SP, Maybank and properties sector are the stock need to watch when investing in stock market.
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KUALA LUMPUR: After the battering for the local stock market in
recent weeks, investors will be bracing for some selling pressure in the
week ahead, starting Monday, Sept 26 especially after the FBM KLCI fell
to its lowest since mid-August last year.
Concerns for the investors include whether the selling, especially
from foreign funds, has eased, especially for fundamentally strong
companies. More than 100 stocks closed at their worst for 52 weeks last
Friday.
Last Friday, the KLCI lost 1.58% or 21.87 points to 1,365.94.
Year-to-date, the KLCI is down 10.07%. It is the fourth worst
performing market after the Philippines, Thailand and Jakarta which fell
7.50% YTD, 7.11% and 7.48% respectively.
The bigger regional markets have slumped between 15% for Singapore and 23% for Hong Kong’s Hang Seng Index.
Affin Investment Bank’s head of retail research Dr Nazri Khan said he
believed the KLCI could see more negative headwinds in the week ahead
on growing fears over the global economy following negative comments
from the US Federal Reserve and more evidence of fiscal weakness across
Europe.
He pointed out the bad inter-market technical picture with traditionally bearish October looming ahead.
“We must caution investors that the FTSE All-World has already
declined by 23.2% since its May 2011 peak (14 months low), putting the
global stocks in the officially defined bear market,” he said.
Nazri said with the FBM KLCI below its 1,400 strong psychological
support (to its low since May 2010) and FTSE All World is now firmly in a
bear market with China Shanghai Composite Index, NYSE Composite Index
and Germany Dax Index scoring a fresh 52-week low, he believes the
traditional June-August summer rebound have ended.
“The high probable forecast next few weeks is clearly down with
September and October living up to its reputation as one of the market's
most bearish months of the year,” he said.
Nazri said the clearest sign that global economy is loosing momentum
can be seen from Hong Kong and Singapore exchanges, which are considered
most opened and most sensitive to global economic growth.
Both Hang Seng Index and Strait Times Index have tumbled 28% and 20%
respectively (to their lowest level since July 2009 and June 2010).
His concerns were more rating downgrades expected next week following
Moody's Investors Service’ downgrade of the credit ratings of US and
French banks.
"On the local front however, we are expecting some positive surprise
in the Budget 2012 to cushion the weaker external economies. Some
anticipated measures such as fiscal incentives to attract foreign
talent, liberalisation in healthcare and education and fiscal support
for GLC on international collaboration are likely budget elements to
boost the local market,” he said.
Overall, Nazri said despite the positive news on the home front, he
retained his cautious view in the near term. He advised conservative
clients to stay defensive with deep-value-high-yield-blue-chips while
aggressive clients to short index futures.
Meanwhile, stocks to watch in the week ahead are SP SETIA BHD [], MALAYAN BANKING BHD [], BANDAR RAYA DEVELOPMENTS BHD [] (BRDB) and TENAGA NASIONAL BHD [].
Oil and gas companies would also provide buying interest, especially
fundamentally strong counters which were affected by foreign selling.
However, investors should take a long-term view of the market, based
on Malaysia’s stronger economic fundamentals and strong banking system
while the Budget 2012 proposals could provide temporary respite.
SP Setia is expanding its landbank in Australia with an investment of
RM81 million for its second property project in Melbourne with an
estimated gross development value of RM772 million (A$250 million).
Its unit SP Setia International Ltd had signed a contract of sale
with Portbridge Pty Ltd to acquire the 2.23 acres of freehold land in
the South Yarra suburb in Melbourne
Investors’ interest could also focus on Maybank, a heavyweight in the
30-stock index, which fell 41 sen to RM7.99 on concerns that it could
face a derating risk. Its decline, which saw RM3.06 billion wiped out
from its market capitalisation, dragged the KLCI down by 7.10 points.
Credit Suisse Asia Pacific/Malaysia research, had in a recent report
on Malaysia, said there appeared to be growing investor concerns about a
possible repeat of the 2008-2009 global financial crisis (GFC).
It said while a repeat of the 2008-2009 GFC was not our base case, it
assessed the vulnerability of the banks if it was to see a US double
dip and debt crisis in Europe.
To gauge the downside risk for the banks, three key measures which it
focused on were valuation comparison with GFC lows; foreign
shareholding levels compared to GFC lows and earnings resilience during
2008–09 GFC period.
Credit Suisse research said that by comparing the current valuations
to the 2008–09 global financial crisis (GFC) lows, within its own
coverage, Maybank and CIMB appeared most vulnerable to a de-rating risk.
Stocks with the least downside risk are Alliance (only stock trading
below GFC P/E) and Public Bank (P/E at only 5% premium to GFC level and
lowest P/B premium to GFC level).
“Moreover, we believe that stock prices of potential acquisition
targets such as Alliance, RHB and Public should be more resilient,” it
said.
In terms of foreign ownership risk, it said CIMB was the most widely
held banking stock among foreigners. Banks that have seen the largest
increase in foreign ownership since the GFC are CIMB (+8.7 percentage
points to 36.4%), RHB (+8.4 ppercentage points to 13.6%), Maybank (+2.7
percentage points to 13.5%) and Hong Leong Bank (+0.9 percentage points
to 8.0%). On the other hand, foreigners have reduced holdings in
Alliance Financial Group, AMMB and Public Bank since the GFC.
Meawhile, among the other two stocks to watch would be Bandar Raya Development Bhd and Tenaga Nasional Bhd.
News reports said BRDB had been asked to disclose the beneficial
owner of a 23.6% block of shares in the property development company.
The report said Bursa Malaysia had asked BRDB to disclose the owner of
the stake, especially after BRDB’s plan to sell its assets to its major
shareholder.
Tenaga could also see trading interest on concerns about the current
gas supply shortage, high fuel costs and the weakening of the ringgit
against the US dollar.
Stocks which would see their dividends going ex the week ahead are MISC BHD []
and Malaysian Marine Heavy Engineering Bhd (MMHE). MISC’s final 10 sen
dividend tax exempt and MMHE’s final single tier dividend of five sen
will go ex on Monday. NCB’s interim dividend of seven sen single tier
will also go ex on Monday.
Source: The Edge
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