinger bad at 11133 and 11530 (17 Aug high) could derail the current rebound, especially if Bernanke speech fails to live up to market expectations of more dramatic action rather than outline gradualist measures.

Immediate resistance levels are 11530 and 11987 (200-d SMA) whilst supports are situated near 10801-11000.

Dow Jones Daily : A Pause Before Bernanke Speech
DowJones26-08-2011


Source: StockCharts.com

Thursday, August 25, 2011

Maxis Berhad Earnings Evaluations: 1H11 Results: In Line With Our Expectation

26 August 2011
Price Target: RM5.51
Share Price: RM5.48


Results
1H11 reported core net profit of RM1,090m (-3.7%) came in within our expectation, at 48.2% of our full-year forecast. Against consensus, the results came in below, accounted for only 45.4% of the full-year estimates.

Deviations
None.

Dividend
Declared interim NDPS of 8.0 sen.

Highlights
# Qoq, 2Q11 core net profit rose by 2.2% to RM551m on the back of: (1) Higher topline; and (2) Lower hubbing and marketing expenses.

# Revenue growth guidance. Expecting revenue growth of 3-3.5% in 2011.

# Subscribers. Prepaid subscribers grew 0.1% qoq to 9.51m, while postpaid subscribers declined by 0.9% to 2.62m.Management feels that the decline in postpaid
subscribers could be due to cannibalization from the prepaid segment.

# ARPU. Postpaid ARPU rose to RM108 (+2.9% qoq), driven mainly by non-voice component resulting from increased data bundle take-up. Prepaid ARPU, on the other hand, rose to RM36 (+5.9% qoq) on the back of 3.6% qoq increase in MOU.

# Capex. 2011 capex guidance lowered further to RM1.2bn

from RM1.3bn guided during 1Q11’s conference call.

Risks
Government, regulatory, industry and execution risks.

Forecasts
Maintained.

Rating - HOLD (Target Price: RM5.51)
Positives
New business potential in converged services, strong postpaid ARPUs.

Negatives
Initially low margin fixed-services would depress margins, weakening prepaid ARPUs.

Valuation
Our DDM-derived Target Price of RM5.51 remains unchanged. At RM5.42, Maxis is trading at FY11-12 P/E of 18.2x and 16.7x respectively.



Source: HLIB Research

YTL Power Earnings Evaluation: 4Q11 Result in Line

26 August 2011
Price Target: RM2.33
Share price: RM1.89


Results
Inline – FY11 results were in line with our expectations and consensus. Reported 4QFY11 core earnings of RM379m, took FY11 to RM1,216m, 96.1% of HLIB’s FY11 estimates and 102.1% of consensus.

Deviations
None.

Dividends
Proposed interim tax exempt dividend of 1.875 sen (Full year net dividend of 9.375 sen vs 13.125 sen last year). Below HLIB FY11 estimate of 11.25 sen.

Highlights
# Strong revenue contribution from Power Seraya in Singapore with +8.2% yoy growth. Consequently, the units PBT contribution also increased by +25.4% yoy.

# Wessex water continued to be impacted by appreciation of RM, translating into lower yoy revenue and profit.

# YTL Communication (YTLC) continued to report losses due to initial start-up period (Low revenue and high expenses). It expects subscriber base to increase to 400k by year end from the current level of 300k. It is currently waiting for Sabah and Sarawak locals government approval for operating in both states. It is also collaborating with Intel for WiMAX-ready products development.

# The sales of 15% stake in Java Power for RM680m was completed in 15 August 2011. YTLP will recognize RM210m gain on disposal in 1QFY6/12. However, the contribution from Java Power will be reduced to RM150m in FY6/12 and RM130m in FY6/13 onwards, from original RM225m pa.

Risks
Downside risks
- Appreciation of RM against other foreign currencies.
- YTLC facing strong competition from the existing telcos.

Forecasts
- Reduced FY6/12-13 earnings by 6-7% after accounting for lower contribution from Java Power. We have introduced FY6/14 earnings of RM1.4bn (+5.9% yoy).
- Cut net dividend forecast to 7.5 sen (previously 11.25 sen)

Rating - BUY
Positives
- Strong and stable cash flow.
- Large cash piles (RM7.2bn) allowing YTLP to look for more value accretive acquisitions
- Relatively unaffected by the surging energy prices.

Negatives
- The increasing competitive landmarks for YTLC especially with the implementation of LTE networks by 2012.

Valuation
Target price reduced to RM2.33 based on Sum-of-Parts, after earnings reduction, and imputing 10% holding company discount to account for higher risk premium.



Source: HLIB Research

Sime Darby Earnings Valuation: FY06/11 Results: Above Our Expectation

26 August 2011
Price Target: RM10.59
Share Price: RM8.80


Results
FY06/11 core net profit of RM3,808.5m beat our expectation, accounted for 110.5% of our full-year forecast. Against consensus, the results came in within expectations, at 102.6% of the estimates.

Deviations
Higher-than-expected contribution from the plantation, industrial, and motor divisions.

Highlights
# FY06/12 core net profit rose by 28.5% to RM3.8bn from RM3.0bn a year ago mainly due to:
(1) Higher plantation earnings contribution (which in turn was driven by higher output and prices);
(2) Better performance at the industrial division thanks to strong sales in Australia, China and Malaysia; and
(3) Strong demand for motor vehicles across all regions.

# 4QFY12 core net profit rose by 58% qoq to RM1,382.6m mainly due to improved profit contribution from all divisions (with the exception of the health care division).

Risks
Downside risks
1) Sharp plunge in CPO prices;
2) Worse-than-expected weather condition that will result in lower-than-expected
FFB yield;
3) Escalating production cost; and
4) Labour shortage.

Forecasts
FY06/12-13 net profit forecasts raised by 0.1-3.1%, largely to reflect higher margin assumptions at both the industrial ad motor divisions, and slightly higher FFB output growth assumption in Malaysia.

Rating - BUY
Positives
- 1) Sustained high CPO prices; and
- 2) Entrance of new management and post kitchen sinking suggests the worst is over.

Negative
- Overseas expansion risks.

Valuation
SOP-derived TP cut by 3.7% from RM10.99 to RM10.60 to reflect higher holding company discount (10% vs. 5% previously arising from higher risk premium at times of uncertain economic condition) that more than offset an upward revision in our forecasts.



Source: HLIB Research

KLIC Trading: Cautious Ahead Of Long Holidays & Bernanke Speech

Bursa Recap: KLCI drops 4.4 points, bucking regional uptrend
Asian markets were higher following another overnight rally on Wall Street, helped by higher durable-goods orders and ahead of a Bernanke speech that many hope will outline plans to kick start the ailing US economy.

Bucking the regional gains, the FBM KLCI lost 4.4 points, its 4th declines in five days ahead of the long holidays next week (i.e. Hari Raya and Merdeka with only 1-1/2-day of trading).

FBM KLCI Outlook: Cautious ahead of long holidays and Bernanke speech
In the wake of unresolved external woes, moderating global economic growth outlook and long holidays next week, we remain vigilant and would like to caution investors about potential kneejerk correction on Bursa Malaysia if Bernanke speech tonight fails to live up to market expectations. Immediate resistance levels remain near 1500-1530.

The bearish engulfing candle formation on 24 Aug, negative technical readings and the failure to defend supports at 1470 and 50% FR (at 1467 points) yesterday could exert more downward pressure on the FBM KLCI. A breakdown below 61.8% FR (now at 1456) subsequently will pressure the index to retest 1443 (76.4% FR) and 9 Aug pivot low at 1423 points.

Daily KLCI Is Heading Towards Lower Bollinger Band
FBM KLCI 26-08-2011



Source: HLeBroking

Wednesday, August 24, 2011

Global Market Weekly Review, 14 - 20 August 2011

Manufacturers in the US churned out more cars, computers and furniture in July, easing concern that one of the mainstays of the recovery was giving way. The 0.9% increase in production at factories, mines and utilities was almost twice the median forecast of economists surveyed and the biggest gain of the year, according to data from the Federal Reserve.

Builders began work on fewer homes in July, indicating residential real estate is failing to contribute to U.S. growth two years into an economic recovery. Housing starts fell 1.5% to a 604,000 annual rate, in line with the median forecast of economists surveyed, from June’s 613,000 pace that was less than previously estimated. Building permits, a proxy for future construction, also dropped.

UK unemployment claims increased the most in more than two years in July, adding pressure on Prime Minister David Cameron to ease the pace of budget cuts as the economic outlook worsens. Jobless benefit claims rose 37,100 from June to 1.56mn, the biggest gain since May 2009. The median of 23 forecasts in a survey was for an increase of 20,000. Unemployment measured by International Labour Organization methods climbed 38,000 to 2.49mn people in the second quarter.



Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 14 - 20 August 2011

Fixed Income
Safe-haven sentiment continued to drive the rally in Malaysian Government Securities (MGS) market despite lower trading volume. During the week, the 10-year benchmark Government Investment Issue (GII) and the 5-year MGS continued to top the trading list. As the 10-year GII is 12 basis points (bps) above MGS level, strong buying pushed 10-year GII yield lower by 5bps week-on-week (WoW) to 3.75% on Friday. Meanwhile, the benchmark MGS yields fell by 2-3bps WoW with 3-, 5-, 7- and 10-year closing at 3.14%, 3.38%, 3.52% and 3.63% respectively on Friday. Of note, 10-year benchmark recorded its lowest yield since March 2009 after inflation moderated and concern about slowing global economy pared down expectations of interest rate hike.

On local economic front, inflation concerns started to ease from a 27-month high of 3.5% year-on-year (YoY) in June, with the recent surprise of 3.4% YoY for the month of July versus consensus forecast of +3.6%. Easing price pressure was mainly attributed to the slower transportation price increase, which rose by +4.8% YoY (June 2011: +5.8%), while clothing and footwear prices contracted by -0.5% after rising +0.3% in June 2011. Aside, 2Q11 Gross Domestic Product (GDP) growth moderated to +4.0% YoY, from an upward revised of +4.9% YoY in 1Q11. This was due to a moderation in consumer and business spending during the quarter, disruption of components supply to the automotive industry caused by Japan’s earthquake, as well as a production problem faced by a major oil field in Malaysia.

In contrast to MGS market, Private Debt Securities (PDS) market turned active during the week under review due to pent-up demand from the local investors as the long-awaited supply to come on stream was slower than expected. Trading share was led by the “AAA” segment and followed by the “AA” segment. Meanwhile, a banking paper contributed to the typically lethargic “A” market.

Fixed Income Outlook
Outlook for 2H11 remains challenging amid signs of faltering US economic recovery and threatening Europe debt crisis to escalate to larger core Eurozone nations. Following the renewed concerns, Bank Negara Malaysia (BNM) highlighted that the external crisis are affecting global confidence and Malaysia’s growth in 2011 may be closer to 5.0%.

With easing inflation and the global and domestic economic recovery likely to be weaker than earlier expectations, it is now less pressure for Bank Negara Malaysia (BNM) to raise interest rates. On this back drop, we opine that BNM may at most increase interest rate by 25bps this year, while continue to assess the evolving economic conditions and sustainability of growth momentum.

Given the above, coupled with record high foreign holdings, the MGS yield curve is expected to remain flat in the short-term. Meanwhile, we remain cautious on potential unwinding of positions from the foreign investors should currency theme taper off.

For corporate bond market, we remain positive on credit market given the pent-up demand and yield requirement built-up over the last few years. Despite of the earlier expectation of more new issuances to come on stream in 2011 on the back of mega infrastructure projects announced by the government, however the pipelines are showing otherwise. In addition, as long as corporate issuers are able to enjoy competitive cost of financing from the banking system, they will continue to opt for the conventional bank loans instead of coming to the bond market for their funding.

Fixed Income Strategy
We maintain our slight underweight call across all Fixed Income. In terms of asset allocation, focus remains on corporate bonds. We aim participate in new issuances for further diversification and yield enhancement.



Source for MGS levels: Bond Pricing Agency
Source: ING Funds Berhad

Malaysian Equity Continued to Outperform the Region, 14 - 20 August 2011 Review

Equity
The FBMKLCI rebounded at the beginning of the week, moving steadily above the 1,500 point psychological barrier before giving up all the gains on Friday due to the steep ~5% fall on Wall Street on Thursday. Analysts downgraded global growth due to fears of another double dip recession. Regional markets performed badly with MSCI Asia Ex Japan plummeting 2.8% week on week. Malaysia equity continued to outperform the region as the FBMKLCI was only down 1.3%. Average daily trading value for the week fell 38% to RM1.84 billion but still above the three month average of RM1.81 billion.

Equity Market Outlook
We believe domestic equity will continue to be under selling pressures which is in line with the regional movement. As the crisis is far from over, we see more downside risk at the moment but this risk will be mitigated by strong corporate results release in the coming week. And without any sharp falls on Wall Street, the Asian market should recover and buck the consolidation trend in European and US market. Technically, the market failed to convince the bull. The recent buying momentum was hammered by another round of massive sell down. This kept the price trend below the 200 SMA. We see the support at 1,460 points.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.



Source: ING Funds Berhad

KLCC Property Earnings Evaluation: Results in-line

24 August 2011
Price Target: RM3.46
Share price: RM3.18


Results
1QFY11 results was in-line with HLIB and consensus estimates. Reported earnings rose 5.8% yoy and 5.0% qoq to RM240.3m, making up 22.3% of our estimate and 24.7% of consensus.

Deviations
None.

Dividends
None.

Highlights
# Maiden earnings contribution from retail element of Lot C (aka Menara 3 PETRONAS). Topline and bottomline growth were driven by positive rental reversions from Suria KLCC and Kompleks Dayabumi, and better yields from Mandarin Oriental (reflecting improved occupancy rates and ancillary income from F&B operations).

# KLCC Property’s parent company, PETRONAS has also been officially confirmed to be the tenant for Menara 3 PETRONAS. We expect the office portion to make its maiden earnings contribution in 2012.

# The financial year end has now been changed to Dec; thus KLCC Property will be reporting 9 month’s results for FY12/11.

Risks
38% EPS dilution from RCULS conversion by the parent company, KLCC Holdings.

Forecasts
No changes.

Rating - HOLD
Positives
- High occupancy rates (>90%), consistently strong human traffic and desirable tenant profile due to prestigious and desirable KLCC address.
- Stability of rental yield and scope for capital appreciation.

Negatives
- Uncertainty over extent of dilutive impact from RCULS.

Valuation
# In the absence of major catalysts, we maintain our HOLD rating and target price of RM3.46 (15% discount to RNAV).

# The RCULS issue needs to be resolved before KLCC Property can enjoy re-rating.



Source: HLIB Research

AirAsia Earnings Evaluation/Briefing: Time to Take Off

24 August 2011
Price Target: RM4.50
Share price: RM3.62


Results
# In line – Reported 2Q11 core net profit of RM142.9m, in line with our expectations but slightly behind consensus. 1H11 core earnings was RM266.0m, achieved 36.0% of HLIB estimates and 31.5% of consensus.

# 1H is seasonally lower. Recall 1H10 was only 32.8% of FY10 core net profit.

Deviations
None.

Dividends
None.

Highlights
# 2Q11 passenger yield (ticket sales/RPK) sustained qoq but down 10.6% yoy to 13.9sen. However, it is likely to improve in 2H11 due to seasonally stronger demand and ease of price competition.

# 2Q11 average ancillary income per passenger was RM49.8, similar to 1Q11 of RM49.9.

# Thai AirAsia and Indonesia AirAsia continued to post positive earnings in 2Q11 despite higher jet fuel cost. Thai AirAsia had fully repaid its loan to AirAsia, while Indo AirAsia still owes RM239.4m.

# Philippines AirAsia is expected to commence operation by 4Q11 with 2 A320s, while Vietnam AirAsia to commence by 1Q12 and Japan AirAsia by March 2012.

# Installation of winglets/sharklets to AirAsia existing Airbus fleets by 2013, reducing fuel consumption by 2%.

# Improve in net gearing to 1.48x from 1.57x (1Q11).

# Jet fuel hedged at 26% for 2H11 at average of US$114/bbl. Fuel surcharge will be continued despite jet fuel price dropped back to US$125/bbl from US$140/bbl.

Risks
World crisis (ie. war, tourism and epidemic outbreak), delay in KLIA2 completion, prolong surge in jet fuel price and the development of high speed train between Singapore and Pulau Pinang.

Forecasts
Unchanged.

Rating - BUY
Positives
- Beneficiary of strong air traffic into Malaysia, inline with government initiatives to boost tourism sectors.
- Largest and lowest cost LCC in Southeast Asia with strong brand name.
- Re-rating catalysts via IPO exercises of AirAsia X, Thai AirAsia and Indonesia AirAsia.
- Strong ancillary income and introduction of fuel surcharge.
- Elimination of Firefly as LCC player

Negatives
- Surging jet fuel cost.

Valuation
Maintained Target Price at RM4.50 based on Sum-of-Parts.


Source: HLIB Research

Axiata Berhad: 1H11 Core Net Profit Rises 1%

24 August 2011
Price Target: RM5.60
Share Price: RM4.98


Results
# 1H11 reported core net profit of RM1,249m came in below expectations, accounting for only 41-42% of our and consensus full-year estimates.

# Declared interim NDPS of 4.0 sen, translating to a net yield of 0.8% and a payout ratio of 27% (based on 1H core net profit).

Deviations
# Lower-than-expected EBITDA margins at Celcom and XL; and

# Higher-than-expected effective tax rate (1H11 effective tax rate was 28.3% vis-à-vis 27.3% we assumed).

Highlights
# Guidance lowered. Management highlighted that its revenue and EBITDA growth targets in 2011 are challenging, given: (1) The challenging operating environment in Malaysia and Indonesia; and (2) The strong
RM that results in lower translated top and bottom lines. However, it remains confident in meeting its ROIC target (with associates: 12.6%; without associates: 16.5%) via more active capital management plan.

# Capex. Management raised capex guidance from RM3.3b to RM3.9bn, due mainly to XL’s accelerated network rollout for data.

# Service charge. Management mentioned that the industry players (including Celcom) are planning to pass down the 6% service charge to the consumers by 16 Sep 11, pending from approval from the MCMC.

Risks
- Regulatory risks (spectrum awards, re-farming and repricing, international interconnection, telco taxes);

- FOREX fluctuations & competitive risks.

Forecasts
Maintained for now, pending further review.

Rating - BUY (Target Price: RM5.60)
Positives
Despite the challenging environment, Axiata’s main businesses (Celcom, XL, Dialog) continue to execute well. The move to pay dividends would help to narrow its valuation gap against other Malaysian telcos over the longer term.

Negatives
Slower growth, regulatory risks and potential disruptions from competition.

Valuation
Our SOP-based target price is RM5.60. At current price, Axiata is trading at an estimated PER of 13.8x, 11.9x and 11.1x for FY11, FY12 and FY13 respectively. Net dividend yields of 2.0% would help to underpin its share price.



Source: HLIB Research

Tuesday, August 23, 2011

Dow Jones Daily: More Upside If Mid Bollinger Band Is Violated, 24-08-2011

Wall Street Recap: Dow Jones rallies 3% on stimulus speculation
Despite the weaker-than-estimated economic data from July new home sales and Richmond Fed manufacturing index, Dow surged 3% or 322 points to 11177.

The disappointing reports served to ramp up expectations of another round of stimulus package by the Fed, with Bernanke speaking at a gathering in Jackson Hole this Friday.

Technically, the inverted hammer (22 Aug) and Marubozu (23 Aug) candles formation as well as bottoming up in indicators could see the saucer-shaped rebound towards 11436 (mid Bollinger band) and 11989 (200-d SMA) levels.

Dow Jones Daily: More Upside If Mid Bollinger Band Is Violated
DowJones24-08-2011



Source: StockCharts.com

FBM KLCI Relief Rally Targets At 1510-1530

Bursa Recap: KLCI jumps 10.2 points amid strong regional performance
Regional markets rallied amid better-than-expected HSBC China’s manufacturing PMI for August and optimism the Fed may take steps to boost the U.S. economy.

Tracking the strong regional rallies, FBM KLCI jumped 10.2 pts or 0.7%, driven by gains in IOICORP (+19 sen to RM4.64), GENTING (+19 sen to RM9.70), PBBANK (+12 sen to RM13.02), MISC (+20 sen to RM7.28) and MAYBANK (+6 sen to RM8.70). Trading volume and valued rose 3% and 5% respectively to 876 million shares worth RM1.76 billion.

FBM KLCI Outlook: Upside likely cap at 1530 points
In the wake of the robust 3% rally on Dow overnight, we could witness similar strength on regional markets and Bursa Malaysia today.

However, we would like to caution investors that current rebound could be disappointed if Bernanke speech this Friday fails to live up to market expectations for stimulus measures. Moreover, the long holiday week ahead could prompt quick profit taking given the volatile DM.

As such, we advocate investors to capitalize on any rallies to trim their position. Alternatively, for risk-takers, adopt a short term trading oriented approach to take profit into any rebound. Please refer to TABLE A for potential technical rebound plays.

Immediate resistance levels are 1500-1530. Key support levels are 1470 (the neckline support before 9 Aug’s rout) and 1466 (76.4% FR). A breakdown below 1466 will trigger more downside risks towards 1452 (lower Bollinger band).

Daily KLCI Upside Likely To Cap At 1530 Points
FBM KLCI 24-08-2011



Source: HLeBroking

Monday, August 22, 2011

Weekly Dow Jones Is Likely To Find Strong Supports Near 10000-10383 Amid Oversold Indicators, 22-08-2011

Wall Street Recap: Dow Jones skids 1.6% last Friday to end -4% wow
Dow Jones stretched losses into a fourth week, as apprehensive investors remained on alert for any sign of trouble or resolution from the European Union and its banks.

After climbing as much as 120 points during Friday’s session, the Dow tumbled 173 points to 10,818. Investors already reeling from big losses in growth stocks were thumped by a dismal outlook from Hewlett-Packard, which nosedived nearly 20%, its worst day since the stock-market crash of 1987.

Wall Street outlook:Dow Jones: Likely to build a base around 10000-10300 levels.
As cautioned earlier, the Dow Jones closing at 10818 (below our envisaged 61.8% FR or 10860 support) last Friday has heightened more downside risks to retest recent low of 10604 and the next 76.4% FR support at 10383, before heading towards the 10000 psychological mark.

We believe the Dow is likely to defend the 10000 points and begin its base building activities amid extremely oversold positions as weekly RSI will then be approaching 3-year low of around 13 (recorded in Oct 08) from 31 now.

Weekly Dow Jones Is Likely To Find Strong Supports Near 10000-10383 Amid Oversold Indicators
DowJones22-08-2011



Source: StockCharts.com

Sunday, August 21, 2011

Profit Warning for Tenaga

22 August 2011
Price Target: RM6.52
Share price: RM5.55


News
# Tenaga has issued profit warnings on the potential lower earnings for FYE08/11 as compared to the consensus’ RM1.4bn net profits. For 9MFY11, it reported core net profit of RM813m.

# Tenaga has been suffering from gas curtailment since March 2011 due to Petronas scheduled maintenance up to Jan 2012. However, Tenaga was expecting improved gas supply post its 3QFY11 (March-May 2011).

# During the gas curtailment period, Tenaga has to source for energy from alternative fuels power generation (i.e. distillate and oil), which cost 5-6x higher than gas power generation.

# According to CEO, Datuk Seri Che Khalib Mohamad Noh, Tenaga incurred additional fuel cost of RM400m/month for the past few months. The additional cost continued to affect Tenaga’s cash flow.

# Following the profit warning, Datuk Che Khalib also pointed out potential lower dividend payout for FYE08/11 due to cash flow constraint. Tenaga has a dividend payout policy of 60% of its free cash flow.

Financial Impact
None, as we have already projected the lower earnings with a forecast of RM1bn for FY08/11 (29% below consensus).

Pros/Cons
# We expect the shortage of gas supply for 4QFY11 to fare better as compare to 3QFY11, as Tenaga has ended the power purchase agreement with Power Seraya (Singapore) since June.

# Despite higher overall unit cost, Tenaga will partly recover the additional cost after the implementation of higher tariff rate since 1st June 2011.

# The fast-tracking of re-gasification project in Melaka, will ensure adequate gas supply for Tenaga power generation by mid 2012.

Risks
- Continued disruption in gas supply.
- Government delay tariff revision.

Forecasts
Unchanged.

Rating - BUY
Positives
- Economic growth driving power demand.
- Implementation of FCPT mechanism.

Negatives
- High commitment on IPPs payments.
- Utilization of coal-fired power plants have reach limit.
- Decision on tariff revisions depends on the government.
- Short term gas curtailment.

Valuation
Despite earnings unchanged, we have lowered our target price to RM6.52 (based on DCFE for FY08/12) to account for higher risk premium. However, since the share price has plunged below our new target price, we upgraded Tenaga to BUY.



Source: HLIB Research

KLCI Has More Downside Consolidation Amid External Woes And Long Holidays Next Week

Bursa Recap: KLCI down 1.3% amid overnight 3.7% plunge on Dow Jones
Regional bourses slumped, led by losses at KOSPI (-6.2%), TWSE (-3.6%), STI (-3.2%) and HSI (-3.1%) amid Dow Jones’ overnight 3.7% plunge on double dip recession fears and the continued credit crisis at European markets.

Tracking the miserable regional markets, KLCI slipped 19.3 points to 1484, off intraday low of 1477.7 (-25.6 points). With the hefty losses, KLCI only managed a 0.02% gain wow.

FBM KLCI Outlook: Crucial supports at 1443-1466 points
In the wake of bleak U.S. data, sovereign debt concerns and worries over the health of banks in Europe, we reiterate our cautious stance on Bursa Malaysia since spotting a “dead cross” of the 20-d SMA below the 50-d SMA coupled with the breakdown below 200-d SMA (now at 1530 points) in early August, which usually indicate a bearish-cycle and threatens to open the window for a prolong downtrend.

Indicators are weak, implying the local bourse may drift lower in quiet trading ahead of the long holidays next week. As such, we only advocate investors to stay defensive or sidelines.

Alternatively, for risk-takers, adopt a short term trading oriented approach to buy on sharp falls in share prices and sell into any rebound. Immediate resistance levels are 1500-1530.

Key support levels are 1470 (the neckline support before 9 Aug’s rout) and 1466 (50% FR). A breakdown below 1466 will trigger more downside risks towards 1423-1443 zones.

Daily KLCI: Immediate Term Support Is Near The Lower Bollinger Band To Prevent Further Slump Towards 1423 Points Again
FBM KLCI 22-08-2011

Weekly KLCI: Medium Term Support Is Near The 100-Days SMA Around 1410 Points To Prevent Further Selldown To 61.8%FR Or 120-Days SMA Around 1368 Points
FBM KLCI 22-08-2011a



Source: HLeBroking

Thursday, August 18, 2011

Signs Of Bottoming Up For Dow Jones With Relief Rally Targets At 11555-11740 Points

Wall Street Recap: Dow Jones ends flat after a roller coaster ride
Despite dissatisfaction over efforts to find a solution to Europe's debt woes, Dow jumped as much as 124 points to 11530 (within our envisaged relief rally targets 11555-11740 points), helped by a handful of positive retail earnings by Staple and Target as well as defensive stocks in telecommunications, utilities and consumer staples, a sign of people looking for yield and safety.

However, Dow Jones experienced a volatile session as the index tumbled from +124 points to as low as 11322 (-84 points) before ending flat at 11410 (+4 points), as investors weighed against a bleak guidance by DELL, signs of rising PPI report and two Fed’s officials expressed concern about the amount of stimulus being applied to the economy.

Dow Jones: Signs Of Bottoming Up With Relief Rally Targets At 11555-11740 Points
DowJones18-08-2011



Source: StockCharts.com

Wednesday, August 17, 2011

More Sideways Consolidationn For FBM KLCI

Bursa Recap: KLCI up 4.8 points to close above 1500 mark
Regional markets ended mixed amid macroeconomic woes. Sentiment was also dampened after German Chancellor Angela Merkel and French President Nicolas Sarkozy Tuesday rejected issuing euro-zone bonds and proposed a new financial-transaction tax to remedy the region’s sovereign debt woes, adding risks of an eventual euro-zone break-up.

FBM KLCI index gained 4.8 points or 0.3%, led by bargain hunting on index-linked stocks. Market breadth was positive with 453 gainers as compared to 255 losers but trading volume decreased to 893 million shares worth RM1.6 billion against Tuesday’s 1.29 billion shares worth RM1.97 billion, as sentiment remained cautious on external headwinds and ahead of local 2QGDP announcement.

Post market, BNM announced a better-than-expected 2Q11 GDP of 4% (consensus: 3.8%; 1Q11: 4.9%).

FBM KLCI Outlook: More sideways consolidation
For KLCI, the 200-d SMA (now at 1531 points) remains a tough resistance during this Aug reporting season, and ahead of a long holiday week in end Aug (due to Hari Raya and Merdeka day).

We remain cautious and will only turn bullish if the KLCI is able to surpass the 200-d SMA and downtrend line resistance (near 1535) levels on high volume. Relief rally targets are 1510 (50% FR) to 1535 points. Support levels are 1470, 1464 (76.4% FR) and 1450 points.

Daily KLCI Strong Upside Resistance Near 1530-1535 Levels
FBM KLCI 18-08-2011



Source: HLeBroking

Volatile Local Equity Market, 7 - 13 August 2011 Review

Equity
The local equity market was extremely volatile as the Wall Street crashed 6% after S&P downgrades its AAA rating to AA+ for the first time since World War 1. Subsequently, it rebounded sharply on the flowing day (Tuesday) but endured another round of massive selling on Wednesday. The trend started to stabilize since then, but the recovery remained choppy. For the week, the FBM KCLI plunged 4.6% or 40.8 points to close at 1,483 points. It managed to outperform the regional as the MSCI Asia Ex Japan fell 9.3%. Average daily trading value for the week jumped 50% to RM2.98bn, which was 67% above the three-month average of RM1.79bn.

Equity Market Outlook
We continue to believe the market is going to end the year with a positive note. We remain bullish on the market due to the ongoing economic and political reform. For the coming week, we expect the market continue to trend up as the market stabilize. We see more value in the market versus one month and start to position for the year end rally.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.




Source: ING Funds Berhad

Global Market Weekly Review, 7 - 13 August 2011

UK manufacturing unexpectedly fell in June and the trade gap widened, adding to evidence that the economic recovery is faltering. Factory output declined 0.4% from the previous month, when it rose 1.8%. The median forecast of 24 economists in a survey was for a 0.2% gain. The goods trade gap widened as falling exports outpaced a drop in imports.

Singapore cut its forecast for export growth this year as a struggling US economy and Europe’s debt crisis threaten overseas sales, valued at more than half of the island’s gross domestic product. Gross domestic product fell an annualized 6.5% in the second quarter from the previous three months, compared with a preliminary estimate of 7.8%.

Claims for US unemployment benefits unexpectedly dropped last week to a four month low, signaling the job market was being hampered by a lack of hiring rather than more firings. The number of applications for unemployment insurance payments fell 7,000 in the week ended 6-Aug-2011 to 395,000, the fewest since early April. The median forecast of 48 economists projected claims would increase to 405,000. The Labor Department revised the prior week’s figure to 402,000 from the initially reported 400,000.

The US trade deficit unexpectedly increased in June to the highest level since October 2008 as a slump in exports exceeded a decline in shipments from overseas. The gap widened 4.4% to US$53.1bn from US$50.8bn in the prior month. The deficit exceeded all estimates in a News survey of economists in which the median was US$48bn. The May shortfall was revised from a previously reported US$50.2bn. US exports decreased by 2.3% to US$170.9bn as shipments of goods declined more than services. Imports dropped by 0.8% to US$223.9bn in June.


Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 7 - 13 August 2011

Fixed Income
Malaysian Government Securities (MGS) momentum remained strong and continued to be driven by safe-haven flows, sparked by renewed concerns over bleak outlook for US economic growth and the European credit crisis. Strong buying was evident at the mid and long-tenured MGS, with the 5-year and 10-year Government Investment Issue (GII) leading the trading share. As an alternative to the pricier MGS, the 5- and 10-year GII rallied with yields pushed lower by 6 basis points (bps) to close on Friday at 3.45% and 3.80% respectively. Consequently, the 7-year and 10-year benchmark MGS yields 6bps to 3.54% and 3.66% respectively. Meanwhile, the 3-year benchmark MGS yield fell 1 basis point (bp) to 3.17%. In contrast, the 5-year benchmark MGS climbed 1bp to 3.40%.

On the local economic front, Industrial Production Index (IPI) increased by 1.0% year-on-year (YoY) in Jun 2011, after a contraction of a revised -5.6% in May 2011. The first rebound in two consecutive months of decline was due to higher growth in manufacturing output at 4.5% YoY (1.4% YoY in May 2011) and a rebound in electricity production at 3.6% YoY (-0.2% in May 2011). Despite the rebound, activities slipped into a contraction of 1.6% YoY in 2Q11 after moderating to +2.4% in 1Q11, which caused consensus to slightly downgrade Malaysia’s Gross Domestic Product (GDP) forecast for 2011.

As investors were mainly focused on MGS, the Private Debt Securities (PDS) market retreated during the week under review with continued interests seen on Government-Guaranteed (GG) as well as high-grade banking papers.

Fixed Income Outlook
Outlook for 2H 2011 is challenging amid multiple concerns on the external fronts, namely the signs of faltering US economic recovery, potential fallout from the Eurozone debt crisis and the downside risks from aggressive monetary policy tightening in large emerging economies. However, on local macroeconomics, the latest data release on June export growth beat market expectations and hence, we continue to expect the growth momentum for domestic economy to remain sustainable driven not only by the strong commodity exports, but also the private investment and domestic consumption on the back of gradual implementation of the Economic Transformation Programme (ETP) and low unemployment rate of 3%.

Given the above, emerging market bonds could benefit from the global headwinds, explaining the surge in foreign holdings of government bonds in Malaysia and elsewhere in the region since 2009 as they search for yield pickup opportunities. However, the record high holding by the offshore investors do present risks should the reverse occurs. In the short run, MGS yield curve should continue to flatten as market prices in further rate hike, pushing short-end yields higher while long-end continues to be supported given the constant demand from pension funds and insurance portfolios. Having said that, yield curve should steepen along the long-end of the curve once BNM is done with interest rate normalization in the medium-term. Nonetheless, we reckon significant steepening is unlikely based on the market flows stated above.

On interest rate stance, we reiterate our view that Bank Negara Malaysia will likely resume overnight policy rate (OPR) increase by another 25-50bps in the next 12 months with timing subject to the central bank’s assessment on evolving economic conditions and to the extent that the growth momentum is sustained.

Fixed Income Strategy
We maintain our slight underweight call across all Fixed Income. In terms of asset allocation, focus remains on corporate bonds. We aim participate in new issuances for further diversification and yield enhancement.



Source for MGS levels: Bond Pricing Agency
Source: ING Funds Berhad

Dow Jones Down 77 Points From As Much As -190 Points Intraday, 17-08-2011

Wall Street Recap: Dow Jones down 77 points from as much as -190 points intraday
The Dow Jones tumbled as much as 190 points following the weaker-than-expected
2Q11 Eurozone growth at 0.2% (consensus: 0.3%), as well as disappointment that German and French leaders proposed a financial-transaction tax and rejected selling euro bonds to halt a debt crisis threatening economic growth.

However, the losses were pared down to 77 points at 11409, spurred by positive newsflow from Fitch affirmation of AAA credit rating for U.S. and better-than-expected July housing starts and industrial productions reports

Despite a 0.7% profit taking retracement, overall technical readings remain positive for further rebound towards our envisaged relief rally targets at 11555 and 11740 (50% FR).

Dow Jones Daily: Positive Technicals Still Bode Well For Further Upside Towards Relief Rally Targets Near 11555-11740 Points
DowJones17-08-2011



Source: StockCharts.com

Tuesday, August 16, 2011

Plantation Stock: Kuala Lumpur Kepong: 9MFY11 Core Rises 67%

17 August 2011
Price Target: RM24.91
Share Price: RM21.10


Results
9MFY11 core net profit of RM1,111.3m came in within our expectation at 76.3% of our full-year forecast. Against the market consensus, the results accounted for 78.3% of the full-year market estimates.

Deviations
None.

Dividends
None.

Highlights
9MFY11 core net profit rose by 66.6% to RM1,111.3m due to higher earnings contributions from both the plantation and manufacturing divisions that more than offset:
(1) Lower contributions at the retailing and property development divisions and associates; and
(2) Higher finance costs.

On a qoq basis, 3QFY11 core net profit rose by 20.7% to RM389.4m on the back of stronger earnings contributions from the plantation division that more than offset: (1) Lower earnings contributions at the manufacturing, retailing, and property development divisions;
(2) Lower associate earnings; and
(3) Higher finance costs.

Risks - Downside risks
1) Sharp plunge in CPO prices;
2) Worse-than-expected weather condition that will result in lower-than-expected
FFB yield;
3) Escalating production cost, in particular, labour costs; and
4) Labour shortage.

Forecasts
Maintained.

Rating - BUY
Positives
1) High CPO prices; 2) Rising rubber prices; and 3) Maturing tree profile.

Negatives
Illiquid trading volume

Valuation
Target Price maintained at RM24.91 based on unchanged 18.5x CY2012 EPS of 134.7 sen.


Source: HLIB Research

KLCI's Major Hurdles Remain At 1510-1530 Points

Bursa Recap: KLCI eases 1.5 points
After climbing as high as 10.8 points to 1510.5 (near 50% FR resistance), the FBM KLCI ended 1.5 points lower to 1498.2, in line with the profit taking activities at most key regional markets. To recap, since plunging to Aug’s lows (i.e. 10-27% correction from 52-wk high), profit taking activities is not unusual as Dow Jones and
key regional markets had rebounded 2-10% from their recent troughs.

Overall, global stock markets are still swinging widely as concerns of the global economic conditions overshadowed the overnight Google deal with Motorola that had lifted the markets in early sessions.

Stagnant growth in Europe's powerhouse Germany of 0.1% in April-June (consensus: 0.5%) hit the euro, adding to investor fears that the world economy is slowing more than expected as well as ahead of French-German talks on the euro zone's worsening debt crisis.

FBM KLCI Outlook: Major resistance at 1510-1530 levels
Following last week’s massive selldown, Dow Jones and most of the key regional bourses are trapped in bearish territory after falling below the long term support of 200-d SMA (within -2% to -15%), except Indonesia and Thailand (please refer to Table A). We believe most of the key bourses are likely to stay below the 200-d SMA for a while given current sluggish economic outlook.

For KLCI, the 200-d SMA remains a tough resistance during this Aug reporting season, as well as ahead of a long holiday week in end Aug and first week of September (due to Hari Raya and Merdeka day).

Overall, we remain cautious and will only turn bullish if the KLCI is able to penetrate the 200-d SMA (1531 points now) level on high volume. Relief rally targets are 1510 (50% FR), 1531 and 1535 (strong downtrend line resistance). Support levels are 1470, 1464 (76.4% FR) and 1450 points.

Daily KLCI Upside Heavy With The Formation Of Shooting Star Candle And A Breakdown Below 10-D SMA
FBM KLCI 17-08-2011


Source: HLeBroking

AMMB Holdings: Boosted By Trading Gains & Lower Provision

16 August 2011
Price Target: RM7.71
Share price: RM6.48


Results
1QFY12 net profit of RM441.5m (+39.6%% qoq; +19.9% yoy) was above expectations, accounted for 29% and 28.5% of HLIB and consensus forecasts respectively.

Deviations
Higher-than-expected gains from sale of securities (mainly AFS and also from HFT) and lower-than-expected provision (mainly from write back of Individual Allowance and higher recovery).

Dividend
None for the quarter.

Highlights
# Management indicated that the gains on sale of securities are unlikely to be repeated while 1QFY12 low credit charge of 39bps (annualized) should normalize to circa 55-60bps for FY12.

# FY12-14 KPIs remained unchanged.

# Net profit recorded double-digit expansion mainly due to the profit from sale of securities and lower provision which more than offset the significant reduction in NIM and rise in overheads (mainly from higher salary for unionized staff and higher headcounts).

# Loans growth was lower than industry average and mainly driven by SME and corporate, in accordance with its objective given the irrational pricing in certain segments of retail business.

# Deposit growth was stronger than loans growth and ahead of industry average.

# Asset quality continued to improve and capital ratios well positioned for Basel III and its dividend policy of 40%.

Risks
Unexpected jump in impaired loans, lower than expected loan growth and impact from Basel III on capital.

Forecasts
Unchanged in view of lower trading profits and higher credit charge ahead while management also indicated that 1QFY12 ROE of 16.8% ROE is expected to normalize to within its KPI range of 14-16% over FY12-14 (vs. HLIB’s projected KPI of 14.1% for FY12)

Rating - BUY
Positives
Value propositions from ANZ have improved asset quality, risk management and competitiveness. Improving profitability and higher dividend guidance as well as focus on profitable growth are bearing fruits.

Negatives
Impact on interest income from rising interest rate albeit marginal while profits from AFS and HFT book boosted earnings, interest income in the future will also be reduced.

Valuation
Target price maintained at RM7.71 based on Gordon Growth (ROE of 14.2% and WACC of 9.5%).



Source: HLIB Research

Bullish Technicals For Dow Jones To Drive The Relief Rally Towards 11740 Points, 16-08-2011

Wall Street Recap: Dow Jones rises 214 points amid M&A deals
The Dow Jones surged 1.9% or 214 points to 11483, fueled by a handful of M&A news (e,g, Google to buy Motorola Mobility for US$12.5bn and Bank Of America to sell its card business in Canada to TD Bank Group for US$8.6bn), shrugged off the sluggish Aug New York Empire State manufacturing index at -7.7 (Jul: -3.8). Sentiment was also boosted ahead of the highly anticipated meeting between by German Chancellor Angela Merkel and French President Nicolas Sarkozy today.

Current bullish technicals are likely to spur index higher towards our envisaged relief rally targets 11740 (50% FR) and 11993 (200-d SMA).

Dow Jones Daily: Bullish Technicals To Drive The Relief Rally Towards 11740 Points
DowJones16-08-2011



Source: StockCharts.com

KLCI: 200-day SMA (1531) Next Major Hurdle

Bursa Recap: KLCI up 16 points in line with rallies in regional markets
Regional markets rebounded further amid bargain hunting activities, as sentiment was boosted by better GDP data from Japan in the Apr-June quarter as well as positive expectation of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy today to discuss the ongoing euro zone debt crisis.

The FBM KLCI surged 1.1% or 16.1 points to close at 1,499.74.

FBM KLCI Outlook: Major resistance at 200-d SMA near 1531 points
Continuous strong relief rally from Wall St overnight should drive the FBM KLCI above the 1500 psychological level and to retest the long term resistance at 200-d SMA (now at 1531 points). Although KLCI had rebounded 5.4% from last week’s trough, it is still highly susceptible to external headline news and volatility, especially ahead of a long holiday week in end Aug and first week of September (due to Hari Raya and Merdeka day).

Overall, we remain cautious and will only turn bullish if the KLCI is able to penetrate the 200-d SMA (1531 points now) level on high volume. Relief rally targets are 1510 (50% FR), 1531 and 1535 (strong downtrend line resistance). Support levels are 1470, 1464 (76.4% FR) and 1450 points.

Daily KLCI: Relief Rally Targets At 1500-1530 Levels
FBM KLCI 16-08-2011



Source: HLeBroking

Sunday, August 14, 2011

DJIA: Signs Of Bottoming Up With Relief Rally Targets At 11555-11740 Points, 15-08-2011

Wall Street Recap:Dow Jones jumps 126 points to record two straight gains
Despite sluggish Aug consumer sentiment at 54.9 (July: 63.7), the Dow Jones ended 126 points higher amid improving July retail sales of 0.5% (June: 0.3%) and rallies in European markets after a short-selling ban on financial shares by France, Italy, Spain and Belgium.

After plunging 18% from 52-wk high of 12928 to 10604 points last Tuesday, Dow Jones had rebounded 6.6% to 11269 but still recorded a 1.5% weekly decline.

Dow Jones Daily Shows Signs Of Bottoming Up With Relief Rally Targets At 11555-11740 Points
DowJones15-08-2011



Source: StockCharts.com

AirAsia: Medium Term Uptrend Remains Intact

Stock to watch – AIRASIA (TRADING BUY)

In the wake of the share swap deal announcement (AIRASIAMAS-KHAZANAH), AIRASIA was suspended on 8 & 9 August. Upon the re-quotation on 10 August, AirAsia tumbled from 52-wk high of RM4.20 on 4 August to as low as RM3.32 on 11 August, as share prices catch-up with the huge selldown on the global markets.

Investors are also concerned that Tune Air’s stake in AirAsia been substantially reduced from 23% to 13% and that MAS will drain too much of Tony’s time and energy. To dispel the worries, Tony clarified that he will be purely directors who will “give ideas and share thoughts” and MAS will be run by an appointed CEO and his management team.

Following the breakdown of its mid-Bollinger band (RM3.75), 10-d (RM3.86) and 30-d (RM3.67) SMAs supports, AIRASIA near term technical outlook has turned negative. Nevertheless, we are relieved that the long term uptrend line (RM3.15) and lower
Bollinger band (RM3.30) supports remain intact, and coupled with oversold indicators and an uptick in Money Flow Index, a technical rebound is in the pipeline this week. Immediate resistance levels are RM3.67 and RM3.86. Supports are RM3.30 and RM3.15. Cut loss below RM3.15.

Daily AirAsia: Medium Term Uptrend Remains Intact Despite Near Term Consolidation
AirAsia15-08-2011



Source: HLIB Research

SP Setia: Overweight: Acquires Land In Beranang

August 15, 2011
Price Target: RM4.12
Share price: RM3.85


News
# SP Setia entered into an agreement with Ban Guan Hin Realty to acquire 1,010.5 acres of freehold land in Beranang, Daerah Ulu Langat, Negeri Selangor for RM330m, or RM7.50 psf. The land is situation between the towns of Semenyih, Bangi Old Town and Beranang, and is approximately 19km from the proposed Bandar Kajang MRT station on the Sungai Buloh-Kajang line.

# The acquisition is slated for completion by 1H FY12, and SP Setia intends to develop a mixed residential township with RM3.5bn of GDV.

Financial impact
# We do not expect any significant impact for FY11-13, as the group’s focus will be on key projects including KL Eco City, Setia Alam / Eco Park, Setia Sky Residences and Fulton Lane in Melbourne.

# We estimated a modest impact on net gearing (from 0.3x to 0.4x) arising from this land acquisition.

Pros / Cons
# We believe that the acquisition price of RM7.50 is fair, given that Sunway City’s cost for its land in Semenyih was RM5.46 psf (acquired in 1996).

# We believe Allows SP Setia to replicate its successful township concept in Setia Alam in the emerging Kajang market, and to position itself for the proposed MRT line over the longer term.

Risks
Slowdown in sales; escalation in construction and raw material costs; delays in launches.

Forecasts
# Due to lack of clarity on key details such as exact product mix, expected completion date or project margins, we make no change to our earnings forecast
or RNAV-based price target for SP Setia.

# Maintain 15-28% earnings growth for FY11-13, supported by RM3.46bn of unbilled sales (2.3x FY10 property revenue); uptick in sales from Setia Alam and Eco Park with the opening of Setia City Mall in May 2012; continued growth in sales from Johor townships.

Rating - Maintain Hold
Positives
highly liquid proxy to property sector, strong product concepts and pipeline; consistent dividends.

Negatives
Trading at only 16% discount to RNAV;(our top sector picks: UMLand trades at 67% discount to RNAV; KSL 46%).

Valuation
Trades at industry-leading 23.7x P/E with limited upside; maintain HOLD.



Source: HLIB Research

FBM KLCI Shows Signs Of Stability Return

Bursa Recap: KLCI up 7.21 in line with overnight Dow Jones’ 4% surge
Tracking the overnight 4% surge on Dow Jnes and higher regional markets, FBM KLCI gained 7.2 points or 0.5% to 1483.7.

After plunging 11% from 52-wk high of 1597 to 1413 points last Tuesday, FBM KLCI had rebounded 4.2% to 1483.7 but still down 2.7% or 40.8 points wow, sparked by worries of a double dip recession in the US, the S&P downgrade, a higher-than-expected inflation data from China and the Europe debt crisis.

FBM KLCI Outlook: Major resistance at 1500-1530 levels
Bursa Malaysia experienced massive panic selling in the early part of last week but selling forces gradually tapered off and bottomed up in the latter part, in tandem with Wall Street and regional bourses.

Although the local bourse rebounded 4.2% from last week’s low, it is highly susceptible to external headline news and volatility as investors are adrift in a sea of conflicting data and emotions, especially ahead of a long holiday week in end Aug. Overall, we remain cautious and will only turn bullish if the KLCI is able to
penetrate the 200-d SMA (1530 points) level on high volume.

Relief rally targets are 1500, 1510 (50% FR) and 1530. Strong downtrend line resistance is situated near 1537 (mid Bollinger band). Support levels are 1470, 1464 (76.4% FR) and 1450 points.

Daily KLCI Relief Rally Targets At 1500-1530 Levels
FBM KLCI 15-08-2011



Source: HLeBroking

Friday, August 12, 2011

Dow Jones: Signs Of Bottoming Up With Relief Rally Targets At 11555-11740, 12-08-2011

Wall Street Recap: Dow Jones soars 423 points after rallying as much as 559 points
Following the 4.6% carnage on 10 Aug, the Dow Jones rebounded 4% to 11143 points, following declining weekly jobless claims and better-than-expected earnings from Cisco and News Corp.

Sentiment also improved on higher European markets after news that French President and German Chancellor will meet next Tuesday to discuss the euro zone governance and other international issues, coupled with France, Spain, Italy and Belgium ban on short-selling effective today.

Daily Dow Jones Shows Signs Of Bottoming Up With Relief Rally Targets At 11555-11740 Levels
DowJones12-08-2011



Source: StockCharts.com

Thursday, August 11, 2011

FBM KLCI Relief Rally Target At 1500-1530 Levels

Bursa Recap: KLCI down 4.1 points after tumbling as much as 26 points
Asian markets pared down their early losses with SHCOMP (+1.3%) and KOSPI (+0.6%) turned positive, amid the fallout from fears over Europe's worsening financial crisis and Dow Jones’ 4.6% plunge on 10 Aug.

KLCI also lost 4.1 points in volatile trade as the index fluctuated between 1454 (-26 points) and 1479.4 (-1.1-pt) as investors remained reluctant to place long-term bets on concerns about the US economic slowdown and Europe sovereign debt crisis.

FBM KLCI Outlook: Relief rally targets at 1500-1530 levels
Despite the 4.6% Dow Jones’ plunge on 10 Aug, regional markets did not react overwhelmingly with most of them only ended slightly lower. In the near term, markets are likely to remain volatility.

However, some semblance of stability regained yesterday after recent routs, as the markets have probably discounted a fair bit of the adverse developments in US and Europe. Bursa Malaysia’s panic selling climax is probably over after 9 Aug’s tough of 1423 points (slightly above our envisaged 1413 support i.e. 50% FR from 1597 and 1230) before ending at 1476.5 points yesterday.

Overall, we remain neutral on the market as the KLCI is still able to close above the 1470 points, which is key YTD neckline support before the 9 Aug’s nightmare. We will only turn bullish again if the KLCI is able to maintain its posture above the 200-d SMA (1530 points). Relief rally targets are 1500, 1510 (50% FR) and 1530. Immediate supports are 1450-1470 points.

FBM KLCI Is Base Building Stage
FBM KLCI 12-08-2011



Source: HLeBroking

Wednesday, August 10, 2011

Global Emerging Market Equities - 3 Key Themes

While emerging market equities have not fared well in 1H 2011, we continue to see various tailwinds for emerging market equities in the form of cheap valuations, strong growth potential and positive market dynamics.

Key Points:
* On a year-to-date basis, EM equities have underperformed their developed market counterparts.

* Current concerns weighing on EM equities include inflationary concerns, weak corporate governance, and global economic concerns.

* While such risks are not to be ignored, they do not detract from the long-term structural growth story of emerging markets.

* Our bullish case for emerging markets rides on three main themes:
o Strong, sustainable earnings growth, riding on the underlying growth potential of developing economies.
o Positive market dynamics, primarily on the basis of strong capital inflows.
o Low valuations, both on a historical basis, as well as when compared with developed market peers.

Underperformance Year-To-Date
Emerging market (EM) equities had a relatively poor first half in 2011, with the EM equity benchmark (MSCI Emerging Markets) declining 2.3% on a year-to-date basis (in MYR terms on a total return basis, as of 5 August 2011). This compares favourably with the 8.5% decline of the broad MSCI AC World index, or the US-centric S&P 500 which declined 6.0% over the same period.

Global Emerging Market Year-To-Date Performance

As shown in Chart 1, weakness in Latin American equities weighed on the overall performance of EM equities, with the Latin American benchmark index declining 11.9% year-to-date. Within the EM equity space, Asia ex-Japan was the best-performing region, declining 2.4%.

VARIOUS CONCERNS WEIGHING ON EMERGING MARKET STOCKS, BUT ISSUES APPEAR TRANSITORY

Inflation
Inflation has been a central theme for much of 2011 so far, and there are concerns that rapid policy tightening in response to inflationary pressures could hurt economic growth in the region. While inflation is a well-known problem associated with fast-growing emerging market economies, current inflationary pressure appears to stem mainly from elevated commodity prices rather than the typical demand-driven factors which often culminate in the “overheating” of the economy. Commodity prices have since come off their April 2011 highs, which could ease some of the inflationary pressure going forward.

Also, given that traditional monetary policy measures have more of an impact on demand-push inflation, rate hikes by EM central banks may be viewed as more of a normalisation of monetary policy, rather than an outright attempt to quell growth in the region. Few EM central banks have hiked their policy rates back to levels seen prior to the 2008-2009 global financial crisis (while elevated at 12.5%, Brazil’s Selic Target Rate is still lower than the 13.75% seen in 2008) resulting in relatively loose monetary conditions, and we see little risk in a sudden slowdown in EM economies as a result of policy tightening.

Global Issues Appear Transitory
In addition to heightened inflationary concerns, the weakness in EM equities this year also stems from various other issues, like weak economic growth and sovereign debt issues in the developed economies, supply-chain disruptions resulting from the Japanese earthquake, as well as corporate governance issues, particularly in the case of China corporations. While these risks are not to be scoffed at, they appear largely transitory in nature and do not detract from the long-term structural growth story of emerging markets. Just as importantly, these problems generally do not have a direct impact on EM equity markets. Rather, the issues have suppressed investor risk appetite, which has translated to weak stock price performance.

THEME 1: GROWTH
“Growth” is a central theme for EM investing, but what is often considered a cliché sometimes gets forgotten in a period of weak investor sentiment, and is worth reiterating here. We view emerging markets as having superior economic growth potential vis-à-vis developed economies, with favourable demographics and urbanisation trends supporting growth. As shown in Chart 2, economic growth in emerging and developing economies is expected to be sustained above 6% over the next five years, with a 6.6% compounded annual growth rate which is substantially stronger than the 2.5% annual growth rate forecasted for advanced economies.

Quicker Pace Of Global Emerging Market Economic Growth

A quicker pace of economic growth flows through to corporate revenues and profits, translating to a higher sustainable rate of earnings growth, which we consider a crucial input for the determination of stock market returns. Chart 2 clearly highlights this phenomenon, with earnings of EM equities expected to post a 14.1% compounded annual growth rate from 2000 to 2012, more than twice the 7% growth rate for global equities on the whole. Thus, assuming no changes in market valuations, EM equities should be expected to post returns commensurate with their superior rate of earnings growth.

Superior Growth Of Global Emerging Market Earnings

THEME 2: POSITIVE MARKET DYNAMICS

Widening Interest Rate (And Growth) Gap

In the current market environment, various problems have created a “two-speed” global economy which has left interest rates at extremely low levels in developed economies and at more moderate levels in emerging economies. Capital tends to flow to assets where higher returns can be achieved, and with an interest rate gap opening up between emerging markets and developed markets, capital will have the tendency to flow from developed markets into emerging markets to benefit from interest rate “carry”. In addition to the interest rate differential, the growth differential also offers better opportunities for investments in emerging economies (where higher rates of return on investments can be achieved). Ultimately, the availability of such capital flows will have positive implications for EM asset prices, and while there is a risk of short-term capital flow reversals which may result in heightened asset price volatility, the stronger growth fundamentals of the EM region will likely attract more capital flows over the longer term.

Positive Trend In Global Emerging Market Capital Flows

THEME 3: LOW VALUATIONS

Global Emerging Market At A Discount To Developed Markets

Given the scarce growth opportunities available in developed economies, one would think that a growth premium would be incorporated into EM equity valuations. Fortunately, investors have been unwilling to pay more for the region’s superior growth fundamentals under the current muted market environment, which means that EM equities can still be bought at fairly attractive valuations. As shown in Chart 6, EM equities remain at a discount to developed markets, despite their stronger growth potential. Also, EM equities currently trade at 10.1X 2011 estimated earnings (as of 5 August 2011), with valuations declining further to 8.9X and 8.0X for 2012 and 2013 respectively, a hefty discount to the long-term 12.8X average since 1995 (based on index adjusted positive earnings).

Strong Sustainable Earnings Growth, Low Valuations And Positive Market Dynamics To Boost Global Emerging Markets Equity Returns
Similar to the relationship between economic growth and earnings, stock market performance has been driven by earnings of the underlying companies (as shown in Chart 2), with the S&P 500 gaining an annualized 7.1% (excluding dividends) from 1946 to 2010, while the earnings of the underlying stocks have grown by a similar compounded annualized rate of 7.1% over the same period. Driven by the underlying profitability of companies, the S&P 500 has also fluctuated to a large extent over a single calendar-year period, chalking up losses of as much as 38.5% (in 2008), or gains of 45% (in 1954). Nevertheless, the long-term trend indicates that earnings have grown at a relatively stable rate, aiding the equity market in posting similar returns over the long term.



Source: FundSuperMart
Author : iFAST Research Team
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