FED ended QE3 or tapering – Stake is high on stable growth outlook

Our theory is simple. If FED is daring enough to end QE3 means they have data on hand that at least 6 to 12 months should have a stable outlook. We should see a stronger USD and potential another round of BNM interest rate increase of 25 basis points.

China is desperate to maintain its grow rate at 7 to 8%. U.S. Is in stable growth environment. Japan and Europe are in loosening stage. ASEAN still in growing mode. We found sentiment is bias to benefit equities markets.

We continue our cautious optimistic approach. However we will increase equities reinvestment percentage by 10% point of our total portfolio. Holding percentage remained across portfolio.

KLCI will resume it’s upward trend

Resistance broken and stable at 1800 above shows they are values in the market. Even consistent outflow of foreign funds. KLCI behaved defensive with quick recovery. 

If Ebola and no major disaster pressuring the market. KLCI is on target to close higher for year ending 2014.

Is Europe fear for real?

Case after case reported problems in Europe economy.  Market reacted sensitively to initial tumbled then recovered.  Reports shown China and US are leading the grow.  Asean is also delivering splendid results.   Is Europe fear over stated? Fears of ECB has no tools to react further. Thousands of huge short positions in Dow Jones and globally.   Will the dooms day eventually arrived badly?

Our bet is no with cautiously optimistic  about the markets.   We believe the world markets reacted too volatile due to too many influential speculating funds from both side.  Europe is no longer a significant market in the world.    We have reserve that Europe economy is going to worsen.   If it is going to be worsen, we still believe the current growth in US, China and Asean may cushion the impact.  Eventually driving it’s consumption back to positive growth rate.

Many results beat estimates both local and globally

A stream of results out from Dow Jones to local KLSE.   Caterpillar, General Motors, Banks, Yahoo, Apple and locally PBBANK just announced a 13% year on year grow in profit. 

We believe there is value in the market and continue support a buy on dip approach with our top picks.   Stay investing with focus on asset oriented; climate changed related and agricultural/food companies.

KLCI 1800 is a resistance now

We believe a healthy recovery will be continuous in this week. Together with global markets selloff calming down. Many bargain buyers are emerging to shop for quality stocks. However, there are still no constructive reason for KLCI to immediately push back above 1800 level. Foreign funds net selling more than 3 billions in short period of time is noticeable.

Values emerged in the market – KLCI support at 1740 – 1750

Some values emerged from the recent correction.  We like MNRB at RM 3.80, Tasco at RM 2.70, L&G below RM 0.500.  Gadang at RM 1.320.  Success at RM 1.700 level.

I recommend continuous nibbling of stocks above while market correct.  But need not rush into it.   Buy with patient.  We may be wrong but we are at the point still believe the major crash is not here yet.

However if you follow asset oriented investment style.  The current down fall impact is minimal to our portfolio. 

Today we bought Lonbisc at RM 0.66, MNRB at RM 3.90 and L&G at RM 0.505.  We have covered our short position and may long future for an oversold position anytime.

Alright, Ebola and Greece concerns again rocking the market!

The selloff in Dow Jones persisted pressured by Ebola and Greece new financial concerns. As of now Dow down another 350 points and it may not look good with on target to set another one of the record black October.

However, we will be still a hold on fundamental top picks. We recommend stay away from the market a while. Take a short rest and walk away. We are still positive about the market and may do mild nibbling time to time.

Concern about little tools that central banks cannot use to boost Eurozone economy is a fact. But the growth of other part of the worlds especially merging market may balance off the effect.

The only worry to us is Ebola. If it is confirmed spreading out quickly in US and other countries. We think a mini crash may be on hand soon.

KLCI will test it support of 1800 post budget week

As we have a neutral stand on budget 2015. The weakness of Dow Jones and potential clearance of protest students in Hong Kong will pressure the global markets. Ebola outbreak is becoming a crucial factor in the coming week. If the spreading is extensive, we can see a further downward trend for world markets.

We will continue nibbling our top picks while market is at the correction phase. We still maintain our position with good stock selection with asset oriented companies will be our choice.

Budget 2015 – Micro oriented and depending on execution

Skip all the details about the budget. We feel that the budget 2015 focused into many micros development. Spending and expenditure are almost balance. It is expected as a tight budget as usual. We think the budget has some qualities in it. However, it will be depending on the execution of all the details. Overall, we would like to say is a neutral budget that still can support growth.

Merger valuaiton on MBSB and RHBCap at RM 2.82 and RM 10.03

If based on the valuation proposed for both MBSB at RM 2.82 and RHBCap at RM 10.03 is not excited us. When we first started invest in both MBSB and RHBCap. We believe its long term value also its price earning valuation ratios are attractive. We valued MBSB at least RM 3.000 above and RHBCap at RM 10.00 above.

However, the post merger may given a higher valuation and move RHBCap and MBSB trading PE to 15 times. We are particular interested in MBSB merger to form the mega Islamic Banking. As we believe the growth of Islamic banking is still immense in Malaysia.

As such, we recommend a hold and if possible until post merger. MBSB may be given a higher valuation after post merger due to its upgrade become a mega Islamic bank. Also possibly tapping into larger opportunity due to its increase in size.

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