OSK Says Market May Move Further South

On Business Times: OSK: Market may move further south

• The stock market may head further south in February as the upcoming stream of corporate financial results is likely to be ugly, says OSK Research.
  
  February is the financial results season and the research house observed that the Kuala Lumpur Composite Index (KLCI) tends to track stock upgrades and downgrades following each results announcement.
  
  As the global economy turned decidedly negative in the fourth quarter of last year, the reporting season in February promises to be much weaker than before.
  
  "As we see the number of downgrades again exceeding upgrades, particularly in higher weightage sectors, we still foresee the market turning south in February. At risk are the banking and transport sectors," OSK said yesterday in a market outlook report for February.
  
  As such, it advised investors to remain largely defensive in their stock picks for the month.
  
  OSK's top picks are Petronas Gas (with a fair value of RM11.10), KFC (RM7.70), Berjaya Sports Toto (RM5.10) and Tenaga Nasional Bhd (RM9.15).
  
  It also has a "trading buy" on Puncak Niaga.
  
  OSK noted that its "take profit" call for the month of January had been "half right".
  
  It said while the expected rally in early January was indeed followed by anticipated profit-taking as poor economic data took its toll, the KLCI still managed to eke out a marginal 0.88 per cent gain at the month-end, closing at 884.45 points, thus outperforming the region.
  
  Yesterday, the KLCI eased 4.78 points to close at 879.67.
  
  The month of January saw record cuts in interest rates, the inauguration of a new US president and the re-emergence of political concerns locally.
  
  Plantation and financial stocks were the biggest gainers that month, with Kuala Lumpur Kepong (up 12 per cent), IOI Corp (up 10 per cent), Bumiputra-Commerce (up 9 per cent) and EON Capital (up 8 per cent) among the winners.
  
  Losers were a mixed bag, with builder WCT Engineering's stock leading the way with a 30 per cent decline.

What say you?