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.

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.

As KLCI in a short term correction mode.  There are stocks that beaten down a lot possibly due to fear of retail investor.  Many 2nd liners or grow stocks has started to show value.  

We bought MNRB at RM 4.250, Lonbisc at RM 0.715, Success at RM 1.700, TA at RM 0.870.  We will gradually nibbling for our top picks as long as value emerge no matter what is the sentiment of KLCI.

We have shorted KLCI at 1835 and covered back at 1822.5.  We longed back at 1822.5 and possibly cover back before end of the day.

There may be speculation but also some short term funds selling.  As many can expect a tightening deficit budget is going to be the objective. 

Corporate tax and personal tax may be lowered ahead of GST.  Many industries will wait for the detail or exemption or inclusion.

To our perspective.  Help those areas in need but definite not handling out cash.  As this will increase wastage as the criteria to receive the money is too general.   

In general, fiscal policy is a tool to influence the economy with objective.  I bet the most critical objectives now are to reduce budget deficit; channel resources to grow high margin industries and realign growth via human factor development like education and social welfare.

The market will very much depending on the budget to build it’s next 2 quarters trend before GST starting in April 2015.  We continuous recommending good stock pick and away from speculative play.

We bought more ABC 1288 at HKD 3.40 as it price has been beaten down due to on going protest.  We like the fundamental and dividend yield of ABC.  We will increase our bargain hunting if the price go further down from here.

The continuous weakness on AUD against RM due to improve speculation that BNM may raise OPR further before year end. Vice versa, Australia economy have mixed pictures with pressure on its central bank to keep rate on hold. We expect AUD weakness to continue with a potential break to below RM 2.80 vs. AUD 1.00 However, we take this opportunity to buy further as we are confident AUD has plenty of legs.

We believe KLCI will reduce net selling from foreign investors with local buyers will be improved. As the Selangor MB saga is going to be ended very soon. There is no significant uncertainty and speculation on budget may attracted some buying activities. World markets will also improve except HSI with its uncertainty of the protest towards Chinese government. We will long KLCI October 2014 fore pre-budget speculation for next two weeks.

Multicode has a flat result announced whereas Cypark improved its revenue and profit more than 15% year on year. Both closing on target to delivery PE 10 times in 2014. We believe their fair value is at least 15 times. Our bet will be more on Cypark with our consistent target of RM 4.00 as of its current trend.

1. MNRB
2. Success
3. Paramount
4. MBSB
5. Cypark
6. TA (New)
7. Lonbisc
8. Kawan
9. Heveaboard (New)
10. L&G

We are not sure which side is right or wrong. But the VGO at RM 3.50 can be antagonized. We believe price of Layhong may surpass RM 3.50 when resume trading. Layhong current share holders may reverse another higher VGO. Alternatively, they will increase its holding share by further buying from the open market. However, a great chance to continue to dispose our remaining shares at higher price.