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.
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.
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.
For December, with both China and Thailand easing monetary conditions and 6 Central Banks in OECD countries coming together to boost liquidity, it appears that governments worldwide want to tackle global economic woes with a united front.
As such, there could be a modest year-end rally in December, both globally and in Malaysia. OSK advocate a little short-term risk-taking while maintaining their medium-term conservative stance.
The table below is the target price for OSK’s December 2011 top picks.
The FBM KLCI is a tradable index comprises of the 30 largest companies in the Bursa Malaysia by market capitalization. The index’s component stocks are due for second 2011 revision on 8th December.
Based on the recent data, PLUS and Gamuda are expected to drop from FBM KLCI components. PLUS will be dropped due to privatization.
On the other hand, Gamuda will be dropped because it is now the 37th largest company by market capitalization. This is because as per FTSE regulations, if the counter no longer in the top 35th, it should be dropped from the FBM KLCI.
Based on the table below, to replace PLUS and Gamuda, 3 most likely candidates are Nestle, AirAsia and Bumi Armada.