Monday, January 30, 2012

Daily Dow Jones: A Breakdown Below 10-Days SMA & Mid Bollinger Band Supports Will Spur More Selldown

Wall Street review: Dow Jones drops 74 points on weak 4Q11 GDP and home sales
After tumbling as much as 104 points, the Dow Jones end 74 points lower to 12660. The decline was triggered by a weaker-than-expected 4Q11 GDP report and persistent anxiety looming over Greece’s ongoing negotiations with private-sector creditors in an attempt to reduce its debt burden. Without an agreement, the country jeopardizes its access to bailout funds and might not be able to make a €14 billion debt payment that is due on 20 March.

Sentiment was also dampened by Fitch’s downgraded of the sovereign debt ratings of five European countries, including Italy and Spain, which took the biggest hits.

Daily Dow Jones: A Breakdown Below 10-Days SMA & Mid Bollinger Band Supports Will Spur More Selldown


Sunday, January 29, 2012

KLCI Lower Liners And Penny Stocks Will Continue To Shine

Bursa Recap: KLCI dips 3 points to end -0.1% wow
Asian markets ended cautiously higher last Friday, as investors awaited the outcome of Greek debt talks and U.S. 4Q2011 GDP. However, KLCI eased 3 points or 0.2% to end at 1520.9 on mild profit taking activities on bigcaps.

Volume increased to 2.28 billion shares worth RM1.85 billion against Thursday’s 1.96 billion shares worth RM1.7 billion amid greater retail participation especially after external sentiment improved with the Fed's pledge to keep interest rates low until late 2014.

FBM KLCI Outlook: Lower liners and penny stocks to shine
This week, KLCI is expected to take cue from the outcome from major overseas development such as 30 January European Summit, Greece debt swap deal with bondholders and Italy’s medium to long term bond auction. Besides, focus will also be on U.S. January economic figures such as consumer confidence (31 January), ADP employment (1 February), ISM (1 February) and nonfarm payrolls (3 February).

Unless KLCI stages a breakout above the 1531 level (31 December 11 high), market is likely to consolidate further with attention remain on lower liners and penny stocks as more investors return from CNY holidays. Immediate support is 1500 while resistance are the huge gap between the 1529-1546 levels dated 5 August 11.

Daily KLCI: Awaiting An Ascending Triangle Breakout
FBM KLCI 30-01-2012

Daily KLCI: Building Its Base
FBM KLCI 30-01-2012a

Source: HLIB Research

Wednesday, January 18, 2012

Currency Investment: What is it and is it a good strategy for you?

Currency investments are definitely not for beginners. Only experienced investors are really able to see and track the patterns that go along with foreign currencies. They can find the little changes that make currency investments worthwhile, but keeping track of these changes can be very difficult.

What is Currency Investment?
Foreign currency investment requires the investor to monitor the exchange rates of various currencies. They buy and sell an investment in specific currencies to make money, much like buying and selling stocks or other investments. However, currency investment is much different than other types of investments because you don’t own a part of a company or a debt of a company. The investment is either kept on hand or treated as a digital asset when it is purchased.

Types of Currency Investment
There are many different types of currencies, and each type can be made into an investment. The best currencies now are the U.S. dollar, the British pound, the Japanese yen, and the euro. A majority of all trades made are with these currencies, so they are very popular with investors.

If you are looking into making a currency investment, you should keep track of the country or countries that use a particular currency. The amount of exports and imports, the national debt, and the gross domestic product in that country will all give some information about the value of the country’s currency.

Benefits of a Currency Investment
No investment is completely risk-free, and the same can be said for currency investments. The success of a person who decides to invest in currency completely depends on how they manage their investments. Most investors don’t like to put all of their investments in one place, so they spread their money around in the stock market, real estate, or other investments. When they decide to invest in foreign currency as well, they can reduce the risk of loss across their entire investment portfolio, and they could have the possibility of making a profit no matter what the economic climate may be.

Is it Right for You?
While foreign currency investments may not be for every person looking to invest, but if you aren’t afraid to do the work and you want an investment that gives back with little risk, you may want to consider currency investing. The act of investing in currency involves a lot of strategy and knowledge if you want to be successful. You definitely don’t want to just blindly invest in something when you are not fully educated on the investment, and even the most experienced investor might get confused with the work that goes into currency investing. Do your research, back up your decisions,and you may be successful, proving that currency investments were right for you.

Vanessa Lang is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about payday loans.

Global Market Weekly Review, 9 - 13 January 2012

Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties. “During a period of stress, banks would be expected to use their pool of liquid assets, thereby temporarily falling below the minimum requirement,” the Basel Committee on Banking Supervision’s governing board said in a statement on its website yesterday, following a meeting in the Swiss city. The aim of the measure, known as a liquidity coverage ratio, is to ensure that lenders hold enough easy-to-sell assets to survive a 30-day credit squeeze.

Consumer borrowing (CICRTOT) in the U.S. surged in November by the most in 10 years, showing households are optimistic enough to take on debt and banks are willing to lend. The advance was almost twice as big as the highest forecast of 31 economists surveyed by Bloomberg News.

The European Central Bank held interest rates steady after two straight cuts as signs of respite from the sovereign debt crisis gave it scope to pause. ECB policy makers kept the benchmark interest rate at a record low of 1%, as predicted by 47 of 53 economists in a survey.

Indonesia kept interest rates unchanged for a second month, extending a pause in monetary easing as a weakening Rupiah and a government plan to contain fuel subsidies threaten to spur inflation. Bank Indonesia kept the reference rate at 6%. The decision was predicted by 13 of 18 economists in a survey, with the rest expecting a quarter-percentage-point cut.

Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 9 - 13 January 2012

Fixed Income
Malaysian Government Securities (MGS) momentum strengthened further during the week under review, led by 7- and 10-year benchmarks. Sentiment was aided by upbeat demand at the first government bond auction this year, namely the RM3.5 billion 7-year MGS which garnered a strong bid-to-cover ratio of 3.6x (last offering in September11 was at 1.7x) at an average yield of 3.415%. Buyers pushed the 7-year and 10-year MGS yields lower by 11 basis points (bps) and 9bps week-on-week (WoW) to close at 3.38% and 3.60% accordingly. In contrast, the 3-year benchmark yield stayed unchanged at 3.01%, while the 5-year benchmark yield increased by 2bps WoW to settle at 3.22%.

On local economic front, exports moderated more than expected to +8.0% year-on year (YoY) in November11 from a revised +15.4% increase in October 2011, as sales of Electrical & Electronic (E&E) goods to the US and Thailand fell. On the other hand, the November 2011 imports climbed less than expected, by +8.4% YoY, beating the prior month’s revised +4.0%. Meanwhile, the November 2011 industrial production unexpectedly eased to +1.8% YoY, after climbing a revised 2.9% in October 2011, as mining contracted and manufacturing growth eased. In contrast, the month-on-month (MoM) industrial production retreated by -4.6% in November 2011 compared to the previous month’s +2.9%.

For Private Debt Securities (PDS) market, higher trading volume was recorded during the week mainly due to a sizeable toll-related primary issuance amounting to RM23.35 billion (AAA-rated) and RM11.0 billion (Government-Guaranteed) respectively making its debut last week. In the AA-segment, buying interest continued to be seen in financial institution bonds and followed by power bonds.

Fixed Income Outlook
Amid the continual debt crisis and sovereign rating downgrades in the Eurozone, local market will be focusing on the upcoming Monetary Policy Committee meeting on 31January 2012. Our take is that the Central bank will likely to keep rate unchanged while continue to assess development of the external factors including the growth prospect of the developed economies.

Meanwhile, we expect next week will be relatively quiet due to Chinese New Year break and the next government bond auction will be in February. Given the absence of Private Placement, the 1st 7-year MGS had garnered strong response from the market. We may continue to see stronger bid-to-cover ratio for the auctions this year compared to 2011.

Movement in Ringgit and a greater Asian growth theme will continue to influence the direction of foreign participation in the local government bond market.

On credit market, investors will continue to look for yield with a cautious mode given the softening growth prospect.

Fixed Income Strategy
We remain positive on local bond market given the perceived conducive environment for bond market. We continue to focus on value enhancing corporate bonds, trade on momentum when opportunities arise. Last but not least, we will continue to participate in new issuances for diversification and return enhancement.

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

Markets Rebound, 9-13 January 2012

Equities rallied back nicely last week, help by improving economy outlook. MSCI World Index rebounded to 9 week high, climbing as much as 3 percent. Analysts speculate that the rise could be attributed to the European Union’s ability to manage some of its members’ debt, causing investors to buy more risky asset, on belief that equities will provide reasonable risk adjusted return. For the week, the FBM KLCI rose 9 points or 0.6% to close at 1,523 points. The FBM KLCI underperformed the region as up to Thursday the index was up 0.7% against the 1.2% rise by the MSCI FExJ. Average daily trading value for the week rose 32% to RM1.9 billion (RM1.47 billion previously), which was 31% higher the three-month average of RM1.48 billion.

Equity Market Outlook
We expect the market to consolidate further. The gap resistance (1,530 – 1,545) proved to be a tough nut to crack. But we remain hopeful as long as the index holds above the 200 day smooth moving average (SMA). We expect the market continue its consolidation for another week or 2 before it breaks the 1,540 points.

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

Source: Source: ING Funds Berhad

Monday, January 16, 2012

Dow Jones Falls 49 Points On Imminent S&P Eurozones Downgrade

Despite a strong January 12 consumer sentiment report, the Dow Jones tumbled as much as 159 points before mitigating its losses to 49 points amid weak J.P. Morgan results, possible Greek default and expectations of an imminent S&P eurozones ratings downgrade.

After the market closing, S&P said it had lowered the long-term ratings of Italy, Portugal, and Spain by two notches, and the long-term ratings of Austria and France by one notch, as initiatives taken by European policymakers in recent weeks may fall short of fully addressing systemic stresses in the eurozone.

The Dow will continue to consolidate its gains (YTD: +1.7%) following the S&P’s eurozones ratings downgrade coupled with the ongoing 4Q11 reporting season. Major results scheduled are Citigroup/Wells Fargo (17 Jan); Goldman Sachs (18 Jan);
Intel/Bank of America/American Express/Google/Microsoft (18 Jan) and General Electric on 19 January.

Daily DJIA: Crucial Uptrend Line Support To Prevent Further Selldown


Sideways consolidation ahead of the CNY holidays

Bursa Recap: KLCI eases 2.5 points but still gains 0.6% wow
Asian markets rose amid successful Italian and Spanish bond auctions and positive ECB President’s remark that euro area showed "tentative" signs of recovery. However, SHCOMP tumbled due to profit taking on weakening 4Q11 forex reserves.

FBM KLCI lost 2.5 points as bigcaps continued to consolidate recent gains whilst interests remained on lower liners and penny stocks, reflected by a 17% jump in daily volume to 1.77 billion shares whilst trading value only inched up by 2% to RM1.61 billion.

FBM KLCI Outlook: Sideways consolidation ahead of the CNY holidays
Technically, trend and momentum indicators have turned less bullish after failing to close above 1531 points (intraday high on 31 December 11) last week. On the backdrop of eurozones crisis, the CNY long holidays weekend and continued consolidation in bigcaps, the market could be trapped within a narrow range on extended consolidation in the immediate term.

Despite short term consolidation, as long as KLCI continues to remain its posture above the 200-d SMA and mid Bollinger band supports (now at 1501), KLCI is still likely to slowly filling the huge gap between 1529-1546 which was recorded on 5 August 2011

Daily KLCI: Immediate Supports Near 10-Days SMA And 200-Days SMA
FBM KLCI 16-01-2012

Source: HLIB Research

Wednesday, January 11, 2012

Global Market Weekly Review, 3 - 6 January 2012

German unemployment fell more than forecast in December as exports of cars and machinery boomed and one of the mildest winters on record helped support jobs in construction. The number of people out of work fell a seasonally adjusted 22,000 to
2.89m. Economists forecast a decline of 10,000. The adjusted jobless rate dropped to 6.8%.

Philippine inflation eased to an 11-month low in December as gains in food and utility costs slowed, boosting scope for an interestrate cut to aid economic growth. Consumer prices rose 4.2% from a year earlier, after a 4.8% increase in November, using 2006 as a base year. The median estimate in a survey of eight economists was for a 4.7% advance. Inflation was 4% using the 2000 series.

Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 3 - 6 January 2012

Fixed Income
Malaysian Government Securities (MGS) started the year 2012 with stronger weekly trading momentum as compared to the previous few months. This was mainly driven by continued interests in the Government Investment Issues (GIIs) and non-benchmark MGS. Meanwhile, there was profit-taking on the 3-year benchmark MGS sending the yield up by 3 basis points (bps) WoW to 3.01% as it touched a 3-week low of 2.98% previously. However, the 5-year benchmark fell by 2bps WoW to close at 3.20%. Both the 7- and 10- year benchmark remained stable at 3.49% and 3.69% respectively.

For Private Debt Securities (PDS) market, trading interests continued to be seen on the AAA- and AA-rated papers, mainly the finance- related names.

Fixed Income Outlook
Heightened speculations on recession in the Euro Zone amid the on-going sovereign debt crisis and protracted anemic economy outlook in the US continue to paint an unexciting global economic climate in 2012. This is coupled with further concerns of a slowing growth in China and the rest of the emerging economies. Locally, while there are domestic engines to support continual growth, external factors will remain a drag to our GDP given the significance of exports and Malaysia being an open economy.

On inflation, latest numbers suggest moderation going into 2012, in tandem with soft economic outlook as well as softer energy prices. Nonetheless, we reckon there is possibility of renewed fear on potential reinstatement of subsidy rationalization post the much speculated General Election as early as 1Q2012.

Given the above growth prospect and comfortable inflation expectation, Bank Negara Malaysia (BNM) is likely to keep interest rate stable at the current accommodative level at least for 1H2012. This is further supported by BNM’s intention to keep asset bubbles at bay. Risks to our outlook will be an unexpected dismay domestic growth and a blow-out of the external headwinds.

On demand and supply dynamics of the government bond segment, assuming an issue size of circa RM3.0 billion to RM3.5 billion for each of the 28 auctions in 2012, gross issuance may total to RM85bn – RM90bn. With total government bond maturities of RM45.56 billion, we expect the net issuance to be around RM45 billion. This is close to the net issuance of RM45.2 billion in 2011. Based on the net increase of foreign holdings in government bonds amounting to RM23 billion in 2011, a whooping 50% of the net issuance was absorbed by foreign investors. While we may not see the same quantum jump in 2012, yield differential relative to the US treasuries, the broad emerging economies theme as well as the relatively less volatile MGS may continue to be supportive of foreign participation. We also reiterate the continual demand for MGS from the local long-term insurance and pension funds.

On credit market, ample liquidity and the perpetual search for yields will continue to offer good demand for corporate bonds. However, the dim growth prospect may prevent investor to move down the credit curve and to focus on only selective non-cyclical industries. In any case, A-rated bonds in the local market have been thinly traded with limited interest for the few years.

Fixed Income Strategy
We are generally positive on local bond market given the perceived conducive environment for bond market. We continue to focus on value enhancing corporate bonds, trade on momentum when opportunities arise. Last but not least, we will continue to participate in new issuances for diversification and return enhancement.

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

FBM KLCI Eased Moderately on Profit-Taking, 3 - 6 January 2012

The local equity market bucked the regional trend in the first week of the year by losing 1.1% or 16.6 points week-on-week (WoW) . The FBM KLCI underperformed the region which registered positive gains in the New Year, within the first week the MSCI FexJ gained 0.5%. Average daily trading value for the week rose 23.9% to RM1.45 billion (RM1.17 billion previously), which recovered above the 3-month average of RM1.40 billion.

Equity Market Outlook
We expect the market to continue consolidating. As more and more investors back from year-end holidays, selling pressure should gain momentum as the underlying concern over the European sovereign debt crisis still persists. If the market fails to hold above the strong psychological level of 1,500 points, investors should expect the market to pullback to 1,485 points.

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

Source: Source: ING Funds Berhad

Dow Jones Up 69 Points To 12462, Near 5-Month High

Wall Street recap: Dow Jones up 69 points to 12462, near 5-month high
The Dow Jones climbed as much as 122 points intraday before ending 70 points higher at 12462 amid a decent start of 4Q11 reporting season by Alcoa, rising expectations for monetary easing in China as government data showed that the nation’s import growth declining to a two-year low in Dec 11 and a positive Fitch’s comments about Europe being on the right path toward solving its debt problems.

However, Fitch also indicated there's a "significant chance" of a downgrade for Italy. The ratings agency plans to make a decision on all the European countries it currently has on negative watch by the end of the month.

DJIA Outlook: Uptrend still intact
Year-To-Date, the Dow Jones jumped 2% and the early "January effect" inspired hopes that US markets were beginning to overcome headline risk from the European debt crisis and moving toward a more independent track.

The Dow Jones tumbled 8.6% from October 11’s high at 12284 to November 11 low of 11231, driven by the persistent deadlock in Euro debts crisis management and an uncompromised plan and fears of potential en-mass bonds rating downgrades by credit rating agencies, overshadowing the gradual progresses in the recent US economic data. However, the index rebounded 11% from the bottom in November 11 to end at 12462 overnight.

Despite the massive rally, overall market is not excessively overbought as RSI still hovers below 70. Following the positive ascending triangle breakout, current uptrend remains intact as long as the Dow is able to maintain its posture above 10-d SMA (now at 12339) and uptrend line supports.

Immediate resistance targets are upper Bollinger band near 12600 and July 11 high of 12753.

Daily DJIA: Upside Bias Unless The 10-Days SMA And Uptrend Line Supports Violated


KLCI IS Taking Cue From Positive Wall Street And Europe Markets

Bursa Recap: KLCI ends flat as November IPI misses estimates
Asian markets closed higher, driven by a 2.7% surge on SHCOMP as December 11 new lending and money supply in China exceeded estimates, boosting speculation the government is relaxing monetary policies to bolster economic growth and engineer a soft landing.

Sentiment was also boosted by increasing evidence of a U.S. recovery, but concerns over euro zone sovereign funding ahead of key auctions kept investors cautious.

Despite a strong regional performance, KLCI ended flat as November 11 IPI was lower than market expectations.

FBM KLCI Outlook: FBM KLCI is taking cue from positive Wall Street and Europe markets
While bigcaps continue to consolidate, second and lower liners continue to hog the limelight following the lifting of trading designation on Harvest and rash of M&A news. Today, KLCI is expected to retest 2011’s close of 1530, taking cue from positive Wall Street and European markets overnight.

In the wake of a strong breakout above the 200-d SMA (now at 1501) and 10-d SMA (1513), the KLCI is poised to trend higher towards upper channel near 1550 points. Immediate supports are 10-d SMA and 200-d SMA whilst upside targets are the huge gap within 1529-1546 dated 5 August 11.

Daily KLCI: Short Term Uptrend Intact Unless 10-Days SMA Is Violated
FBM KLCI 11-01-2012

Source: HLIB Research

Tuesday, January 10, 2012

Wall Street: Dow Jones Meanders Ahead Of The Start Of 4Q Reporting Season

Wall Street recap: Dow Jones meanders ahead of the start of 4Q reporting season
The Dow Jones ended 33 points higher at 12393 as investors continued to keep a close eye on events in Europe and geared up for the start of 4Q11 report announcements.

In Europe, German Chancellor and French President said that progress has been made on a proposed intergovernmental pact to increase fiscal discipline across the Eurozone. The leaders added that the pact could be signed ahead of the Jan 30 EU summit and go into effect as early as March.

After the closing bell, Alcoa report its 4Q11 revenue that topped estimates but incurred a larger-than-expected net loss due to slumping aluminum producer's prices and rising costs.

Daily DJIA: A Breakout Above The Ascending Triangle Resistance Will Spur A New Rally

Source: StockCharts

KLCI Holding Well Above The 10-days And 200-days SMAs

Bursa Recap: KLCI bucks weak regional bourse to end +7.6 points
Asian stocks traded mixed on Monday as renewed worries about the fallout from the European sovereign debt crisis overshadowed signs of vigor in the U.S. economy. Worries over Europe intensified with a debt rating downgrade to junk status for Hungary as well as this week's key debt sales by Italy and Spain.

Investors are also awaiting the outcome of the meeting between German Chancellor and French President late evening to craft a plan for rescuing the euro over the next three months. Bucking the regional trend, FBM KLCI jumped 7.6 points at 1521.7, thanks to last minute bargain hunting on selected index-linked stocks such as CIMB (+11 sen to RM7.29), TENAGA (+13 sen to RM6.09), PETGAS (+30 sen to RM15.10), MAXIS (+9 sen to RM5.62) and AXIATA (+3 sen to RM4.98).

Investors were also relieved that Anwar Ibrahim’s acquittal over a sodomy charge yesterday an exoneration for the political conspiracy claims hurled at the BN government.

FBM KLCI Outlook: Uptrend still intact
In the wake of a strong breakout above the 200-d SMA (now at 1501) and 10-d SMA (1510), the KLCI is poised to trend higher in its bid to re-challenge the all-time historical high of 1,597 over the intermediate-term perspectives.

Despite anticipating short term volatility particularly from external headlines, expectations of acceleration of ETP projects, generally positive Chinese New Year (CNY) performance and potential pre-election rally will further augment upward trajectory.

Supports are 10-d SMA (1510), 1501, mid Bollinger band and uptrend line (1490). The rally from its September 11 is at stake if the 1490 support is violated.

Upside targets are the huge gap within 1529-1546 dated 5 August 11.

Daily KLCI: Consolidating Upward Along The Uptrend Channel
FBM KLCI 10-01-2012

Source: HLIB Research

AirAsia: Buy On Weakness At RM3.70: Building Its Base

AirAsia: Building its base.

# Despite recent correction from the RM4.00 region, its medium to long term uptrend remains intact as share prices continue to stay above the 100-d (now at RM3.55) and 200-d (RM3.33) SMAs and lower Bollinger band (RM3.60).

# Although there could be further consolidations amid volatile markets and its high foreign shareholding, any price weakness is an opportunity to accumulate for potential rebounds later as technical readings are on the mend.

# Immediate resistance levels are RM3.76 (50-d SMA), RM3.80 (upper Bollinger band) and RM4.00. Supports are RM3.55-3.60.

# Cut loss below RM3.55.

Daily AirAsia: Building Its Base

Source: HLIB Research

Sunday, January 8, 2012

Genting Malaysia: RWNY To Expand Further?

6 January 2012
Price Target: RM4.07
Share Price: RM3.89

# Genting Malaysia’s (GenM) subsidiary, Genting NY, has announced that it has entered into a non-binding letter of intent with Empire State Development Corporation to consider the development of an integrated mixed-use complex on real
property located adjacent to RWNY.

# The project is anticipated to cost at least US$4bn (~RM12.56bn) which will include an integrated 3.8m sq ft of convention and exhibition centre with up to 3,000 hotel rooms and an expansion of RWNY.

# However, both parties are still in the midst of negotiation, with a view of entering into a binding MoU on or before 30 November 2012.

# In view of the project, this could contribute positively to GenM as RWNY will become a full-fledged integrated resort rather than just a casino operator.

# If terms are agreed between both parties, this development would be the nation’s largest convention center, replacing Jacob K. Javits Convention Center in Manhattan.

# With a hotel and convention center built adjacent to RWNY, this could draw more visitors into the casino, especially businessmen who are on business trips and hotel guests.

# This development could be an added advantage for RWNY as it will be the only casino within New York City that offers hospitality services, which will indirectly increases its visitors’ convenience to get to the casino.

# The project also includes the expansion of RWNY to offer more machines (5,000 units currently) in order to cater for the additional customers.

# No detailed information were given on how long will this development take place if the terms are met. However, assuming the development takes 3 years to complete, GenM
will still have a healthy net gearing level of 0.1-0.3x.

1) Regulatory risk;
2) Weaker hold percentage;
3) Pandemic breakouts;
4) Cannibalization from Macau & Singapore;
5) Appreciation of RM and
6) Destination resort legislation not approved by Florida Legislature

Remain unchanged pending more information on the mentioned development.

Rating: Hold, Target Price: RM4.07
(1) Defensive stock;
(2) Monopoly in the industry; and
(3) New source of earnings from international markets to drive earnings growth

(1) Highly regulated industry; and
(2) earnings highly dependable on luck factor and hold percentage.

Target price remain unchanged at RM4.07. Maintain HOLD.

Source: HLIB Research

Wednesday, January 4, 2012

Global Market Weekly Review, 27 - 30 December 2011

Taiwan’s central bank left interest rates unchanged for a second straight quarter. The central bank left the discount rate on 10-day loans to banks at 1.875%. Eleven of 15 economists predicted the decision in a survey. Four expected policy makers to cut the key rate to 1.75% after keeping it unchanged in September for the first time in six quarters.

Vietnam’s economic growth accelerated this quarter as rising domestic consumption and exports limited the impact of higher interest rates. Gross domestic product increased 6.1% in the fourth quarter from a year earlier. The preliminary estimate compares with a revised 6.07% growth rate for the three months through September. For the full year, Vietnam’s economy expanded 5.89%, down from the 6.78% rate for 2010.

Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 27 - 30 December 2011

Fixed Income
Malaysian Government Securities (MGS) extended gains for another week on lingering concern over Europe debt crisis. Gains were led by the 7-year benchmark MGS with yields falling by 5 basis points (bps) WoW to 3.49%, followed by 3-year benchmark with yields falling by 3bps WoW to 2.98%. Meanwhile, the 5- and 10-year benchmark yields closed lower by 1 basis point and 2 bps respectively, at 3.22% and 3.69%. Of note, trading volume of short-term bills surged to RM11 billion despite the 4-day trading week amid weaker Ringgit, which was spotted at RM3.168/USD on 30 December versus RM3.1558/USD on 23 December.

For Private Debt Securities (PDS) market, trading interests continued to focus on the AA-rated papers, mainly the finance-related names.

Fixed Income Outlook
Eurozone developments as well as economic data releases will continue to influence the direction of the global financial markets as well as the local bond market. Given the uncertainties in the ongoing external headwinds, some are arguing for potential easing in the first Monetary Policy Committee (MPC) meeting of 2012 in January. On contrary, we opine the central bank might continue to maintain the current interest rate level while keeping a close watch on how the external headwinds will manifest itself in near future.

Meanwhile, the much anticipated MGS/Government Investment Issue (GII) Auction Calendar was officially released. There will be a total of 28 tenders with zero private placements (PP), which is comparatively more than the previous 21 tenders held and 8 PP last year. Given that MGS/GII issuances is skewed towards mid-to-longer tenures focusing at 7-years and beyond, we expect long-term investors such as the pension funds and insurance companies will continue to support the government bond market.

For credit market, we expect the local corporate bond market to remain resilient in near to medium term on the back of sustainable liquidity in the local market. Having said that, we acknowledge the stretched pricing by historical valuation for some of the high-grade names. We also do not discount any risk-aversion triggered by heightened fear of a collapse of the global economy set off by the break-out of the Eurozone.

Fixed Income Strategy
We remain positive on local bond market in general with focus on value enhancing corporate bonds. We look to participate in new issuances for further diversification and yield enhancement.

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

FBM KLCI Ends 2011 Positively, 27- 30 December 2011

The local equity market bucked the regional trend by registering strong positive return of 2.3% or 34.5 points week-on-week (WoW) . Investors were positioning for big cap with strong dividend yield. The FBM KLCI outperformed the region as up to Thursday the index was up 1.0% against the 0.7% rise by the MSCI FExJ. Average daily trading value for the week rose 0.7% to RM1.17 billion (RM1.16 billion previously), which was 17% below the three-month average of RM1.41 billion.

Equity Market Outlook
We expect market to consolidate after the year end window dressing. Buying was exhausted as volume started trending down. As more and more investors back from year-end holidays, selling pressure should gains momentum which will cap the upside due to worsening global economy condition. If the market fails to hold above the 1,520 points, investors should expect the market to pullback to 1,500 points which is strong psychological support.

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

Source: ING Funds Berhad

Monday, January 2, 2012

KLCI: Upside Bias Despite An Overbought Slow Stochastics

This Week: Second and lower liners to shine amid bigcaps profit taking consolidations

Bursa Recap: KLCI up 24 points to record its 7th straight gain and seals 2011 with a 0.8% increase
Asian markets opened a risk-filled New Year still hung over from a rocky 2011, with little direction to trading and many exchanges closed. For 2011, all of the top Asian stock indexes were well in negative territory. Leading losers were SENSEX 9-24.2%),
TWSE (-20.6%), SHCOMP (-20.3%) and HSI (-19.8%) whilst the only two gainers were JCI (+3.2%) and KLCI (+0.8%).

Last Friday, Bursa Malaysia ended 2011 on a high note as the KLCI surged 24 points to 1530.7 points on last minute window dressing in heavyweights.

FBM KLCI Outlook: Anticipate profit taking consolidation but second and lower liners to provide sparks to the market
In the wake of a strong breakout above the 200-d SMA (now at 1501), the KLCI is poised to trend to higher highs in its bid to rechallenge its all-time historical high of 1,597 over the intermediate-term.

Nevertheless, we expect KLCI to remain volatile this week amid profit-taking pullback following last week’s fund managers' ritual of window dressing coupled with grossly overbought technical readings. Immediate support is 1500 whilst further upside targets are 1550-1570.

While big caps are poised to consolidate further this week after recent solid gains, we expect rotational 2nd and lower liners to shine to provide the sustainable momentum to our market in anticipation of a Jan and Chinese New Year rally.

Daily KLCI: Upside Bias Despite An Overbought Slow Stochastics
FBM KLCI 03-01-2012

Weekly KLCI: Uptrend Is Well-Supported
FBM KLCI 03-01-2012a

Source: HLIB Research
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