Wednesday, December 25, 2013

M'sia 2014 Outlook & Lookouts - Defensiveness Returns (MKE)

2014 Outlook & Lookouts - Defensiveness Returns
Current KLCI: 1,851 (17 Dec 2013)
YE KLCI target: 1,940 (unchanged)

We expect a faster global economic growth of 3.5% in 2014 from an estimated 3.1% in 2013 as major advanced economies – US, Europe, Japan – simultaneously expand for the first time since 2011. In contrast, ASEAN‟s growth trends are expected to be mixed on factors ranging from favourable impact of external demand rebound on Singapore and Malaysia, to transitory effects of domestic macroeconomic turbulence, political uncertainties and natural disasters on Indonesia, Thailand and the Philippines. This is amid the continued sub-8% expansion in China.

We are constructive on Malaysia‟s macroeconomic picture given the steady growth momentum (GDP 2014E: 5%; 2013: 4.6%), clarity and credibility in fiscal policy to address the budget deficit via spending and tax measures, sustainable current account surplus, and the removal of domestic political uncertainties. The key thing to watch is domestic consumer spending as inflation accelerates and inflationary expectations rise in reaction to subsidy rationalisation and price adjustments. Against the consensus call of at least a 25bps rise in the benchmark OPR in 2014, we are taking the view that BNM will keep the OPR unchanged at 3.00% to support growth amid fiscal consolidation.

We expect Malaysian equities‟ defensiveness to stand out yet again amid external volatilities in 2014, albeit at a milder level with the US QE Taper being priced in. While the KLCI‟s 16.3x one-year forward PER on an 8.1% earnings growth offering implies a rather “pricey” PEG of 2x, the sustainability of Malaysia‟s longer term growth on strong macro-economic policies and banking and corporate balance sheet strength will continue to lend support to the premium rating. Political concerns have diminished, fiscal balance issues are being addressed and domestic liquidity remains ample.

We maintain our 1,940 end-2014 target for the KLCI. 2014 will very much be a stock-picking year and we advise investors to focus on the value stocks in the near term, and notice the big-caps on broader market dips. Our top stock picks are TNB, Genting Malaysia, Hong Leong Bank, AMMB, Bumi Armada, IJM Corp, Time dotCom, Cahya Mata Sarawak and MPHB Capital. Meanwhile, we see continuous re-rating for the Shariah stocks and higher upside for the Shariah mid-caps in plantation, oil & gas, telco and property. Visit Malaysia Year 2014 will benefit those in the hospitality industries.

Source/Extract/Excerpts/来源/转贴/摘录: MKE-Research,
Publish date: 23/12/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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