Monday 20 July 2009.
WEEKLY MARKET OUTLOOK.
Friday Markets Closing Prices.
FBM KLCI 1120.90 up 12.02 or 1.08%.
October FCPO RM2,123.
Ringgit 3.5725.
DJIA 8,743.94 up 32.12 or 0.37%.
Crude Oil US$63.56.
Gold US$937.50 up 2.10 or 0.20%.
Natural Gas US$3.67 or 0.0.
NEWS.
The Government has introduced a five year ceiling on foreign workers staying in the country, among seven measures, under a move to reduce dependence on 2.1 million registered foreign workers in the country.
Analysis – A good move by the government but still not serious enough in addressing the issue of over reliance on cheap foreign labors instead of taking care of the locals.
Japanese E&E firms in Malaysia to hire 10,000 workers as sales rise up to 90% of last year level on orders fro China.
Analysis – A sign that a recovery in E&E has taken place and more good things can be expected from the sector. They can hire a locals (Malaysians) by offering a better salaries and perks instead of relying on cheap foreign labors again.
WCT Bhd, RM2.40, has won four contracts worth a total RM766.5 million to build infrastructure at Medini Iskandar Malaysia, in Johor, to be completed by July 2011.
Stock Recommendation – BUY WCT BHD on excellent outlook as the contracts will add substantial profit to them for the next 2 years (around RM76.6 million based on 10% net profit margin).
FOREIGN NEWS.
US banks and technology companies posted better than expected results for 2Q 2009. 12 more DJIA related stocks are due to announce 2Q results this week.
Analysis – More or less the worse seems to be over for the U.S. and their stock market still have some more leg to go. The world stock markets will certainly benefit from this.
WEEKLY MARKET OUTLOOK.
FBM KLCI is expected to trade higher in tandem with the regional and the U.S. markets due to positive economic numbers and better than expected 2Q 2009 results.
The Emerging Markets especially in the Asian region will lead the global economy and market recovery due to a very high growth prospect and financial stability on less debt lurking as compared to the more develop economies.
MARKET STRATEGY.
Basically, I can confirmed that the Malaysian economy will certainly recover from a recession and show a positive growth next year. This is due to in 2010 Malaysian economy is starting from a very low base as compared to 2009 and global recovery.
With that economy outlook, I advise investors to continue BUYING and ACCUMULATING good quality stocks especially the FBM KLCI linked 30 stocks index. This is in anticipation of a better than expected 2Q 2009 results for banking, plantation, telco’s, utilities, oil an gas, rubber gloves manufacturer, and other sector of the economy.
Public Bank Bhd, RM10.10, and Bursa M’sia Bhd, RM7.20, results are due on Monday July 20. Tenaga Nasional Bhd, RM8.20, results also should be out anytime now.
BUY rating for PBB, BM and TNB based on the upcoming 2Q09 results and 2010 earnings outlook but all the three stocks look fairly valued now based on 1Q09 earnings.
Most of the banking stocks look fairly valued and had reached my target price based on 1Q09 results but I believe at least another 10% to 15% upside potential are possible based on better than expected 2Q09 results and 2010 earnings outlook.
The exception is Affin Holdings Bhd, RM1.80, BUY, which is a laggard stock and the upside potential is between 50% to 100% based on low Price to Earnings Ratio, High Dividend Yield, Low Price to Net Tangible Book Value and vastly improving assets quality.
TECHNICAL OUTLOOK.
Support Level at between 1096 to 1103. Technically and fundamentally, it look very hard for FBM KLCI to break below this level, let alone below the 1000 level due to a very potent combination of better economic and earnings outlook, and influx of foreign and local funds after the recent sweeping liberalization moves by the Malaysian government.
Next Target Level at 1200 and possibly 1331 in 2009 depending on 2Q09 results onward.
WEEKLY MARKET OUTLOOK.
Friday Markets Closing Prices.
FBM KLCI 1120.90 up 12.02 or 1.08%.
October FCPO RM2,123.
Ringgit 3.5725.
DJIA 8,743.94 up 32.12 or 0.37%.
Crude Oil US$63.56.
Gold US$937.50 up 2.10 or 0.20%.
Natural Gas US$3.67 or 0.0.
NEWS.
The Government has introduced a five year ceiling on foreign workers staying in the country, among seven measures, under a move to reduce dependence on 2.1 million registered foreign workers in the country.
Analysis – A good move by the government but still not serious enough in addressing the issue of over reliance on cheap foreign labors instead of taking care of the locals.
Japanese E&E firms in Malaysia to hire 10,000 workers as sales rise up to 90% of last year level on orders fro China.
Analysis – A sign that a recovery in E&E has taken place and more good things can be expected from the sector. They can hire a locals (Malaysians) by offering a better salaries and perks instead of relying on cheap foreign labors again.
WCT Bhd, RM2.40, has won four contracts worth a total RM766.5 million to build infrastructure at Medini Iskandar Malaysia, in Johor, to be completed by July 2011.
Stock Recommendation – BUY WCT BHD on excellent outlook as the contracts will add substantial profit to them for the next 2 years (around RM76.6 million based on 10% net profit margin).
FOREIGN NEWS.
US banks and technology companies posted better than expected results for 2Q 2009. 12 more DJIA related stocks are due to announce 2Q results this week.
Analysis – More or less the worse seems to be over for the U.S. and their stock market still have some more leg to go. The world stock markets will certainly benefit from this.
WEEKLY MARKET OUTLOOK.
FBM KLCI is expected to trade higher in tandem with the regional and the U.S. markets due to positive economic numbers and better than expected 2Q 2009 results.
The Emerging Markets especially in the Asian region will lead the global economy and market recovery due to a very high growth prospect and financial stability on less debt lurking as compared to the more develop economies.
MARKET STRATEGY.
Basically, I can confirmed that the Malaysian economy will certainly recover from a recession and show a positive growth next year. This is due to in 2010 Malaysian economy is starting from a very low base as compared to 2009 and global recovery.
With that economy outlook, I advise investors to continue BUYING and ACCUMULATING good quality stocks especially the FBM KLCI linked 30 stocks index. This is in anticipation of a better than expected 2Q 2009 results for banking, plantation, telco’s, utilities, oil an gas, rubber gloves manufacturer, and other sector of the economy.
Public Bank Bhd, RM10.10, and Bursa M’sia Bhd, RM7.20, results are due on Monday July 20. Tenaga Nasional Bhd, RM8.20, results also should be out anytime now.
BUY rating for PBB, BM and TNB based on the upcoming 2Q09 results and 2010 earnings outlook but all the three stocks look fairly valued now based on 1Q09 earnings.
Most of the banking stocks look fairly valued and had reached my target price based on 1Q09 results but I believe at least another 10% to 15% upside potential are possible based on better than expected 2Q09 results and 2010 earnings outlook.
The exception is Affin Holdings Bhd, RM1.80, BUY, which is a laggard stock and the upside potential is between 50% to 100% based on low Price to Earnings Ratio, High Dividend Yield, Low Price to Net Tangible Book Value and vastly improving assets quality.
TECHNICAL OUTLOOK.
Support Level at between 1096 to 1103. Technically and fundamentally, it look very hard for FBM KLCI to break below this level, let alone below the 1000 level due to a very potent combination of better economic and earnings outlook, and influx of foreign and local funds after the recent sweeping liberalization moves by the Malaysian government.
Next Target Level at 1200 and possibly 1331 in 2009 depending on 2Q09 results onward.
Next Target Level at all time high of 1525.
For further inquiries please call:-
Kamel Bin Mohd Yusoh.
013-6306544 or 03-21634549/50.
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