KL stocks face 'wild ride' on earnings: OSK

MALAYSIA’s stocks are in for a “wild ride” this month, said OSK Research Sdn, after the economy expanded at the slowest pace in seven years in the past quarter and companies reported weaker-than-expected earnings.
“We see a lot of uncertainties in March,” OSK analysts Chris Eng and Loke Siew Ting wrote in a report today. The market “appears overpriced and is ripe for a sell-down,” they said.

“Corporate news was largely disappointing,” the OSK report said. “Overall, we saw more than 50 per cent of the companies under our coverage having their earnings downgraded.”
The Kuala Lumpur Composite Index slumped 2.1 per cent to 872.09 as of 12.21pm local time, set for the biggest decline since Nov 6. The measure climbed 0.7 per cent last month.
The gains last month resulted in the stock index becoming “substantially more expensive than most bourses in the region,” OSK said.

Malaysia’s stocks are priced at 11.7 times current-year earnings estimates, compared with 9.6 times for Singapore, 9.1 times for the Philippines, and 7.5 times for Thailand, according to data compiled by Bloomberg.
“We see buying interest resuming” ahead of the stimulus package to be announced on March 10 and the Umno party elections, OSK said. Still, “there is a risk of a sharp sell-down” toward the end of the month after stocks outperformed other regional markets in February, limiting the “upside,” it said. - Bloomberg