Some Rather Bullish Comments On the Malaysian Markets

Posted on Bloomberg News: Templeton's Mobius Says Credit Crisis Is Near End

Yes, Mr. Mark Mobius of Templeton Asset Management Ltd reckons that the credit-market crisis that's caused $245 billion of losses at banks and brokerages is "near the end.''

What struck my attention was what the following statement.

• The fund manager, who oversees $47 billion in emerging- market equities, said he has been buying shares of banks including Bank of China Ltd. and Industrial & Commercial Bank of China Ltd. Malaysian equities are also becoming ``more and more attractive,'' he said in a Bloomberg Television interview today.

And in his brief explanation, he reasoned that

• Malaysia's Kuala Lumpur Composite Index on March 10 plunged 9.5 percent after the government suffered its worst election result in almost 50 years. The gauge has lost 13 percent in 2008.
  
  `Good Impact'
  
  Prime Minister Abdullah Ahmad Badawi last month vowed to proceed with infrastructure projects to promote growth and pledged measures to help the poor, seeking to reassure investors after the government's narrow poll victory.
  
  Malaysian stocks are ``becoming more and more attractive as a result of these political changes,'' Mobius said. ``There has been re-awakening so to speak, reassessing that Malaysia should be doing well and prosper. I think that's good news and that could have good impact on the market.

More and more attractive as a result of the political changes?

Some might argue against these wind of changes in the politics scenes are only in the beginning stages and many uncertainties lies ahead.

Nevertheless, in another report published on Business Times, Citi: Start buying as KL mart is bottoming out

• On its stock pick, the research house puts SP Setia, KLCC Property and UEM World on the top buy list
  
  
  IT is time to buy into the Malaysian bourse as the market is bottoming out with banking, plantation, telecommunications, utilities and gaming sectors taking the lead, said Citi Investment Research yesterday.
  
  “A lot of the bad news (global equities meltdown and shocking 12th general election results where the ruling coalition government lost the two-third majority) are already in the price. In an illiquid market like Malaysia, we urge investors to start positioning,” it said in its research paper released yesterday.
  
  Besides, Citi Investment said, investors would eventually be tired of speculating on the outcome of such negative events and re-focus on basic investment fundamentals.
  
  On the converse, it said, the Kuala Lumpur Composite Index (KLCI) is domestic-centric and hardly any sector is directly exposed to the outside world.
  
  “The only sector that is directly exposed to the external environment is the plantation sector which accounts for 17 per cent of the KLCI weighting.
  
  “Banking accounts for another 23 per cent, while utilities and telecommunications make up a further 16 per cent,” it said.
  
  Citi Investment, which is a division of Citigroup Global Market Inc, said its bottom-up index target suggested a 15 per cent upside for KLCI.
  
  “We now expect the KLCI to hit 1,499 points by year-end,” it said.
  
  The KLCI ended 2.9 points higher at 1,256.54 yesterday.
  
  Citi Investment said some local institutions are seeing their cash levels rising to over 20 per cent and, “we see buying activities picking up imminently.”
  
  It said huge pent-up demands are waiting to re-enter the market and the 2009 Budget is expected to stir up buying interest as investors expect an expansionary budget to shore up consumer confidence.
  
  “The 2009 Budget can boost next year's gross domestic product growth, spending and confidence to levels back to the 1990s,” it said.
  
  On its stock pick, the research house put SP Setia, KLCC Property and UEM World on the top buy list.
  
  “We continue to like IOI Corp, KL Kepong and IJM Plantation in the plantation sector but are dropping Sime Darby from the list.
  
  “Listing Telekom Malaysia's mobile unit can add more interest in the telecommunications space.
  
  “DiGi is also expected to continuously deliver strong earnings growth and cash flow,” it said

How now my dearest MooMooCow?

Would you agree with what Citi is saying here? Or do you reckon that the comments made are far too optimistic in general?