How Now TK?

The market, it rebounded!

Meat Loaf - Alive!


Here is a snippet from Dow Jones.

Mild Recovery? Market at this moment of time is up 24.68 pts! Mild?

• Malaysian stocks staged a mild recovery Tuesday from yesterday's 9.5% plunge, helped by a technical rebound across all sectors, although analysts warned that market uncertainty is likely to continue.
  
  "We see the sharp correction as a buying opportunity. In our view, Malaysia's economic and corporate fundamentals remain intact," said UBS analyst Colber Nocom in a note, adding that near-term uncertainty is likely and the KLCI will test support at 1,170 points in the coming months.
  
  At the midday break, the benchmark Kuala Lumpur Composite Index was 2.1% higher at 1197.90 points, off the intraday high of 1211.75, led by gains in shares of construction, plantation and government-linked companies.
  
  The Malaysian ringgit also staged a slight recovery, recently trading at 3.2000 against the dollar, strengthening from yesterday's intraday two-week low of 3.2090.
  
  Stocks rebounded from yesterday's plunge to a seven-month low of 1173.22 when the market reacted negatively to the weekend's general election results.
  
  Still, dealers remained cautious, warning strong selling pressure may emerge in late afternoon trade as investors sell into strength and stay on the sidelines.
  
  "Investors should avoid getting distracted by taking trading positions until the dust settles," said Citigroup Malaysia's Head Of Research Choong Wai Kee in a report Tuesday. "We advocate a strategy of staying focused, targeting just blue chips. Our picks are Telekom Malaysia, IOI Corp, Public Bank, Malayan Banking and Resorts World."

Other news clip showed that Macquarie Resarch been positive.

• Macquarie Research remains positive on Malaysia equities despite ruling coalition Barisan National failing to win two-thirds majority; analyst Edward Ong says market may impute higher perceived risk factor in immediate term but BN still retains power with simple majority. "Its loss of a two-thirds majority is likely to be perceived as negative in the short term but this could also mean stronger checks and balances, particularly in terms of constitutional changes, and potentially spur reform in the medium term"; elections a victory for democratic process and opposition wins demonstrate election process is transparent and fair. Adds, potentially lower petrol and diesel subsidies could delay public transport infrastructure spending; Northern Corridor Economic Region plan could also be reassessed after loss of 3 states in north, potentially raising perceived risk for construction firms. Likes DiGi.com (6947.KU), Maybank (1155.KU), Genting (3182.KU), KL Kepong (2445.KU), AMMB (1015.KU) Telekom (4863.KU) Mah Sing (8583.KU) and Berjaya Sports Toto (1562.KU).(VGB)

From UBS:

• UBS tips Malaysian market's sharp selloff yesterday following election results as buying opportunity. "In our view, Malaysia's economic and corporate fundamentals remain intact. Barisan Nasional (BN) still controls 62% of Parliament and opposition parties have declared they will pursue market-friendly policies on states they control." Says post-selloff, Bumi-Commerce (1023.KU), IJM (3336.KU), UEM World (1775.KU) offer good value. Says in plantation space, Asiatic (2291.KU), IJM Plantations (2216.KU) look attractive. Says after revisiting EPS estimates, believes these companies should not be materially affected by political uncertainty.
• UBS says Malaysian market de-rating offers bargains. Says post-correction, three lowest-P/E stocks under coverage are Kinsteel (5060.KU) at 5.8X, Sunway Holdings (4308.KU) at 6X, and Sunway City (6289.KU) at 6.5X. "We think the sell-down on Kinsteel and Sunway Holdings have more than priced in earnings risk from potential delays in infrastructure spending." Notes highest dividend yield stocks under coverage now Gamuda (5398.KU) at 7.8%, Bursa (1818.KU) at 7.1%, Public Bank (1295.KU) at 7%. "Clarity on politics could trigger a rebound for the KLCI. While it is difficult to second-guess the political news flow, we think both BN and the opposition parties will unlikely want to see a sharp slowdown in economic activity in the near-term. Thus, we believe the political posturing on both sides could be short-lived." Says UMNO elections next key event to watch. KLCI up 2%.

Finally we are seeing more bullish statements on the planters (see HwangDBS goes Overweight on Planters) ! (Where were they when the CPO were above 4400?)

• UBS reiterates Buy ratings on Malaysian plantation stocks despite recent consolidation of vegetable oil prices. Notes palm, soybean oil prices have corrected sharply after hitting March 3 high, with consolidation initially sparked off by upward revision of Brazil soybean crop, news of Chinese canceling contracts; adds, unwinding of speculative long trades since then driving momentum. "While the current newsflow is negative, we think the demand-supply fundamentals remain supportive of price;" notes 2008 opening world inventory of soybeans down 15.4 million tonnes, or 25%, vs 2007. "The revision of 1.2 million-1.6 million tonnes in Brazilian soybeans does not in our view change a fundamental tightness in vegetable oil supplies globally in 2008." Tips attractive valuations on stocks; says Hap Seng Plantations (5138.KU) offers 6.9% net yield on FY2009 estimates, Sime Darby (4197.KU) trades at 12X FY09 earnings after falling 30%, IOI Corp. (1961.KU) trading at 22X earnings after falling 23%

Note how the planters fared this morning: Market firmer at midday, CPO surges

• Plantations were higher, led by Asiatic, which gained 50 sen to RM7.75, Sime Darby 35 sen higher to RM9.75 while United Plantations, Chin Teck and KL Kepong gained 30 sen each to RM13.60, RM7.30 and RM15.20 respectively. IOI Corp added 15 sen to RM6.80.

And the folks at Kuwait Finance House is rather positive with the market according to Business Times. ( see KFH maintains KLCI can hit 1,500 by year-end )

• Its optimism was based on Malaysia’s firm macro fundamentals, take-off of Ninth Malaysia Plan infrastructure projects, sustained corporate profit growth of 13 per cent and the stronger ringgit, KFH said in a review of the results of the election today.
  
  Despite the knee-jerk selling on the market, “we foresee strong fundamental support backed by the resilient economy,” the investment banker said.
  
  “We do not expect any change in the current macroeconomic policies such as monetary and fiscal policies as the Barisan Nasional remains the federal government despite the reduced majority,” KFH said.
  
  However, it reiterated its optimism that the 9MP infrastructure projects would be implemented as planned.
  
  Among them are the Iskandar Development Region, Eastern Corridor Economic Region, Sabah Economic Corridor and the Sarawak Corridor of renewable energy.
  
  “The victory for BN would also mean that the Prime Minister can continue with efforts on clamping down on corruption, improve the efficiency of public services, provide an enabling business environment for local and foreign investors and government-linked companies (GLC) restructuring,” it said.
  
  The ringgit is expected to hover at 3.16 this week at the expense of the dollar as the US Federal Reserve is widely expected to cut interest rates further.
  
  KFH said its sector pick included construction, infrastructure-related namely steel, cement and aluminium, property and real estate as well as GLCs.
  
  “We expect the economy to continue on a steady growth path, maintaining our gross domestic product growth of 5.7 per cent this year.” “Government initiatives to develop new economic growth areas will help to revitalise the economy and further raise domestic demand,” KFH said

However, RHB suggests one should go defensive in their strategy report this morning. Here are two screen shots.

Some interesting sector downgrades!

Meat Loaf - Couldn't have said it better!