Telcos


For May, OSK see the risk of a global pullback increasing, following a strong performance by global markets in the past 4 months.

Coupled with the poor track record of markets during the period of May–Sept, OSK advise investors to heed the old maxim of “Sell in May and Go Away”. If markets do take an early tumble, then those with longer investment horizons should consider stocks in the Construction, O&G and Banking sectors which will benefit from the ETP.

For May, OSK recommend defensive stock such as Telcos and consumption related stocks which might benefit from a drop in commodity prices such as AirAsia (jet fuel) and Media Chinese (newsprint).

The table below is the target price for OSK’s May 2012 top picks.

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OSK has a Neutral outlook on the Malaysian market going into 2012 as the combination of uncertain growth outlook in the US and Asia coupled with a possible recession in Europe cloud the prospects for strong earnings growth locally.

OSK advises investors to stay cautious into mid 2012 and focus on Defensive sectors such as Consumer, Telco, Healthcare and Media with KLCI fair value of 1466 pts.

Investors are advised to Trade on Cyclical sectors such as Banks, Oil & Gas and Construction as the market dips or rallies strongly. The trading strategy to adopt is, buy when the KLCI falls towards the 1300 pts and sells when the KLCI rises towards the 1500 pts.

The tables below are OSK’s top Big/Mid/Small Caps Stocks with the target price & rating for 2012.

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Bursa

The FBM KLCI is a tradable index comprises of the 30 largest companies in the Bursa Malaysia by market capitalization. The index’s a component underwent a review on 8th December 2011

The prediction made earlier, was partly correct. Bumi Armada, UEM Land and AirAsia are joining the KLCI to replace PLUS, MISC and Gamuda. UEM Land’s inclusion is effective from 13th December while Bumi Armada and AirAsia will be part of the index from 19th December.

With Gamuda drop from the index, there is no longer any construction representative in the index. However, the inclusion of UEM Land into the index gives a property sector representation.

The table below is the new FBM KLCI component’s stock together with their sector, market capitalization (actual & adjusted) and weightage.

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For November, given the previous month’s sharp rally, OSK expects some pullback in global markets, with Malaysia being no exception.

Barring the announcement of a General Election, OSK remains defensive on the Malaysian market and would advocate a BUY only if the KLCI retraces towards 1,300 pts, while we may call a SELL if the market heads towards 1,533 pts. Maintain NEUTRAL for now.

The table below is the target price for OSK’s November 2011 top picks.

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OSK foresee that market will recover in May as they believe the 1Q2011 will at least meet downbeat expectations after the past 4 quarters of disappointments. With the potential for reasonable results, OSK believe the market will shift back to fundamentals and look back at Big Caps.

Strategy for the month would be to Buy fundamentally strong Big Caps as well as Trade on the Property sector as the newsflow here could resume after a couple of months hiatus.

OSK Top Buys are big caps with Maybank, CIMB, and Axiata are top banking & telcos stocks. AirAsia’s reintroduction of fuel surcharges and upcoming listing of its associates should help its share price while UEM Land is an excellent proxy for newsflow in the property sector

The table below are the target price for OSK’s May 2011 top picks.

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