May Outlook - Back to Basics (OSK)

The KLCI lagged the region in April as it suffered from the fallout ahead of the Sarawak state elections. With that behind us, we see the market recovering in May as we believe the 1Q2011 will at least meet downbeat expectations after the past 4 quarters of disappointments. With the potential for reasonable results, we believe the market will shift back to fundamentals and look back at Big Caps. As such, our strategy for the month would be to Buy fundamentally strong Big Caps as well as Trade on the Property sector as the newsflow here could resume after a couple of months hiatus. Our Top Buys for May are all Big Caps.

Going Big Cap with our Top Buys. Our Top Buys in April all outperformed the KLCI which is a rather rare occurrence. In line with our view that the market may go back to basics for May, we shift our Top Buys all to Big Caps with Maybank and CIMB our Top Banking Buys and Axiata our Top Telco Buy. AirAsia’s reintroduction of fuel surcharges and upcoming listing of its associates should help its share price while UEM Land is an excellent proxy for newsflow in the property sector.