Market Talk by RHB

by **hlk** Sun 21 Aug 2011, 22:48

This morning I was 'free' ... it is seldom that I m 'free' on Saturday mornings. So, I took the opportunity to attend a market-talk, tho it is at Port Klang. I never see distance as an excuse to listen to the experts, speaking of their opinions. Yup, I will try to attend market-talks, seminars, workshops, exhibitions, traders meetings and such ... it is just my way of learning. I know I m seen as 'crazy' or even 'stupid' but as I have said ... I am still very much in my learning process. Such talks will give me some insights and relating what I have read. It is confidence building in a trader/investor regarding opinions and outlook views.

I do like the fundamentals discussion in the talk, less technical, please. Mr Yap of RHBInvest started to speak about world/global economies. BLEAK ... consumer and business confidence have decreased. With QE2 ended, debt ceiling raised and AAA rating cut, we could expect the markets to adjust themselves, from overly optimistic at one point ... to the current un-certainties. The rush towards GOLD is an evidence that many investors have moved slowly moved out of equities/stocks ... the drop of crude oil(and CPO) has also confirmed the bearish outlook of global economies. The gold rush has started months or years back, actually. It is not new when we see GLD fromUSD100 to current USD180 or SLV from USD15 to current USD40.

HIgher US fiscal deficits is un-sustainable, Europe's debt crisis(PIIGS) with Italy and Spain stealing the limelight at the moment. Another 'bad' news is CHINA ... China's new housing prices has dropped substatially(do read about the bubble bursting in China's property market, especially in Shanghai and BeiJing). Inflation has been a risk, higher as ever now(explaining the appreciation of Gold prices). There is also an agressive credit tightenting in China's property, a measure take by the gov to curb property speculations.

Over in Malaysia, the risk of the delay in ETP implementations is a main concern. Near-term concerns are 1. rising inflation 2. property prices to ease and 3. household debt.

KLCI target has been cut from the bullish 1700 level to current 1450 level. This is RHB's cut-cut-cut for our KLCI. OSK has recently done that too. So, the out-look for KLCI 'suddenly' becoming BLEAK. Can things turn so BAD in such a short-term? THINK ... What I do like about charts is CHARTS DONT LIE. Human do ... analysts, broker houses, dealers, papers ... it is a huge scam, as some simply put it. Anyway, MANY more broker houses WILL come out SOON with their DOWN-grading of KLCI outlooks, the sectors and stocks. Hence, once a bullish outlook ... becoming ... darker.

KLCI target at 1450 is based on 14X2012 EPS, with P/B at 2.20. It is still HIGH, in my opinion. Hence, if we really see the bear market in coming months, KLCI needs to go below 1200 level for us to see some good valuations.

Top picks : Digi and TM for defensive play with good dividend yields. BJToto, Carlberg, KPJ and Segi being mentioned for their defensive nature. Dialog and Gamuda complete their list.

Top pick sector is TELCO with Digi and TM being favoured.

As for recession proof counters, MEGB(3.00), SEGi(2.30), Help(2.60) and KPJ(4.82) being mentioned.

Construction : HSL, Fajar, TRC and Sendai are having outperform(OP) rating.

O&G : Dialog, Perdana, WaSeong, PetGas and Dayang are OP.

Timber : TaAan and JTiasa for their venture into plantations.

Gaming(FV) : BJToto(4.85), GenM(4.25) and Genting(12.15)

Auto : TChong(5.50) is their top-pick, DRB(2.95) with Proton UP(3.00).

Consumer : Amway(10.00), Carlberg(8.23) and CIH(5.80) are OP with AEON, BAT and QL under-perform.

Plantation : CBIP, Sime and THPlant(2.70, PE8) are OP. THPlant is their top-pick. IOI, Asiatic, IJMP are MP with KLK placed UP.

HealthCare : KPJ, Faber(2.32), Kossan(3.87) and Hartalega(6.10) are OP with TopGlove(4.23) UP.

Property(MP) : UEM(1.98), SPSetia(3.80), IJMLand(2.40), MahSing(2.25) and KSL(1.52)

Utility : Puncak(3.02), Tenaga(6.50) and YTLPower(2.00)

Puncak : There is an investor who is interested with Puncak and asked Mr Yap(the speaker) on why Puncak seems to be drifting lower. Checking the chart, it is LOWER than the during the 2008 crash!! Wow ... so, I m placing her in my waterfall list today.

Media - underweight.

Technology(UP) : JCY(0.39), Unisem(1.26) and Notion(1.74). He also mentioned tha 4Q is the weakest quarter for tech-sectors. So, MORE downside risk on these stocks.

JCY : Someone asked about JCY as the FV is so much lower than other broker houses' forecast. Well, Mr Yap explained very well, indeed. He is the analyst for JCY, so obviously he has his reasonings why he see JCY will go lower from here!! Anyone read about HP's news yesterday? Is it really the end of HDDs?

Reporting by : CP TEH

Haha ... I have reported what I have listened and managed to write. I am the very few who pen-down some notes while listening. I think the average age of the audience is 45-50?

RHBInvest : These data may not be accurate as I hv jotted them down in haste. Please check with RHB, ok?

I am in good mood ... as Liverpool beat Arsenal 2 - 0. Yeah!!

TEH