It's a clue. Something to ponder about KLSE

Today (30 Jan 2013) KLSE in red while others asian market in green. Are we in bad economic situation? I think no. Then why? Are the 13thGE is around the corner? Yes exactly right.

So what? Does it's a good time to kick the show up to the sky? Now i'm really thinking what is the institution investor's having in their mind. People are taking their profit and runnnnnnn as far as they to avoid become a loser? I think there are a very big worry of what to happen tomorrow... nobody can predict what will to happen next in today's situation. So, they are reflecting the market before late.

Japan share market rose more than 20% in 3 months... Everybody knows, investors confident return back after new leaders up.

China share market rose more than 10% in 3 months.. this should be a benchmark as global US & European market in this rank.

Singapore share market rose more than 7% in 3 months.. slower might due to his neighbor near to enervation

Let's look at KLSE...

Huhuhu... Malaysia market share in plunge mode. -2% and maybe more to come later.. I'm pretty sure this general election are very tough to the ruling government. But, I'm also pretty sure long term investment are really worth-with. The best for you who are concern about lowest risk is invest in unit trust. Yes, investment in unit trust will never frust you as long as you agree to invest in long term. Here the prove..

You will never get today's value in next 5 years.. What's comes around is goes around.. You will benefit yourself by investing your future value money at today's decision.

Tinjauan pasaran saham pada 1 December 2011

Terkini : Sekumpulan bank-bank pusat yang terdiri daripada 6 bank utama negara-negara maju yang diketuai oleh Federal Reserve dan diikuti dengan European Central Bank, Bank of England, Bank of Japan, Bank of Canada dan Swiss National Bank telah melancarkan pelan tindakan bersama dengan menyediakan pinjaman USD kepada bank-bank Eropah pada kadar yang rendah iaitu mereka memotong swap kadar kecairan dolar Amerika Syarikat(AS) sebanyak 50 mata asas yang akan dibiayai dalam tempoh terdekat. Dalam masa yang sama juga People's bank of China juga mengurangkan kadar keperluan reserve bank untuk pertama kali sejak 2008 sementara Thailand dan Brazil turut serta mengurangkan kadar masing-masing pada minggu ini.

Pengumuman yang besar ini dibuat sebelum pasaran saham Amerika dibuka menyebabkan indeks utama Amerika dan Eropah melonjak 3%-5% semalam. Sentimen pasaran dilihat akan meneruskan impak yang sangat positif sementara penggubal policy ekonomi negara-negara Eropah akan meneruskan agenda memperbaiki situasi ekonomi dan pencapaian fiscal negara masing-masing.

Pasaran saham tempatan dijangka akan kembali kepada aliran menaik hari ini rentetan tindakan bank-bank pusat ini yang mencipta kecairan dalam pasaran pada tahap yang lebih tinggi seterusnya meningkatkan harga untuk semua asset.

Sebahagian besar penganalisis pasaran saham melihat ini adalah permulaan bagi rally pasaran yang dijangkan akan berterusan untuk beberapa minggu mungkin sehingga perayaan tahun baru Cina nanti. Mereka juga telah meletakkan pasaran pada fasa "bullish trading".

Petronas Chemical (Stock Code : 5182) Worth to buy

Share price as at 30 November 2011 : RM5.99
Target Price : RM8.15

3Q11: Awesome
Above consensus. RM2,818m (+40.3% YoY) 9M11 PATAMI was 74% of our full year forecast (within expectation) and 78% of consensus (ahead). These are impressive results driven by high utilization rates, strong product margins and relatively stable input cost. PCHEM will continue to leverage on the current high chemical prices and should obtain strong results in 4Q11. Maintain Buy, with a TP of RM8.15/share based on 13.5x 2012 PER, in line with peers’ historical mean PER.

Well oiled machine. RM1,149m 3Q11 PATAMI (+128.9% YoY, +31.5% QoQ) was higher than our expectation of RM1,018m. The main driver was an average utilization rate of 84% (against our 83% assumption) which helped boost volumes by 3% YoY. Product prices were also significantly higher by an average of 49% YoY (against our 54% assumption).
Record margins. 3Q11 EBITDA margin was at 40.9%, which is 15 ppt improvement YoY. Equally impressive, 3Q11’S PATAMI margin of 24.8% was 8.9 ppt higher YoY. To add further credibility to these already strong numbers, the tax rate in 3Q11 was at a full rate of 25.2% against 18.8% for the same period last year. PCHEM has utilized all of its tax benefits. As a sweetener, an interim single tier DPS of 8 sen was announced, the stock will go ex-div on 9 Dec 2011.

2011 on track to beat consensus. There has been a slew of downgrades on PCHEM recently as many North Asian petrochemical players have been underperforming. Consensus fails to see the distinction between PCHEM, which uses gas as its feedstock, and its North Asian counterparts which use naphtha as their feedstock. Naphtha is significantly more volatile and expensive whereas gas is cheap and stable. If anything, PCHEM is benefitting immensely under the current environment as the high naphtha cost supports for high product prices in order for producers to breakeven.

Maintain forecasts. We are confident that PCHEM will be able to meet our 2011 forecast. Utilization should stay above 80% in 4Q11 as there are minimal scheduled maintenance shutdowns during the period and product prices continue to stay strong. We will update on the impact of the Ethylene plant closure in Kerteh post an analyst call later today.

Price up, volume down. 3Q11 revenue was up by 46.4% YoY, due exclusively to higher product prices. As a result of the higher product prices, EBITDA grew by 131.6% YoY to RM1,897m with 15.0 ppt higher margins at 40.9%. This is a highly respectable margin which is among the highest of any petrochemical company in the world.

Utilisation rates recovered. As shown below, the plants utilization rates have recovered across all the divisions in 3Q11. This is because the heavy maintenance shutdowns were carried out in 1H11 and 2H11 should have a much smoother run with minimal operational disruptions.

Tinjauan Pasaran Saham 29 November 2011... YoYo trend

Posting kali ini dan seterusnya saya akan tulis dan bahasa Melayu berdasarkan maklumbalas dan permintaan dari pembaca yang setia. Sekali lagi terima kasih atas respond yang diberi dan semoga ianya bermanfaat.

Pasaran saham minggu lepas menunjukkan kejatuhan 7 hari berturut-turut bagi pagi pasaran US dan juga Eropah akibat dari situasi krisis kewangan yang melanda mereka. Keadaan itu memaksa pasaran BSKL juga berada pada aliran menurun. Pelabur dilihat sangat berhati-hati untuk memasuki pasaran memandangkan isu utama yang berlarutan ini dilihat sebagai suatu risiko yang perlu diberi perhatian.

KLCI telah mencatatkan rekod tertinggi indeks pada 8 July 2011 pada 1,597.08 mata dan kemudian menjunam keparas 1,310.63 mata pada 26 September 2011 iaitu penurunan sebanyak 287 mata dalam tempoh kurang 3 bulan. Segalanya bermula apabila berita menakutkan mengenai krisis hutang Amerika yang mencapai tahap maksimum limit dan penurunan taraf kredit Amerika menyebabkan pelabur mula menjauhi pasaran. Kemudiannya, episod pasaran menjunam bersambung dengan krisis hutang eropah. Sedikit harapan dilihat apabila para pemerintah negara-negara eropah mula menunjukkan kesungguhan dan kerjasama untuk menangani dengan langkah, strategi dan cadangan-cadangan baru yang dilihat memberi sedikit harapan untuk mengelak situasi menjadi lebih buruk. Ianya dilihat peluang kepada pelabur yang akhirnya memasuki semula pasaran pada Oktober lepas sehinggan indeks BSKL naik 183 mata daripada paras terendah sebelumnya.

Saya merasakan krisis ini bukanlah sesuatu yang mampu dibaiki secara drastik untuk melihat hasil yang baik. Ia akan mengambil masa dan komitment yang tinggi dari pihak pemerintah untuk lebih bijak dalam menguruskan ekonomi negara masing-masing. Saya juga merasakan isu ini akan meletakkan pasaran saham dunia termasuklah negara kita ini akan berada di dalam situasi "yoyo".

Barita baiknya mungkin sedikit "support" akan diberi oleh pihak kerajaan bagi mana-mana negara yang akan menghadapi pilihanraya bagi mengekalkan kestabilan ekonomi serta pasaran saham untuk jangkamasa pendek.

Indeks BSKL mungkin akan menguji paras 1424 mata dalam masa terdekat. Melepasinya ke bawah akan membawa kepada paras 1380 mata. Bagi aliran menaik, indek akan menguji paras 1453 mata dan sekiranya indeks mampu melepasi paras ini, mungkin sedikit harapan untuk melihat indeks kembali keparas 1493 mata.

Bagi pelabur unit amanah, dengan menggunakan strategi pemurataan nilai ringgit dengan membuat pelaburan secara berterusan, anda mungkin perlu consider untuk menambah pelaburan anda sekarang pada harga yang lebih rendah.

GAMUDA BERHAD (Stock code: 5398) Worth to buy

Gamuda Berhad through its subsidiaries, the company provides earthwork construction, manufactures and supplies road surfacing materials, and operates quarry and road laying projects. It also has operation in hiring and rental of plant and machinery, develops properties, and manufactures and sells paper.The front runner for the mass rapid transit (MRT) tunnelling project – the Gamuda Bhd-MMC Corp Bhd joint venture – may be put in a tough spot to match the lower bids from some of the pre-qualified bidders, industry sources said. Five companies had been pre-qualified for the project, including Gamuda-MMC, China’s Sinohydro Group Ltd, South Korea’s SK Holdings and two other parties from China and Japan. Gamuda-MMC was the only local company shortlisted.
The tunnelling works for the MRT is estimated to cost RM7bil and the financial newspaper reported that the pre-qualified parties had three months to submit their bids.
It had been reported that the project delivery partner (PDP) of the MRT project, Gamuda-MMC, would have the upper hand in bidding for the job as it was given the right to match the lowest offer from other bidders for the tunnelling job under the Swiss challenge system (Gamuda-MMC has to match the lowest bid to win). However, bidders from China are said to pose a threat to Gamuda-MMC due to their expertise and experience in tunnelling jobs as well as having the financial muscles to undertake the project.

A reliable source added that local parties have a price advantage of between 3.5% to 7.5%, depending on the level of local and bumiputra equity participation in the project. “However even with this price advantage, Gamuda-MMC could still be hard-pressed to match the pricing of some of the other bidders,” an industry source said. (The Edge, October 24, 2011)

TENAGA NASIONAL BERHAD (Stock code: 5347) Worth to buy

Tenaga Nasional Berhad transmits, distributes, and sells electricity under license issued by the Director General of Electricity Supply. Through its subsidiaries, the company manufactures sells and repairs transformers and switchgears. It also provides project management and consultancy, engineering works and energy project development services.
Tenaga Nasional Bhd (TNB) will build a 132kV sub-station and a district cooling plant for the supply of chilled water and electricity at the new low-cost carrier terminal, also known as KLIA2, in Sepang, Selangor. The deal, struck with Malaysia Airports Holdings Bhd (MAHB), is for a build-operate-transfer model for a concession period of up to 20 years. In a Bursa Malaysia filing, TNB said 80% of the KLIA2 generation plant project's cost of RM388mil would be funded through external borrowings while the balance would be via shareholders' equity. TNB unit Airport Cooling Energy Supply Sdn Bhd is the concessionaire for the project.

The KLIA2 generation plant would supply energy cooling to the airport's core facilities, comprising the terminal building, with 250,000 sq metres of covered area, and for private facilities at the integrated complex.

Meanwhile, MAHB will take a 23% stake in Airport Cooling Energy Supply with the balance owned by TNB's wholly-owned subsidiary, TNB Engineering Corporation Sdn Bhd (TNEC). Within the next 60 days, Airport Cooling Energy Supply will allot shares to MAHB and TNEC at a subscription price of RM21.9mil and RM77.3mil respectively. The deal for the KLIA2 generation plant project was struck after a public tender process by MAHB. (The Star, October 28, 2011)

Market outlook as at 27 October 2011... The bull is charging

FBMKLCI today is strongly moving upwards following all our regional market. All this massive buying support from the investors came into the market after news on European debt deal looking better ahead.

Our local bourse will be test near term resistance at 1,500 points with the support at 1,460 points. I'm also positively looking ahead this uptrend would be continue for the next few days or may be next few weeks. Recap on the previous 2 months (August & September) and early October, US debt crisis came along with the European debt crisis was broke all the rising trend of world market. However, with the European nations making steady progress towards resolving the sovereign debts problem and the surprisingly positive economic data coming out from the U.S, there come to be a main reason why the market soar.

On the news side, these might be a good reasons why the bull is charging :
1. The EU Rescue Package provides near term stability for the financial sector, lifting risk appetite and the euro
2. Greek Haircut of 50% reduces the losses that banks need to absorb, which is positive for stocks and risk
3. European Banks will need to repatriate funds to meet new capital requirements, which could mean more demand for euros
4. ISDA confirmed that the PSI will not trigger a credit event on Greek debt, which is positive for risk
5. Traders were short euros going into the EU Summit and now that a deal has been reached, it has triggered a wave of short covering.

SUPERMAX CORP BERHAD, MALAYSIA (Stock code: 7106) Worth to buy

Supermax Corporation Berhad (SUPERMX) is an investment holding company whose subsidiaries manufacture, sell, and export various types of latex gloves around the world.

Stanley Thai, executive chairman of Supermax Corp., the world’s second-largest maker of rubber gloves, comments on the company’s share price, raw material costs, profit margins and earnings outlook. He made the remarks in an interview in Kuala Lumpur today.
On Supermax’s falling share price: “We have a high percentage of institutional shareholdings. Foreign funds are investing in the rubber-gloves industry. When they exit or take profit, our counter gets hit. This is a good time where there is good bargain for people who understand our industry.”
On raw material costs: “The volatility of the raw material prices will actually affect our margin. As far as the demand and consumption is concerned, we are still enjoying quite good demand. We are still able to have a compounded annual growth rate of over 20 percent.”On global rubber supply: “Supply should increase because of new acreage of plantations coming up in Cambodia and southern Vietnam. When it happens, all the new capacity will go to China because it will be a big consumer for material. Once the new supply comes in, we’re going to see natural rubber prices come down.”
On the ringgit’s strength: “So long as the ringgit appreciation is in tandem with regional currencies, we should be able to compete globally. We are in a recession-proof industry. We are pretty much resilient.”
On European and U.S. glove-market outlook: “We can grow at least 50 percent in terms of earnings and revenue in European market, and at least 25 percent growth in our American market. We see tremendous growth potential in emerging economies.”
“We’re looking at new emerging economies such as the BRICs nations and South Africa.” (Bloomberg News, September 14, 2011)

LATEXX PARTNERS BERHAD, MALAYSIA (Stock code: 7064) Worth to buy

Latexx Partners Berhad (LATEXX) is an investment holding company. The company, through its subsidiaries, manufactures, markets, distributes, and exports natural and synthetic rubber gloves. It also operates in property investment.
Latexx Partners Bhd says it is still eyeing M&A opportunities even after two failed merger and acquisition (M&A) bids in the last six months. Executive chairman and chief executive Low Bok Tek said future M&As involving Latexx will be assessed thoroughly to ensure the deals are economically viable, and make business sense. “As mentioned earlier, the company is committed to organic growth and is going to see the plans through. We have not ruled out the possibility of M&As in the future as well. However, for any corporate exercise to go through, it must be assessed thoroughly to ensure the basis of the industry consolidation is justifiable and creating value [for] the parties involved.”
According to Low, Latexx’s organic growth plans were not disrupted during the last two rounds of M&A as the glove manufacturer was still expanding as planned. He said the group had completed the expansion of its annual production capacity from six billion pieces of gloves to nine billion and is currently working towards 12 billion pieces in the next two years. By 2015, Low expects Latexx’s annual maximum output to reach 15 billion pieces. “All newly added lines are hybrid that is interchangeable between nitrile and natural rubber. We will continue to grow our business by focusing on our nitrile range, especially on the non-medical sectors,” Low said.

Low said the outlook of the group’s earnings is improving in tandem with the company’s expansion. The company is allocating some RM70 million to install new production facilities, he said. The capital expenditure will be financed via internally generated funds and an “optimum level” of borrowings. Geographical expansion to emerging markets is also on the cards. Low said since the last two quarters, Latexx has been widening its global reach across Eastern Europe, the Middle East, and Asia. These markets will be in addition to the developed markets where the glove producer already has a presence. (The Edge Financial Daily, August 10, 2011)

Market outlook as at 18 October... Don't panic!

The moment this acticle wrote, KLCI index is at 1437.42 drop 27.93 points! Recap on previous market analyst, they have noted that the medium-term downtrend line for FBMKLCI would be tested soon and it's actually happen which the index managed to easily brushed aside the strong horizontal resistance at 1445-1450 yesterday 17 October 2011 as my previous articles. A break above that downtrend line would be positive for the market as it would signal a pause in the downtrend. But, how far would this rally go?

If the market action in 2008 can be a guide, the current rally's next stiff resistance would be at the 20 & 40-week SMA lines at 1471-1483. On weakness, it may drop back to the breakout level of the previous downtrend line at 1435. I expect the market to trade within this band- between 1435 & 1483- for the next few weeks. A breakout of the band (which has yet to be formed) would then point the way forward for the market either the BEAR continue or BULL.

In conclusion, those who hold a bearish view of the market should look to sell but you can afford to pace your selling. If possible, you should sell into strength at 1471-1483 (and possibly buying on dips to 1435). However, those who think otherwise, you can choose to hold & add to their position on market weakness (by buying on dips to 1435).

Market outlook as at 17 October 2011... Upleg for 'bull'

This morning, KLCI indeks rose 19.41 points to record a new high at 1461.84 after market set the lowest points 1,310.53 last months. It was broke the analyst resistance level at 1445-1453 point. Within this current positive market sentiment, some analyst believe that the "bear" market was over and new upleg was created.

As on last week, the FBM KLCI rose 42.38-points to close at 1,442.43 point last Friday. The local market remained volatile but surged up well as EUROZONE worries diminished after Slovakia helped to ratify and enlarge the EFSF fund. The news that the G20 nations issued a communiqué to resolve the European debt crisis also helped sentiment at the weekend.

The obvious support areas for the FBM KLCI are in the 1,392 to 1,442-zone. The next resistance levels is 1,500 will see heavy liquidation activities. The local market had peaked on 11 July 2011 at the all-time high of 1,597.08 and a softer phase had emerged to the 1,310.53 low. Two possible levels where the rebound may be contained are 1,487.62 and 1,500 points.

The EUROZONE debt worries may have diminished somewhat with Slovakia’s EFSF ratification. Nevertheless, investors should still remain vigilant if any unusual volatile moves to the downside may suddenly emerge – due to unforeseen events.

KLCI today... bull is starting or just a bear rally..

Our FBMKLCI broke above the psychological 1400 level & tested its accelerated downtrend line at 1415 yesterday morning than slowest back to close at 1411.65. If it can break above 1415 level, it could potentially test the medium-term downtrend line that stretches back as July 11. The resistance posed by this downtrend line is at 1445, which coincides with the strong horizontal line. On weakness, FBMKLCI can find support at the psychological 1400 level or at the short-term uptrend line at 1395.

How should we play this rally? It depends on whether this is a bear rally or the beginning of a new upleg. To qualify as a new upleg, you need at least an upside breakout above the 1445 level (preferably the 1450 level). Failure to surpass this level would simply mean that the downtrend is still intact & the market may slide off again. As you know, that’s what we called a bear rally or a corrective move within a bear market.

If you wish to trade now, you should buy either when FBMKLCI breaks the 1415 level or when it pulls back toward 1395-1400. Once you have gone long in the market,you should aim to sell at 1445-1450 (on the assumption that this is a bear rally). If FBMKLCI can break above 1445-1450, you should get back into the market (on the possibility that the market could be entering into a new upleg).

Adakah anda sentiasa rugi dalam melabur?

Pernahkah anda bercakap tentang melabur? Atau pernahkah anda mendengar kawan-kawan anda berbicara tentang pelaburan? Anda mungkin berminat untuk meneruskan bacaan anda sekiranya anda peminat melabur.

Sekiranya anda seorang pelabur, anda perlu kenali siapakah "kawan" yang paling rapat dengan anda yang selalu menasihati anda untuk membuat sesuatu keputusan samada beli atau jual sesuatu produk, asset, saham, dana unit amanah, komoditi dan seumpamanya untuk merealisasikan sesuatu transaksi pelaburan yang anda putuskan. Anda juga perlu tahu keuntungan atau kerugian nyata (real) hanyalah akan berlaku setelah transaksi 'beli' dan 'jual' berlaku. Tanpa salah satu transaksi tersebut atau tanpa kedua-duanya maka keuntungan atau kerugian itu hanyalah bersifat'on paper' sahaja dan tidak real. Sebahagian portfolio pelaburan anda pula mungkin melibatkan naik turun harga seperti saham, unit trust, produk komoditi sepeti emas, perak dan seumpamanya.

Anda tentu setuju bahawa konsep asas kepada keuntungan sesuatu pelaburan ialah beli pada harga murah dan jual pada harga tinggi. Konsep yang sangat simple tetapi kenapa anda masih rugi dalam melabur? Jawapannya ialah kerana "kawan" anda selalu memberi nasihat yang salah kepada anda. "Kawan" anda itu ialah "hati dan perasaan" anda sendiri. Adakah anda percaya bahawa anda selalu membiarkan hati dan perasaan anda membuat keputusan bagi anda? Mari kita lihat bagaimana cara orang yang rugi dalam melabur berfikir...


Graf ini menunjukkan aliran naik turun harga atas suatu portfolio pelaburan. Di setiap pergerakan harga akan ada orang yang berfikir untuk membeli dan ada yang berfikir untuk menjual.

Sekiranya cara anda berfikir sama seperti gambarajah ini, anda perlu sedar bahawa anda akan sentiasa rugi dalam melabur.

Oleh itu, saya ingin menasihati anda supaya memperbetulkan "kawan" anda itu tadi supaya tidak mengikut hati dan perasaan. Hanya orang yang menggunakan ilmu dan kebijaksanaan akal untuk mentafsir ilmu akan menang kerana 'ikut hati anda mati' dan 'ikut rasa anda binasa'.

Anda mampu mengubahnya...

MARKET WRAP: WEEK ENDED 8 JULY‘11

WEEKLY HIGHLIGHTS
• The FBM KLCI edged up to close at a record high of 1,594.7 points for a gain of 0.7% for the week.
• Regional markets remained firm on expectations that the U.S. private sector job market has improved.
• Looking ahead, the local market is anticipated to move in tandem with overseas markets as investors continue to monitor the outlook for global economic activities.

STOCKMARKET COMMENTARY
After commencing the week on a mixed note, the local market moved higher amidst resilient gains in regional markets. Market sentiment was also lifted by a positive update on the government’s initiatives under the Economic Transformation Programme. The FBM KLCI rose to a record high of 1,594.7 points, up 0.7% for the week.

Average daily trading volume was sustained at 0.9 bil over the preceding week while daily turnover in value terms was also unchanged at RM1.7 bil over the same period.

On Wall Street, the Dow rose to a 2-month high of 12,719 points on Thursday on expectations that the U.S. labour market has improved. However, investors were subsequently discouraged by the release of weak non-farm jobs data on Friday, showing that only 18,000 jobs were created, comprising 57,000 private sector job gains and 39,000 public sector job losses. The Dow subsequently eased and closed at 12,657 points for a weekly gain of 0.6%. The broader-based S&P 500 Index rose by 0.3%to 1,344 points. The Nasdaq was up 1.6% to 2,860 points over the same period on gains in selected tech stocks.

In the U.S., the labour market weakened with non-farm jobs increasing at the slowest pace in nine months at 18,000 jobs in June from 25,000 jobs in May as the pace of hiring in the services sector continued to weaken for the second consecutive month. Meanwhile, the unemployment rate edged up to 9.2% from 9.1% over the same period. The Institute of Supply Management Non-Manufacturing Index, which gauges the health of the services sector, fell to 53.3 in June from 54.6 in May on lower new orders. However, the reading remains above 50, indicating that services activities continue to expand for the nineteenth consecutive month. Crude oil prices closed at US$96.20/brl to register a weekly gain of 1.3% due to reports of lower U.S. oil inventories.
On the local front, Bank Negara Malaysia kept the overnight policy rate (OPR)unchanged at 3.00% during its monetary policy meeting on 7th July 2011 on concerns that heightened uncertainties from global developments may pose downside risks to growth.

Malaysia’s export growth slowed to 5.4% in May from 11.1% in April on lower exports of electronics and selectedcommodities such as petroleum & LNG. Meanwhile, import growth moderated to 5.6% from 9.4% over the same period. As imports outpaced exports, the cumulative trade surplus for the first five months of 2011 narrowed by 9.0% to RM51.3 billion compared to the same period last year.

On a weekly basis, the Ringgit strengthened by 0.6% against the US$ to close at RM2.992 while on a year-to-date basis, the Ringgit appreciated by 2.3% against the greenback.Looking ahead, the local market is anticipated to remain supported by resilient economic growth and low real interest rates. However, investors will continue to monitor the outlook for the U.S. and global economic activities.

As at 8th July 2011, the local stock market is valued at a P/E of about 16.8x on 2011
earnings, which is comparable to its 10-year average P/E ratio of 16.7x. The local
market is also supported by a gross dividend yield of 3.8%, which exceeds the 10-year average of 3.6% and the 12-month fixed deposit rate of 3.15%.

FORTNIGHTLY REGIONAL MARKETS COMMENTARY
WEEKLY HIGHLIGHTS
• Regional markets remained firm on expectations that the U.S. private sector job market has improved.
• Regional economic activities continued to moderate while inflationary pressures continued to rise.
• Regional markets are anticipated to continue moving in tandem with global markets as investors monitor the outlook for global economic activities.

STOCKMARKET COMMENTARY
In North Asia, stock markets remained firm with the Korea and Japan markets registering weekly gains of 2.6% and 2.4% respectively. The Hang Seng China Enterprise Index rose by 1.4% for the week.

In South East Asia, the Thai market outperformed the region with a weekly gain of 4.5% following the decisive election victory of the Pheu Thai party. The Indonesia market rose by 2% to a record high of 4,004 points amid expectations that the central bank will not raise interest rates this week.

The Australian market closed 1.4% higher on gains in mining stocks following higher metal prices.China’s export growth slowed to 17.9% in June from 19.4% in May on lower exports to Japan and selected ASEAN countries. Meanwhile, import growth moderated to 19.3% from 28.4% over the same period. As imports grew by a larger margin than exports, China’s cumulative trade surplus for 1H2011 narrowed by 17.5% to US$46 bil compared to US$55.8 bil in the same period last year.

On the inflation front, China’s inflation rate rose to a 3-year high of 6.4% in June from 5.5% in May due to higher food and transportation costs. The People’s Bank of China raised the 1-year lending rate to by 25 basis points to 6.56% on 6th July 2011 to curb inflationary pressures.

Japan’s exports declined by 10.3% in May after contracting by 12.4% in April as exports to the U.S. and Europe weakened at a slower pace. Meanwhile, import growth rose to 12.3% from 9.0% over the same period. As imports grew by a larger margin than exports, Japan’s registered a trade deficit of US$11.9 bil in the first five months of 2011 compared to a surplus of US$29.1 bil in the same period last year.

As at 8th July 2011, the valuations of regional markets, as proxied by the MSCI Far East ex-Japan Index, is at a P/E of 12.5x on 2011 earnings, which is 20% lower than its 22-year average P/E ratio of 15.7x.

ESSO (stock code : 3042) Recommended Buy

Buy Price : RM5.25
52 week high : RM5.97
52 week low : RM2.50
Mkt Cap RM : 1.4b
P/E : 3.9x
ROE : 42.3%
Target Price : RM5.97

Esso Malaysia Berhad manufactures and markets petroleum products as well as operates an oil refinery in Port Dickson which has the licensed capacity of 75,000 barrels per day. The company is a subsidiary of Esso Eastern Incorporated, which is wholly owned by Exxon Corporation that is incorporated in the USA. Esso Malaysia Bhd's earnings surged 154% to RM154.82 million in the first quarter ended March 31, 2011 from RM60.94 million a year ago, boosted by inventory holding gains. It reported on Monday, May 16 that revenue rose 30% to RM2.6 billion from RM2 billion reflecting higher average product prices and increased retail volume. Earnings per share were 57.30 sen compared with 22.60 sen. Esso Malaysia said the improvement in current quarter's results was driven mainly by inventory holding gains caused by the significant increase in crude and product prices.

On the prospects, Esso Malaysia said business conditions remain challenging in light of the uncertainty in the crude price environment. “Recognising the potential earnings volatility, the company will continue to focus on sustaining flawless operations, cost control and product and service quality, while sustaining our competitive position,” it said. (Bloomberg News, May 16, 2011)

The Economic Cycle and Its Impact on the Stock Market

“What goes up must come down.”
Usually used to explain gravity, the saying can also be used to describe the economic cycle. Economies do not grow in a straight line – instead, they expand, dip into a recession and then embark on a recovery which leads to the next expansion. Economic cycles are driven by various factors such as credit cycles, asset bubbles, demographics and technological breakthroughs.

For instance, the Malaysian economy entered into a steep recession in 1998 following the Asian financial crisis. After recovering in 1999 and 2000, the Malaysian economy slowed down again in 2001 due to the global economic fall-out following the U.S.-led technology bust (chart 1).
In the most recent global recession of 2009, the Malaysian economy contracted by 1.7%as exports were dampened by the decline in the U.S. economy and other major economies amidst tight credit conditions and weak job markets.In general, the term economic cycle (or business cycle) refers to fluctuations in economic activity around a long-term growth trend, and typically involves shifts between periods of relatively rapid growth (upswing or boom), and periods of relative decline (downturn or recession). Initial recovery. Usually a short phase of a few months, the initial recovery phase marks the period when the economy first recovers from a recession or slowdown. There are often stimulatory government initiatives in place such as stimulus spending and/or low interest rates. Business confidence is rising and inventories are starting to be rebuilt. With unemployment still high though, consumer confidence may still be low.
Early upswing. This is the healthiest phase of the economic cycle, as growth can be robust without overheating or higher inflation. This phase usually lasts a year to several years provided growth is at a not-too-rapid and thus sustainable pace. During this period, the inventory rebuilding that we saw in the initial recovery period leads to greater hiring activity by firms and, as employment rises so too does consumer confidence. This in turn leads to strong sales. To meet increased demand for their goods and services, businesses invest to expand capacity.
Late upswing. The economy is now operating at full capacity and is in danger of overheating. Confidence is high among both consumers and businesses, and unemployment is at very low levels. Inflation is picking up and wages are accelerating as shortages of labour occur. To combat rising inflation, central banks raise interest rates.
Slowdown. The economy slows, usually as a result of higher interest rates. Business confidence starts to waver, and firms start to reduce their inventories, which has a knock-on effect on unemployment and private sector spending.
Recession. A recession is conventionally defined as two successive quarters of negative GDP growth. During this phase, there is often a large inventory pullback and a decline in business investment. Unemployment can rise quickly, putting downward pressure on inflation. Consumer spending on durables declines. In a severe recession, the financial system may be stressed by bad debts, making banks cautious to lend.

Because of the different dynamics at work in each of the phases of the economic cycle – varying inflation rates, consumer and business confidence, capacity utilisation rates, unemployment rates and corporate profitability – the stage of the economic cycle can significantly affect how different sectors of the economy and the various parts of the capital market perform. Unit trust performance will be affected accordingly, depending on the assets and sectors in which the various funds are invested.

A word of caution

“Prediction is hard, especially about the future.” – Yogi Berra.
The description of a typical economic cycle and its impact on market performance may suggest that forming market expectations in the short and medium terms is relatively straightforward. However, economic cycle turning points are often difficult to predict. The phases of different economic cycles may vary in length and amplitude. Recessions can be steep (think of the 1930s and the early 1980s) or they can be short-lived affairs with only a small decline in output and a modest rise in unemployment. The cautious investor also needs to bear in mind that the sequence of the various phases of the economic cycle is not fixed in stone. A particular phase in the economic cycle may not take place and there may also be a reversion to an earlier phase.

Because prescient market timing is often difficult, there are several investing rules-of-thumb that would benefit the investor’s portfolio in the long term, and prevent the often disastrous “investing at the top and exiting at the bottom”. Ensuring sufficient portfolio diversification by investing in unit trusts for example, is one such rule, otherwise known as “not putting all your eggs in one basket”. Investing for the long term is another good rule, which will help prevent ill-timed panic selling by the investor influenced by the short-term performance of the market. Investors can also adopt the practice of Ringgit-cost averaging, which entails purchasing a fixed ringgit amount of a unit trust or other investment on a regular basis, regardless of unit price. By investing on a fixed amount regularly, the investor can take advantage of market dips without worrying about when they will occur.

Yinson Holdings Berhad : 7293

Recommended BUY

Price : RM1.72
52 Week high : RM1.74
52 Week Low : RM0.68
Mkt Cap : RM0.1b
P/E : 6.2X
ROE : 16.3%
Targt Price : RM2.14

Yinson Holdings Berhad is an investment holding company. Through its subsidiaries, it provides comprehensive transportation services, trades construction materials, leases properties and operates as a haulage contractor, Yinson Holdings Berhad has entered into a consortium agreement with Petrovietnam Technical Services Corporation (PTSC), in relation to the execution and performance of bareboat charter contract for the provision and charter of a floating storage and off-loading (FSO) facility.
The deal will allow Yinson and PTSC to develop and establish contractual arrangements, pending the formation of a joint venture company to be incorporated for signing of the Bareboat Contract with PTSC. PTSC is a subsidiary of Vietnam National Oil and Gas Group. (Business Times, June 10,2011).

Rimbunan Sawit Berhad : 5113

Recommended BUY

Price : RM2.61
52 Week high : RM2.68
52 Week Low : RM1.36
Mkt Cap : RM0.4b
P/E : 6.4X
ROE : 22.0%
Targt Price : RM3.08

Rimbunan Sawit Berhad cultivates oil palms and processes palm oil. It owns about 13,500ha of plantation land and operates its palm oil mill. Rimbunan Sawit Berhad registered total revenue of RM74.40 million for the quarter ended 31 March 2011, representing an increase of 58.40% as compared to RM46.97 million reported in the previous corresponding period. The increase in revenue was mainly attributed by more favourable average crude palm oil and palm kernel prices realized and additional volume of fresh fruit bunches production generated by the subsidiaries acquired in the second half of last financial period. In tandem with higher commodity prices and higher volume fresh fruit bunches production, the Group registered a higher profit before taxation of RM22.6 million compared to RM7.77 million recorded in the last corresponding period.
The Group’s prospect for the remaining quarter is strongly depending on the development in the world edible oil and related market, world economic movement and their corresponding effect on CPO prices. Based on the current market price of CPO, the Group are of the opinion that its performance for the next quarter is expected to remain stable and optimistic. (Bloomberg News, May 25, 2011)

KLCI Year End 2011 Target Compilation

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) started 2011 at the closing record of
1,576 points on January 6. Many analysts positive on 2011 outlooks with some targeting FBM KLCI to hit
as high as 1710 points.
Below are some of the factors on the positive outlooks.
• Early general election in 2011
• More foreign funds coming
• Impact on 10th Malaysia Plan (10MP) and Economic Transformation Programme (ETP)
The table below is the FBM KLCI 2011 year end target from various research houses or brokers.

2011 Year End KLCI Target

Maybank Investment Bank Bhd,
We are finalising our new end-2011 FBM KLCI target, with upside potential from the current target of 1,660 points. Chart-wise, we see 1,618, 1,673 and 1,710 as potential target areas for the index.

Am Research and ECM Libra
Still, analysts generally expect this year to end with further – albeit limited — gains for the stock market. According to feedback from research houses received by The Edge Financial Daily, the targets for the headline index range from 1,620 to 1,870

OSK Research
We expect a better 1H11 with a KLCI fair value of 1,648 or 10% upside leading to our Buy call on Malaysia.

ING Fund Bhd
Our base case supports an index target of 1,650, based on our projected corporate earnings growth of +15% for this year pegged to an average five-year PER of 15.5 times. This gives a market return of about 10% for this year, which we believe is more realistic