Monday, May 15, 2017

Genting Singapore : Game starts when betting on Japan prefectures begins SELL

Market Strategy : Malaysia: The Hare And The Tortoise

Conventional wisdom says that the stock market is always forward looking, being 6-12 months ahead of the market earnings – just like how the furry one racing ahead of the hard-shelled one in the children’s classic tale of The Hare And The Tortoise. YTD, the Hare, i.e. FBM KLCI index, has risen by 8.1% to 1,775 pts from 1,642 pts, backed largely by inflows of funds back to the emerging markets. On the other hand, we project the Tortoise, i.e. FBM KLCI earnings, to grow by only 6.6% in 2017.  The Hare is way ahead of the Tortoise. The Hare has clocked up a "distance" of 8.1% in just four-and-a-half months, as compared with a "distance" of 6.6% that will take the Tortoise 12 months to complete. As the story goes, the Hare decides to take a little nap under a shady tree.

We feel that the extent of the market’s lead over earnings, at this point of time, is going to rattle the market’s comfort level a little. FBM KLCI currently already trades at 17.8x our 2017F FBM KLCI earnings, which has surpassed our target of 17.5x. The Hare has certainly got a little further ahead of the Tortoise than it ought to be. Also, we believe the market should take a breather, rightfully, ahead of a key event, i.e. the MSCI index rebalancing by the end of the month. If history is a guide, the event is likely to turn out to be a negative one for the market. We remain positive on the equity market outlook in Malaysia, although we do expect volatility over the immediate term as the market has moved a little further ahead of earnings than it ought to be, coupled with the potential negative impact coming from the MSCI Emerging Markets Index rebalancing at the end of the month.

Others :
Genting Singapore : Game starts when betting on Japan prefectures begins        SELL
Star Media : Disposal of Cityneon removes growth component                                  HOLD

Tenaga Nasional : Vortex Solar signed and sealed                                                             BUY
Plantation Sector : News flow for week 5 - 12 May                                                           NEUTRAL
TASCO, CCK Consolidated Holdings,Salutica,Cocoaland Holdings

US : Faster inflation supports June rate hike

AirAsia : AirAsia to launch new Chinese low-cost carrier
MK Land : Shot in the arm for MK Land
Felda Global Ventures Holdings : FGV scraps rubber venture in Myanmar

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