The global sell-off in equities has definitely raised the risk of an early recession. While it’s still early days yet to say that a bear market is taking hold, OSK feel that it is prudent to highlight a list of alternative defensive stocks for the longer run that would benefit in the event a recession does set in early.
These stocks will benefit from a drop in incomes and commodity prices and are generally more inward looking as OSK believe domestic incomes should be more resilient.
The tables below are OSK’s alternative stocks which contains, target price, rating & the reason for the selection.
While markets did not rally as much as expected in 1H2011, OSK are keeping our view of an election-fuelled rally towards year-end, bringing the KLCI to 1680-pt target.
Banks, Oil & Gas, Construction, Property & Healthcare/Media remain OSK Preferred sectors. OSK Top Buys are generally extracted from these sectors.
OSK note that their Top Buys are not cheap but they continue to promote these stocks on account of their lower risk profile and the cautious mood in the market.
Below are OSK Top Buys for 2H2011
Top Buys for Big Caps Stocks
Real Estate Investment Trust (REIT) becoming popular in Malaysia due to high dividend yield paid by the management company. Currently, there are 14 REITs approved by Security Commission (SC) and listed in Bursa Malaysia.
The main advantage of (REIT) when compare with actual property investment is the investors earn better liquidity and cash flow.
How do they performed? The table below shows the comparison between the 14 REIT available in Malaysia in terms of Market Capitalization, Earnings per Share (EPS) and Dividend Yield for the past 1 year.
Markets rebounded in March with the KLCI ending 1Q in the black. Moving into 2Q, OSK foresee there will be some short term volatility but they are confident on their year-end KLCI target of 1680 pts.
OSK also advise investors to buy Big Caps on potential rebounds while focusing on the more defensive Small Caps given their superior performance over the past few months. OSK’s favourite sectors remain Banks, O&G, Property and Construction in the mid- to short-term while the longer term buys are Media and Healthcare.
The table below are the target price for April 2011 top picks.
OSK still maintain year-end 1680-pt KLCI target. However, they note that there are increasing market volatility in the short term. Investors with a lower risk appetite and shorter investment horizon may want to focus on defensive and dividend yielding plays.
OSK Top 10 Defensive Buys, which have dividend yields exceeding 4%, are from a broad range of sectors including Consumer, Healthcare, Media and Logistics.
OSK Top 10 Defensive Stocks Picks are,