OSK Research: 1Q2012 Report Card and Strategy (June 2012)

In the recently concluded 1Q2012 reporting season, a similar number of companies under our coverage underperformed, at 31% versus 32% in 4Q2011 and 34% in 3Q2011. The percentage of companies that outperformed fell to 14%  from 17% in the previous quarter (see Fig 1) and 15% in 3Q2011. Surprisingly, there were more earnings letdowns among the big caps, with 27% missing estimates versus 17% in the preceding quarter while among the small caps, more companies trumped estimates - at 20% - compared with 12% in 4Q2011. The notable positive surprises among the big caps were Maybank and JCY while the negatives were from MAS, the Genting Group and MISC.

Steel, plantations and oil & gas disappointed.

The steel, plantations and oil & gas sectors were  dogged  by industry-specific issues and the macro-economic environment. Most steel companies that we cover continued to be mired in losses due to weaker selling prices and high material costs while plantation companies suffered production setbacks and higher input cost. Oil & gas companies were drenched by the monsoon season and the dearth of new contracts, which are only expected to pick up in 2H2012. The Genting group of companies saw earnings skimmed by the poor showing from the domestic and Singapore gaming units as well as its plantation outfit.

But consumer, financials/insurers gave reason to cheer.

As expected, the sectors in better shape were those with relatively more stable and defensive earnings and which had benefited from the Chinese New Year demand. Here, the breweries and retailers stood out. There was also the positive fillip for financial related insurance companies due to the adoption of the Malaysian Financial Reporting Standard (MFRS1) during the quarter.    

Given the potential bugbears in the form of:

1. the upcoming make-or-break elections for Greece slated for 17 June,
2. possibility of a Spain bailout,
3. FOMC’s meeting on 19-20 June, and
4. the technical violation of the US markets last Friday,

there are enough reasons for investors to stay defensive while positioning for rebound trades in the event of a sharp pullback. The upcoming listing of 2 major IPOs (Gas Malaysia and Felda Global Ventures) should provide near-term catalysts and support for the FBM KLCI. We like the banking, consumer, construction and oil & gas sectors.

In short, market is turning more cautious, so do investors...


Source: OSK Research

Outlook: SELL in May and Go Away? (May 2012)

Lackluster global markets. The Malaysian market sputtered in April after hitting a  record close of 1606.63pts early in the month. It then trended downwards together with most global markets, as political uncertainties in Europe sapped the strength of markets worldwide in the first half of the month, while political uncertainties at home dampened the KLCI in the second half of the month. This was indeed as per our expectations.

Outlook: Sell in May and Go Away?

We investigated the historical index performance over the months of May–Sept and Oct–April for the US and for Malaysia, Jakarta and Hong Kong to try and determine if there was any truth to the old adage. Analysis indicates that over the past 52 years in the US and 22 years in Asia, markets do indeed under-perform more during the months of May–Sept as compared to Oct–April, with the KLCI surprisingly emerging as a high beta market compared to the other three markets.

What goes up must come down
With the  historical trend speaking for itself and global markets performing robustly thus far in 2012, we therefore believe there is a strong risk for markets to retrace in May. Even though Malaysia has under-performed global markets year to date, a global slump may still put a dent in the Malaysian market. As such, we advise the following strategy for the month of May:

• Sell early in the month with Blue Chips likely being sold down if the global market slumps
• Buy defensive stocks early in the month, especially in the Mid and Small Cap consumer  space as some stocks here have not rallied in the 1Q
• If markets come down significantly, ie, the KLCI drops below the 1550pts, then consider accumulating stocks in the Construction, O&G and Banking space on weakness

April Top Buys did well
Considering the 1.6% drop in the KLCI for April, our top Buys did well with 4 out of our Top 5 outperforming the KLCI and also returning a positive return for the month. This was due to our strategy of selectively picking stocks with their own specific catalysts in April. The only disappointment was  MMC that continued to be dampened by rumours of a delay in the IPO for Gas Malaysia.

Start off with defensives in May
With a potential drop in the market in May, we would recommend going defensive over a 1-month time frame. Those with a longer time frame could consider picking up cyclical as the market drops, but we do not have the luxury of that for our monthly outlook. The Top 5 are, therefore, familiar defensive names including telecom companies Axiata and Telekom Malaysia, consumer-related plays AirAsia (which may benefit from lower oil prices) and Media Chinese (benefiting from increased political interest) as well as TASCO, a small logistics company with reasonable dividend yields and a strong track record.




Source: OSK Research report

OSK's March 2012 Outlook and Strategy

While Malaysia remained a laggard compared to the rally in developed markets, the global rally that had started in January finally dragged the local bourse kicking and screaming up during February with a rally of more than 3%. Globally, markets continued to rise despite the patchy fundamental landscape. Thus, while we had anticipated a potential rally in the 1st half of February, our expected market retraction in the 2nd half failed to materialize.

Top Gainers for February were dividend plays such as Carlsberg or companies with corporate activities such as Hartalega with its bonus issue or potential targets such as RHB Cap and MBSB. Smaller plantation companies such as TH Plantations and RImbunan Sawit also had a good run.

On the flip side, companies with poor results such as Maybulk, MAS and KNM got sold down. On a broader sectoral basis, telcos were the dominant play. It was the return of the Big Caps in February as the catch-up played by the KLCI meant that big caps ran up with the inflow of foreign funds.

KLCI year-end target set at 1,620 pts!!!

Moving forward, we unveil our KLCI year-end target at 1,620 pts. This is derived from the average of our 2012 and 2013 fair values at 1,466 pts (13.5x PER) and 1,775 pts (15.0x PER) respectively. We still believe that weak fundamentals justify a lower PER than the historical average of 16.6x for the KLCI. While we remain unconvinced of the current rally’s fundamentals and still see a risk of market correction, news flow with regards to large infrastructure investments should help the KLCI post a stronger 2H2012.

The derivation of our target is as such:

• There is no change to our 2012 KLCI fair value of 1,466 pts based on 13.5x PER on 2012 numbers
• We still believe that weak fundamentals justify a low PER for 2012 and that there may be mid-year weakness in global markets
• We derive our 2013 KLCI fair value of 1,775 pts based on 15.0x PER on 2013 numbers
• The higher PER of 15.0x is based on 0.5 std dev below the historical average 16.6x PER of the KLCI
• We are still holding back from applying a historical average PER as we remain concerned on overall global economic fundamentals
• Nonetheless, the global liquidity fuelling the current rally could continue to drive markets and the news flow with regards to large infrastructure investments should keep the KLCI buoyant in 2013. Hence, we apply a higher PER compared to 2012
• Our 2012 KLCI year-end target is the average of the 2012 and 2013 fair value which gives a figure of 1,620 pts

Upgrading market call to NEUTRAL

Rolling forward our investment outlook horizon and nothing that the year-end target gives some 3.2% upside to the market, we upgrade our call on the market from Sell to NEUTRAL. Given our view that this is a Liquidity-Driven Rally with risk of correction, we recommend investors take a Balanced approach to the market for the remainder of 2012. As the market could still turn south in the middle of the year, we keep some Defensive stocks among our Top 10 Buys. At the same time, the burgeoning news flow on Construction and Oil & Gas means we recommend investors take some positions in these sectors. We, thus, expand our Top Sector calls from Consumer and Telcos to also include Construction, Oil & Gas and Banks.

Top Buys are a balanced mix

Our revised 2012 Top Buys represent a balanced mix of Defensive and Cyclical stocks with a range of deep value to reasonable yield plays. Our Top Buys are Maybank, CIMB, Axiata, TM, Gamuda among the Big Caps and Dialog, KPJ, QL, Padini and KimLun among the Mid and Small Caps.

For March, given the uncertainty remaining in the market, we introduce a balanced Big-Small-Cyclical-Defensive portfolio. As such, we select Maybank, CIMB, Axiata, Gamuda and KPJ as our March top buys.

Source: Excerpt from OSK Research report

OSK Strategy and Outlook (Feb 2012)

Global Rally ex Malaysia. While global markets rallied in Jan 2012 to post their best January performance since 1994, Malaysia languished as an exception among all the major markets in East Asia, thus strangely validating our Sell call on the Malaysian market in January. Globally, the economic outlook in the US remained stable with 66% of companies that reported earnings thus far beating estimates. While the situation was different in Europe with the European Financial Stability Fund (EFSF) losing its AAA rating with S&P, nonetheless, the slush of liquidity unveiled by the Long Term Refinancing Operation (LTRO) allowed European markets to rally accordingly as bond yields in Italy declined dramatically.

Takeover spare continues. While December saw the privatization offers for KFC, QSR and YTL Cement as well as rumours of Proton’s stake sale by Khazanah, January saw more of the same including:

1. DRB-Hicom acquiring Khazanah’s 42.7% stake in Proton for RM5.50 a share.
2. Can One acquiring a 32.9% stake in Kian Joo for RM1.65 a share
3. Samling Strategic Corporation’s plans to privatise Lingui and Glenealy at an indicative price of RM1.63 and RM7.50 per share respectively.

Comeback kings. Top Gainers for January were comeback kings which had languished in

2011 but which were either driven by fundamentals (such as JCY) or rumours (such as Maybulk). Sector-wise, Tech (driven by JCY) and Transport (driven by Maybulk and MAS) as well as construction (by Mudajaya and Gamuda) gave the best returns for the month.

OUTLOOK: BETTER TO BE NIMBLY FLEXIBLE THAN DOGMATICALLY WRONG

Right but still… While we were correct in our calls for the market in Jan 2012, calling a SELL on the broad market and choosing “alternative” Buys as our Top 5 Buys for the month, still the market performed better than we had expected while global markets soared despite a patchy month of headlines. While equity markets do tend to outperform in January given the re-balancing of portfolios in a new year, the strength of the market thus far has taken us by surprise.

Be prepared for an upgrade. If indeed the KLCI performs well over the next 15 days inline with a global rally, we would be forced to rethink our bearish view for 1H12. Instead, we may upgrade our call on the market to a NEUTRAL from the current Sell, and may well promote more cyclical sectors such as Oil & Gas and Construction. While the market may subsequently turn south after a 1Q rally, still the flush of liquidity in the system may keep it resilient for most of the year. For now, we remain Defensive with Consumer stocks and other defensive mid-cap plays likely to outperform still in the short term.

Top Buys are Defensives with Good Results expected. 

With February being a results seasons month, we go back to fundamentals to select our Top Buys. Four of our Top 5 “Alternative” Buys outperformed the KLCI in January, namely Sarawak Oil Palms, Supermax, JCY and Old Town. For February, therefore, our selection of Top Buys for the month of February is mainly culled from these expected defensive out-performers, namely:

1. KPJ Healthcare – While results for the 4Q are typically not stellar (doctors tend to go on holidays and patients tend to postpone treatments where possible given the festive season), the excitement surrounding the upcoming listing of Integrated Healthcare Holdings could be enough to spur the share price upwards.
2. Malaysia Building Society (MBSB) – We are expecting a strong set of results for the company for 4Q11 and the recent civil servant pay hike in 2012 should mean management should provide a decent enough outlook going forward.
3. QL Resources – After two quarters of lackluster earnings due to poor fish catch in Sabah, we understand the catch improved in 4Q11. Also, expansion plans in Indonesia and Vietnam are largely on track.
4. Media Chinese – Expecting the best ever quarterly results in 4Q11, we still see many catalysts for ad spending in 2012 including the General Elections, 2012 Olympics and Euro 2012.
5. Padini – Our new Top Buy in the Consumer Retail space, a recent visit confirms that the company has an excellent profit track record, solid management, a good growth story (in the form of value fashion outlet Brands Outlet) and cheap valuations (below 10x forward PER). What’s not to like?

Source: OSK Research

OSK 2012 Outlook: Be Nimble in the "Way of the Market"

OSK have a Neutral outlook on the Malaysian market going into 2012 as the combination of uncertain growth outlook in the US and Asia coupled with a possible recession in Europe cloud the prospects for strong earnings growth locally. While Malaysia is likely to avoid slipping into recession, the deficit reduction exercises undertaken by Eurozone economies may well tip their slow growing economies into a recession.

In any case, for Malaysia, OSK see earnings growth slipping to between mid single digits and low double digits, a pale shadow of what it was in 2006, 2007 and 2010 when earnings growth came in between 20 to 30%. Newsflow on developments surrounding the handling of sovereign debt in Europe and US will also likely to lead to volatile markets worldwide. As such, in the short term, we are faced with volatile markets which will likely give way to a dampened economic outlook. OSK advise investors stay cautious into mid 2012 and focus on Defensive sectors such as Consumer, Telco, Healthcare and Media. OSK's 2012 KLCI fair value is 1466 points based on a PER of 13.5x or 1 standard deviation below the historical average of 16.6x given the uncertain market conditions.

But, there are opportunities to TRADE?

That being the case, despite the overall Neutral stance, the volatility expected should give rise to plenty of Trading Opportunities. OSK advise investors to Trade on Cyclical sectors such as Banks, Oil & Gas and Construction as the market dips or rallies strongly. The trading strategy to adopt is:

• Buy when the KLCI falls towards the 1300 points level as the broader market then offers a 10% upside to 2012 fair value. As Malaysia is not likely to enter into recession, earnings contraction was expected and value should emerge closer to 1300 points. A combination of still positive earnings growth, low foreign shareholding and the Economic Transformation Programme (ETP) should mean Banks (leading the economy), O&G and Construction (beneficiaries of the ETP) will present good entry points at that level of the market.

• Sell when the KLCI rises towards the 1500 points level as the market will be overpriced then. Fundamentals remaining weak. Although the 3Q2011 earnings season may have seen a slight improvement q-o-q, most of the improvement was focused on the Small caps where analysts have had time to pare down forecasts. On the flipside, Big caps continued to slide with the potential for more downgrades in the coming 2 quarters.

What are the sectors to focus on?

Which are the Top Picks?

Among the defensive stock calls, the Top 10 Defensive Buys are namely:

1) Axiata (FV: RM5.60) – The only listed Malaysian telco company that also offers a regional footprint in Indonesia, Singapore, India, Bangladesh, Sri Lanka and Cambodia. Still the cheapest Malaysian telco company at 13x PER.

2) Petronas Gas (FV: RM15.52) – Natural gas processor, importer and transmitter in Peninsular Malaysia with 80% of profits guaranteed by its mother company, Petronas. Growth catalyst in the form of new LNG import terminal in Melaka.

3) Telekom Malaysia (FV: RM5.15) – Incumbent fixed-line telecoms provider in Malaysia. Making waves via its new high-speed Internet offering Unifi that is acquiring new subscribers at a rate of 1,000 per day. Highest yields at 10–12%.

4) Guinness Anchor (FV: RM13.58) – Broadest brewery offering translates into defensive earnings in the event of an economic slowdown. Decent yields, coupled with the 2012 growth potential coming from the UEFA 2012 football tournament.

5) AirAsia (FV: RM4.57) – Largest Low Cost Carrier (LCC) in Asia; continues to outperform its regional airline peers. Potential IPO of regional associates and benefits from a partnership with MAS will be the catalysts for 2012.

6) KPJ Healthcare (FV: RM5.21) – Largest private hospital provider in Malaysia, which is growing its hospital chain by another five hospitals from the current 21 over the next three years. Growth areas are medical tourism and retirement care.

7) QL Resources (FV: RM3.62) – Largest manufacturer of surimi in ASEAN and second largest producer of eggs in Malaysia. It is replicating its business in Indonesia and Vietnam over the next 12 months.

8) Media Chinese International (FV: RM1.51) – Largest publisher of Chinese language newspapers in Malaysia. To benefit from falling newsprint prices in 2012.

9) Supermax (FV: RM5.50) – Second largest rubber glove maker in the world, which will benefit from a fall in latex prices, while demand remains resilient.

10) TRC Synergy (FV: RM0.76) – Leading Bumiputera contractor. Shortlisted for various packages in the KL MRT project and should be assured of some contracts over the next 12 months.

Source: OSK Research

OSK Strategy and Outlook (Dec 2011)

Essentially, with the uncertainties in Europe continuing amid a potential global slowdown in the economy, we will continue to see market volatility in the next few months. As such, we continue to advise investors to be patient and focus on Defensive counters, while looking out for opportunities to Trade. We continue to advocate Buying into Weakness when the KLCI falls towards the 1,300-pt level, focusing on Banks, O&G and Construction stocks while we advocate Selling into Strength on the same three sectors when the market rallies towards 1,500 pts.

Festive Cheer in December?

While we remain fairly defensive over the mid term, December may still be a bright spot amid the gloom. There is still a possibility of the traditional year-end rally and the just announced joint effort by various central banks, including the US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada to provide liquidity may just convince markets that there will indeed be a coordinated global effort to tackle the sovereign debt woes.

These central banks will be reducing interest rates on dollar liquidity swaps by 50 basis points. While we doubt that this will be the magic pill for Europe and the world, there may just be enough optimism and hope left in December to see markets rise towards the year end. As such, we see a possibility that the KLCI may still rise to end the year in positive territory, close to our 1,533-pt year-end target, although ultimately economic woes in Europe should drag it down towards our 1,466-pt 2012 Fair Value.

Asian governments also getting into the act. The efforts by central banks is also being supported by Asian countries with the Chinese government cutting reserve ratios for its banks, while Thailand announced its first interest rate cut since August 2009. As such, there could also be a regional boost to support the global effort.

OSK Stock Picks for December 2011

Throwing in some cyclical names in December

Given our view that the KLCI may possibly rise in December with the coordinated efforts by central banks worldwide to put on a united front (at least till the end of 2011), we introduce more cyclical names into our Top Buy list, such as Maybank (replacing Axiata that has done very well) and Dialog (replacing the ever defensive KPJ Healthcare).

Source: OSK Research Report

OSK Stock Picks for July 2011

While fears of an European sovereign debt default reverberating worldwide, Malaysia quietly outperformed most of the world in June as the Banking sector led the KLCI higher after the potential M&A of RHB Cap was called off . We had expected the KLCI to trend higher led by banks but our hope was founded on potential excitement driven by the merger rather than on sighs of relief that there would be no overpaying for RHB Cap.

OSK Research: Top Gainers and Losers of FBM 100 during the month of June 2011.

July looks to be a Strategist’s fantasy?

With numerous announcements related to economic reform and infrastructure developments lined up for July, namely:

• 1 July – The launch of the ETP River of Life project involving the rehabilitation of the Klang River;
• 5 July – The 7th ETP update during which the PM will also unveil PEMANDU’s efforts to classify some 37 policy change recommendations made in the NEM into 6 Strategic Reform Initiative (SRI) clusters that will signal real economic reform and serve as enablers to the ETP projects;
• 8 July – The ground breaking ceremony of the ETP KL MRT project.

Coupled with what appears to be increasing foreign interest in the Malaysian market, July looks to be every optimistic strategist’s dream as the market may well scale higher from its already record levels. Only the risk of unrest related to the planned rallies (now banned) on 9 July appears to be casting a cloud over the July outlook. Even the global outlook has improved with problems in Greece appearing resolved until another day.

OSK Research: Foreign shareholding level still depressed as of March 2011

ETP has been well marketed...

The heightening foreign interest in Malaysia appears to have stemmed in part from the marketing efforts of PEMANDU in promoting the ETP. As economic reform moves into the next gear with the mapping out of details on how the New Economic Model’s policy reform can serve as enablers of the ETP, we believe that the buoyant foreign sentiment can be sustained. Thus we continue to advocate buying of sectors which will benefit from the ETP, namely Banking, O&G, Construction and Property.

Top Buys reflect our 2H2011 outlook

For July, we stay with our favourite sectors in naming our Top Buys, with Banks (Maybank), Construction (Gamuda), Property (UEM Land) and O&G (Dialog) all fielding a representative each. We also present a Top Buy from the Steel sector (Perwaja) in line with our recently upgraded view on the sector on account of potential M&As and handing out of Iron Ore mining concessions.

OSK Research Top Picks for July 2011

Source: OSK Research

OSK Stock Picks for June 2011

The KLCI performed as expected as a reasonable stream of results provided a stable floor while strong news flow drove up Bigger Caps. For June, while the 4 upcoming IPOs and the KLCI review may draw some attention, OSK believe all eyes will be on the potential tussle between CIMB and Maybank over the control of RHB Cap.

OSK Research

Outlook: Possibly not as quiet as expected

With a total of 4 IPOs going for listing in June and July, it was expected that the market to be somewhat quiet as investors stored away funds to subscribe to the IPOs or buy into them when traded. Despite concerns that the amount of funds raised by the 4 IPOs, namely UOA Development, MSM Malaysia, Axis International REIT and Bumi Armada, would suck the liquidity out of the market, but the amount of funds (RM7.7bn) is far less than that raised in 2010 with the listing of MMHE and Petronas Chemicals (RM14bn). Thus, there should not be much of an issue on the liquidity of the market post the 4 IPOs.

Funds to be raised by IPOs in 2011 (Source: Company Data, OSK)

Together with the KLCI review

Another market's attention factor is the upcoming KLCI review, which are to be announced on 6 or 7 June and become effective in the 3rd week of June. In this review, OSK see MMHE and UEMLand possibly replacing PLUS and MAS, which will be privatized and has fallen below the Top 40 stocks by market cap respectively.

OSK Research, Bloomberg

Banks and Situational

Given what may still be a lackluster broader market in June, we are focusing on a number of situational stocks that should see better news flow during the month.

1. First, we have UEMLand who will likely joining KLCI before end June.
2. We also have KimLun Corporation which may see a pick up news flow on Iskandar Malaysia during the month.
3. Next, we have Khazanah's Pos Malaysia stake sale completed in the 3rd week of June coupled with details of what DRB-Hicom plans to do with the company.
4. Finally, we have 2 smaller banks, namely RHB Cap and Alliance Financial Group that should see sentiment on improved M&A rumors.

Source: OSK Research

OSK Stock Picks for April 2011

After being hit by a few Black Swan events, markets rebounded in March with the KLCI ending 1Q in the black. Moving into 2Q, we still see some short term volatility but are confident of an eventual rally to close in on our year-end KLCI target of 1680 points. We advise investors BUY Big Caps on potential rebounds while focusing on the more defensive Small Caps given their superior performance over the past few months. The favorite sectors remain Banks, O&G, Property and Construction in the mid-to-short term while the longer term buys are Media and Healthcare. This strategy is reflected in our April top buys as well.

Timber the BIG winner...

For March, timber stocks were actually the big winners, including names such as Suber Tiasa, Jaya Tiasa, TaAnn, WTK and Lingui, on hopes for better timber demand in view of reconstruction efforts in Japan. Nonetheless, these counters are not part of the FBM100. Instead, among the FBM100 constituents, media player Media Chinese and Petronas companies Petronas Dagangan and Chemicals were the big winners. Sectoral wise, O&G led the way followed by Technology (JCY), Media (MCIL), and Gaming (Genting).

Outlook: Moving into 2Q

Moving into 2Q, we see the possibility of some short-term volatility for the remainder of 2011 but market fundamentals remain sound. We maintain our year-end KLCI target of 1680 points based on an average of the 2011 KLCI fair value (1648 points 16x PER) and 2012 KLCI fair value (1710 points 15x PER). With this in mind, we maintain Overweight on the Malaysian market. Our view is driven by 4 key factors:

• The economy will continue to grow
• Upside and Downside are fairly equal
• News flow ahead of the General Election remains very supportive
• Earnings should match expectations

For April - A month of 2 Halves

We believe that there may well be 2 distinct halves in the month of April. The first half should be positive for the market, with the one of the key factors being the Invest Malaysia conference which will be held on 12 April. Among the announcements could be:

• The disposal of Khazanah's stake in Pos Malaysia
• The next Risk Service Contract for marginal oil fields
• Release of Government lands for property development

However, for the second half of the month, we are concerned of greater market volatility, due to potentially less positive outcome of the Sarawak elections. Since BN already holding more than 80% of the state seats, we believe the risk is that their performance may drop in this upcoming election. Consequently, this may spark some knee jerk selling until the 1Q2011 reporting season.

Source: OSK Reseach Report

OSK Stock Picks for March 2011

By OSK Research,

Despite relatively strong results from a number of Blue Chips in February, the market still retreated and ended up in the red so far in 2011. Selling was largely attributed to concerns arising from political unrest in the Middle East although we continue to see limited risk if this does not spread to Saudi Arabia.

Go out and BUY?

Trading Strategy - Buy on Weakness

OSK continue to advise investors to Buy on Weakness in the current volatile market with focus on Banks, especially those that have been sold down recently as we still see robust loans growth of 8.5%. OSK also advise trading in Oil & Gas, Construction and Property counters as the news flow should remain good although they caution that profits will likely to kick in only in 2H of 2011.

March 2011 Top Buys

OSK's top buys did poorly for February, with only 2 stocks matching or exceeding the KLCI namely KPJ and Kencana. For March, as we remain hopeful of a market rebound, we are keeping CIMB, Kencana and SP Setia as our top buys. At the same time, we have added in defensive plays such as Petronas Gas and also retain KPJ.

Source: OSK Research

By Finance Malaysia,

While we are hopeful that the unrest in Middle East will eased soon, without spreading to Saudi Arabia, I think investor should trades cautiously as long as KLCI did not break free from the 1,500 psychological level. In terms of sector, I prefer Oil & Gas and Construction sector mainly because of Malaysia government's "preferred play". I view these sector as more defensive to global uncertainties, as Petronas and government is the main projects sources for O&G and construction sector respectively.

Related Posts:

Why Malaysia Market keeps going UP?

Maybank is going to 'EAT' OSK?

Financial Daily recently reported that Maybank is going to take-over OSK Holdings Bhd as Maybank was said to be continuously seeking opportunities. Although, both Maybank and OSK reply to Bursa Malaysia's query, both parties have neither denied nor confirmed the opportunities. And now, let us look at the possible acquisition.

What makes OSK attractive?

• Good track record of rapid growth, which offers a wide spectrum of financial, advisory and investment services.
  
• Already operating in Malaysia, Singapore, Hong Kong and Shanghai.
  
• One of the pioneers in local broking industry with 450 remisiers and 300 company dealer's.

What's in-store for Maybank?

• Maybank had explicitly wanted to expand regionally, especially on investment banking services.
  
• Regional equities broking was always in Maybank's radar.
  
• And, main weakness of Maybank now was its fund management arm, in which, OSK is famous of.
  

If this is true, Maybank is heading in a right direction, by 'eating' OSK, to compliment with its aim to expand regionally and addressing its main weakness.

New Fund: OSK-UOB US Focus Equity Fund

Following the US government pump priming efforts during the global financial crisis, OSK-UOB believe that we are now witnessing the US economy being stabilized and poised for economic recovery albeit at its early stage. Henceforth, they offer investors a US-focused equity fund to capitalize on the US economic recovery.

Tag-line: "It is PRIME time to up your STAKES"

This is a feeder fund that will invest principally in Schroder International Selection Fund US Small & Mid-Cap Equity (launched on 10/12/2004), which invests primarily in equity securities of smaller and medium-sized US companies. Those are the US companies which, at the time of purchase, form the bottom 40% by market capitalization of the US market.

Key Summary

Fund category           : Feeder Fund

Fund type                 : Growth

Initial offering period : 15th Oct - 4 Nov 2010

Initial investment       : Min RM 1,000

Top-up                    : Min RM 100

Sales charge            : 5.50%

Exit fee                    : 1.00% (within 6 months, thereafter none)

Source: OSK-UOB

New Fund: OSK-UOB Capital Protected Asia Gaming & Hospitality Fund

With the Asian economies leading in the run up to the global economic recovery, it is expected that the gaming and hospitality sector in Asia would be positioned for growth. Supported by a stead fast growing population and rising income, the gaming and hospitality sector in Asia is thus expected to flourish.

On such expectation OSK-UOB offer investor a new fund that will seek to capitalize on the expected growth of this sector in the Asian region, particularly in Macau and Singapore whilst protecting* investors' capital.

This is a 4-year close-ended capital protected* fund which aim to provide regular income over the medium term whilst protecting investors' capital* on the maturity date.

This fund is suitable for investors who:

1. have a low risk tolerance;
2. seek capital protection*;
3. share our view on the growth potential of the Asian gaming and hospitality sector during the run up to the world economic recovery;
4. have a medium term horizon (4-year);
5. seek regular income

Offer Period     : 5 Oct - 18 Nov 2010
Min Investment : Rm 1,000
Sales Charge    : 2.50%

* This capital protected fund is provided through investments in ZNIDs and not by a guarantee.

OSK-UOB Capital Protected World Mining Fund

OSK-UOB Unit Trust Management Bhd:

Following the stabilisation of the global economies after the global financial crisis, we have seen a significant recovery in prices of hard commodities (such as base metal (e.g. copper, aluminum), bulk commodities (e.g. coal, iron ore) and precious metal (gold, silver)). Whilst we do not necessarily expect the same rate of price increase going forward, it is our expectation that such commodity prices are likely to remain well supported from demand growth, particularly from the emerging markets such as China, India and Brazil as well as the western world coupled with supply side constraints which should underpin these commodity prices over the coming years.

OSK-UOB Capital Protected* World Mining Fund (CPWMF) is a 4-year closed-end capital protected fund which aims to provide capital appreciation over the medium term whilst protecting investors’ capital on the Maturity Date.

CPWMF is suitable for investors who:

• have a low risk tolerance;
• seek capital protection*
• seek potential returns from the exposure to the hard commodities sector; and
• have a medium term horizon.

Key Fund features:

Offering period  : 17 Aug - 30 Sept 2010

Min Investment : Rm 1,000

Fund Type        : Capital Protected (close-ended)

Entry Charge    : 2.5%

* This is not a capital-guaranteed fund.

* Disclaimer: This is not a recommendation to buy or sell

Source: OSK-UOB website  

New Fund: OSK-UOB China-India Dynamic Growth Fund

OSK-UOB Unit Trust Management Bhd is launching a new fund on 11th March 2010. The fund will capitalise on the potential growth of world's two largest emerging countries. With a spectacular GDP growth of 8-10% per annum, China and India poised to lead the world's economy out of recession. China and India now ranked as world's 2nd and 4th largest economy respectively, and will outpace Japan in the next few years.
Among the key selling points of the fund are:

1. Rapid urbanisation
2. Great domestic consumption demand
3. Sustainability of strong GDP growth

This is a high risk, high return fund, with portfolio allocation of 60%-40% between the two countries.
UOB asset management will manage the China portfolio, while, UTI International (Singapore) is the sub-manager for India portfolio of the fund.