The KLCI sprang a surprise with a strong rally in the 2nd half of July just as it looked as though the run-up might be losing steam. Although it took the cue from the US markets which rallied on strong banking results, the KLCI still underperformed almost all its East Asian peers despite the flow of interesting news surrounding Maxis’ relisting and progress on the Selangor water issue.
As the KLCI is over-valued, we maintain our Sell into Strength call for August although the index may just be able to hold off the bears for a few more months.
Stock picking is vital as there are still selective good buys. We are largely carrying forward our Top Buys from July except for Public Bank, which we replace with MRCB.
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