A 2011 correction in the making (Edge)

By Benny Lee / Jupiter Securities Sdn Bhd   | October 15, 2014 : 10:35 AM MYT  
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The market continued to stay in its bearish mode. The selling pressure remained as the volume was firm but the index was declining. Technically, the FBM KLCI is strongly bearish as the short-term 30-day moving average has fallen below the long-term 200-day moving average. The last time this happened was in 2011 where the index fell 16% in two months from the then historical high. So far, the index has fallen only about 5% from the historical high, and 16% from the current historical high is roughly at about 1,600 points.

Momentum indicators like the RSI and Momentum Oscillator continue to indicate strong bearish momentum, similar to the decline in 2011. Furthermore, the FBM KLCI continues to trade below the bottom band of the Bollinger Bands and this indicates strong bearish momentum. We may expect some technical rebounds because of the market being oversold in the short term but these may be dead cat bounces as the market is still bearish.

If history does repeat itself, then we may expect a year 2011-like correction. With the current pullback, there is still room for the index to fall lower. The next technical support level would be at 1,750 points based on a 50% Fibonacci retracement level of the uptrend that began in early 2013 and a 23.6% Fibonacci retracement from the uptrend that began in late 2011. We could expect the index to trend lower unless there is a strong rebound, and that is if the index is able to climb above the 1,820 points support-turned-resistance level.

Downtrend in crude oil prices a big concern for Petronas (STAR)

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will review costs of projects, delay or differ the implementation of some of them if the need arises.

Petronas president/group chief executive officer Tan Sri Shamsul Azhar Abbas told a media briefing following the release of the company’s second-quarter financial results ended June 30, that cost remained a major concern, especially in light of the downtrend in crude oil prices.

“We’re in the process of reviewing the costs of some of our projects, and if there’s a need for us to differ some of the projects in order to contain costs, then we would do it,” he said.

Shamsul said cost reviews were not new. “We would not embark on projects that at the end of the day would not be feasible because of high costs,” he added.

Shamsul said upstream costs continued to be a worry, with oil and gas infrastructure facilities as well as support services rates rising.

“These costs are creeping up, which is not good as far as our projects are concerned,” he said, adding that the bulk of the expenditure would be for upstream activities, which comprised 65% of the company’s total portfolio.

Meanwhile, Shamsul said the final investment decision on the RM60bil Refinery and Petrochemicals Integrated Development (Rapid) project in Pengerang, Johor, would only be made in March as reported.

“We would scrap the project if the numbers are not right. I think it would be silly of us to proceed with the project if there’s no economic return, which is also in line with the Government’s policy,” he said.

However, Shamsul said the scrapping of the Rapid project would have to take into consideration the agreements that have been signed with foreign investors.

“We’ve signed four heads of agreements, which we’re in the process of negotiating into shareholders’ agreements by year-end,” he pointed out.

Already bearish on oil prices since the beginning of the year, Shamsul said based on prices from US$100 to US$110 per barrel, the company should be able to declare a profit before tax of RM91bil to RM92bil for the financial year ending Dec 31.

On another note, executive vice-president for finance Datuk George Ratilal said the dividend paid by the company to the Government continued to be a matter under discussion. Petronas would be paying RM27bil this year compared with RM30bil last year.

“There’s nothing definitive, but we’re beginning to see progress. Let’s keep it at that for the time being,” he said....

Market Outlook - Sentiment cautious, banks may shine （Edge）

CIMB Research: Good time to bottom fish (Star)

CIMB Equities Research believes the selling this week has been excessive and that it is a good time for investors to bottom-fish.

“Our preferred sectors remain the Economic Transformation Programme (ETP) winners, that is oil and gas, construction and property,” it said on Friday, maintaining the end-2013 FBM KLCI target of 1,850.

The research house said although Malaysia faces several macro headwinds that need to be addressed, it is still Positive on Malaysia in the longer term and view the stock market's sell-off this week as an opportunity to accumulate positions on weakness.

“The re-rating catalysts include a return to stability for regional markets and potential

government policies to assuage macro concerns,” it added.

To recap, regional stock markets have come under heavy selling pressure this week. For instance, Indonesia's Jakarta composite index fell by as much as 5% intra-day on Monday and Tuesday, leading the entire region’s decline.

“However, the real culprit was investors' jitters regarding Indonesia, India and Thailand’s currencies and stock markets. On Thursday, the KLCI was sold down again as it was swept along by the downward regional trend,” it pointed out.

CIMB Research said Malaysia’s macroeconomic figures released on Wednesday including GDP growth and the narrowing current account surplus, magnified that uneasiness.

The share prices of the KLCI component stocks were the first to be hit, but that has spread to second and third-liner stocks. The early losers were companies with high foreign shareholding and exposure to Indonesia.

“While there are macro headwinds that our economics team has warned of and is concerned about, we are optimistic that the government will address these issues in the 2014 Budget in October,” it said.

Malaysia faces formidable economic problem, says RBS (Edge)

Plantations - Fear of rising supplies (CIMB)

Malaysia’s palm oil stocks improved 1% mom to 1.66m tonnes at end-July. This is 3% below our forecast but 3% above consensus. We are neutral on this news and project that CPO prices will remain range-bound as the fear of rising supplies offsets the low stocks. The big surprise came from the higher-than-expected mom improvement in production signalling the beginning of the high production season. We project palm oil stocks to rise in August as the improvement in production more than offsets the exports and domestic consumption. We keep our Neutral sector call. First Resources, Wilmar and IOI Corp remain our top picks.

Analysts still see value in O&G stocks (Edge)

Analysts turn optimistic on water sector (Edge)

股市触顶前的三个征兆 (WSJ)

2013年 08月 07日 07:20

Mark Hulbert

当前我们可能比大多数投资者所认为的更接近一个大的股市顶点。这是我在比较现在的股市环境和上世纪几个大顶点时所得出的结论。

当然，通过比较我们也发现了它们之间存在着差异。但这并不意味着我们没有在接近顶点。就像马克•吐温(Mark Twain)说的：历史不会重演，但总会惊人地相似。

本着这一观点，我研究了自1920年代以来上世纪的35个牛市顶点。我在找寻股市自身和其他众多的内部因素（比如企业盈利和市盈率）其中的规律和模式。与此同时，我也关注小公司股票、成长股以及价值股在触顶前的几个月的表现。

我依仗的信息源包括耶鲁大学(Yale University)教授罗伯特•希勒(Robert Shiller)所建立的关于标普500指数企业盈利和市盈率的数据库，以及芝加哥大学(University of Chicago)的尤金•法玛(Eugene Fama)和达特茅斯学院(Dartmouth College)的肯•弗伦奇(Ken French)维护的关于小盘股和大盘股、成长型和价值型股票相对表现的数据库。至于如何定义何时是牛市和熊市的起始时间，我采用的则是Ned Davis Research所采用的精准释义。

牛市破灭之前的急升

通常来说，在一轮超常的良好表现之后，牛市将会遭遇破灭。换言之，在牛市结束前夕有时的确能迎来最好的投资回报。在牛市的最后阶段，股市并不会放缓，股市顶点的股价图通常呈尖锐的山峰状而并非平原状。

自1920年代起，牛市平均在到达顶点前的12个月中上升超过21%──这比长期的平均水准整整高出两倍之多。而最近的股市给投资者带来的回报颇似顶峰前的平均水准：这阶段的标普500指数已经上升近23%。

风险最大的股票大放异彩

股市在触顶前最显著的特性之一，就是风险最大的一批股票表现远超风险上最为保守的股票。

法玛和弗伦奇设计了两个风险指标。一是价值股对比于成长股的相对表现。一支股票市净率低意味着它是价值股，市净率高则标志着它是成长型股票。第二个风险指标是小公司股票相对于大盘股的表现。

不幸的是，近期的种种情况都符合这一模式。实际上，在过去12个月，价值股和成长股之间的差额超出历史平均值的两倍以上（法玛和弗伦奇认为价值股比成长股风险大）。虽然小盘股还没有超出大盘股如此大的差额，但小盘股也是遥遥领先。

股市顶点的市盈率

我本以为，在股市顶峰的时候，市盈率会相当之高。然而我的研究结果却与此大相径庭。

标普500指数自1920年代起在牛市顶点的市盈率是18.7，仅比上世纪这80年的平均值16.8高一点点。

从另一方面来说，标普500指数现如今的市盈率并不十分高。从过去12个月直至今年6月30日，以每股的盈利来算，现在市盈率为18.5（注：对于还未提交六月季度报表的公司以标普的估算为准）。也就是说，现在的市盈率仅比历史上牛市顶点的平均值稍低一点。

而根据所谓的“希勒市盈率”(Shiller P/E)，情况更不妙。这个以这位耶鲁大学经济学家命名的市盈率算法，主要运用过去10年经通货膨胀调整后的平均盈利来进行计算。从历史上看，它比起传统的市盈率算法有更好的预测记录。现在的希勒市盈率高达23.8，远高于过去牛市顶点时的平均数20点。

不消多说，并不是所有的数据显示的都是坏消息。领先经济指标指数并没有显现在近期内会有任何经济衰退的迹象。而在利率上涨的同时，历史记录上曾有效预测未来的收益率曲线现如今依然保持着高涨的势头。这些都是好消息，因为这意味着我们正离开经济转折期，而只有在转折的时候，经济才有极高的下行风险。

当然，在下一个熊市之后，该熊市形成的原因会瞬间变得清晰明了。到时候我们将会为没有提早预测到它感到悔痛万分。

其实现在情况已经非常清晰明了。诚然，参照历史记录的预测并不是百分之百的科学之举。我们现在只能说，当我们把眼下的股市和历史上的股市顶点相比较的时候，它们之间存在着一些让人担忧的类似之处。

这并不说明现在的牛市必然要马上终结。但这也意味着我们不能盲目自信了。

（本文译自《巴伦周刊》）

More traction post roadshow (CIMB)

Investors we met during our roadshow in Malaysia, Singapore and Hong Kong were generally positive about the construction sector. Many were keen to shift to the laggards and some were more upbeat about the beneficiaries of the oil & gas infrastructure build-out. 

Gamuda, our top pick, remained investors' core holding. There was a revival of interest in Muhibbah Engineering and Benalec, which are viewed as laggards offering attractive turnaround stories. We maintain Overweight, underpinned by the sector's new domestic upcycle driven by rail (MRT and HSR) and other infrastructure jobs.

What Happened 
Following our upgrade of the construction sector post the general elections, we went for a week-long trip to meet 45 investors in Singapore and Hong Kong with the final leg in Malaysia. Most investors concurred that the post-general elections strategy was to look at the beneficiaries of the execution of MRT 2 but some were concerned about the 1.5- to 2-year "gestation period" from 2H13 before new MRT awards were given out. We highlighted that there was a lot to look forward to beyond MRT and promoted major laggards and event-driven stocks like Benalec (Iskandar land reclamation story) and strong turnaround stories like Muhibbah Engineering (order book recovery with oil & gas angle).

What We Think 
Funds with market cap and liquidity restrictions were still keen to hold on to Gamuda. Most were looking at price points at which to accumulate rather than considering other big-caps like IJM Corp given the perceived lack of near-term catalysts. Most investors agreed with our thesis that 2H13 could be the most exciting for Gamuda given the three major events for MRT 2 (approval, launch and PDP appointment) and the asset monetisation angle (Splash and Litrak), which could lead to special dividends. For the smaller mid-caps, we sensed that investors were warming up to Muhibbah (even at these price levels), sparked by its securing of a Petronas offshore fabrication license. We believe most funds are still keen on Benalec's Iskandar story and could revisit the stock for a play in 3Q-4Q13.

What You Should Do 
Stay invested in the big-caps, which offer a strong MRT story, but also consider the smaller mid-caps like Muhibbah and Benalec. We expect sector developments to pick up in 2H13, powered by MRT, which will continue to drive interest in the sector.

Stock market rebound expected in second half (STAR)

By YVONNE TAN
yvonne@thestar.com.my

PETALING JAYA: The market will rebound in the second half of this year while defensive stocks such as telecommunications and consumer stocks, which are in focus now, could de-rate then amid increasing investor appetite.

Maybank IB Research said this in a market strategy report, noting that investors were currently focused on the likely outcome of the impending general election slated for the first quarter, with most taking a neutral stand, saying they would be constructive once there was clarity on the political front.

The research house, which expects the market to weaken further before staging a rebound in the second half, remains defensive during this period, advising clients to take some profit off the table.

“We, however, continue to advise investors to buy at lower levels and raise weightings on the cyclicals post-general election, expecting the defensives (telcos, consumer) to de-rate as global risk appetite is increasing,” it said.

The FTSE Bursa Malaysia KLCI (FBM KLCI), the 30-stock gauge, shed 19 points to 1,614.14 points yesterday.

A total of 1.08 billion shares changed hands in trading valued at RM2.01bil.

According to Maybank IB Research, 13 times 12-month forward earnings or a FBM KLCI level of 1,550 points was a good level to accumulate.

At 13 times price earnings ratio, there should be more value in the banking, property and construction sectors.

Also, oil and gas should outperform post-general election as the country's broader energy agenda remained intact and Petroliam Nasional Bhd's capital expenditure spending gained traction, it added.

RHB Research at the beginning of the year had also advised clients to stay defensive in the first half of the year, while taking advantage of market weakness during the period to buy into fundamentally-robust stocks for “greater out-performance” in the second half.

UOB Kay Hian Research head Vincent Khoo, meanwhile, cautioned that post-general election, sentiment could be tempered by moderating economic growth amid slowing local consumption, stemming from the resumption of the previously-deferred energy and food subsidy reduction schedules, as well as the absence of pre-election fiscal packages.

Kenanga Research said it would continue to adopt its trading stance, buying-on-weakness below the 1,610-point level and selling-on-strength above 1,710 points in a range-bound market environment.

More market weakening ahead of GE, says Maybank