Strategy Flash Note - Technicals, currency and feng shui outlook for 2015
Yesterday, CIMB hosted three speakers at a half-day conference on technical analysis, the currency outlook and the feng shui perspective for 2015. There were some overlapping views shared, including a weak stock market and forecast oil price, a positive outlook for smaller-cap and trading-oriented stocks as well as bullish prospects for the construction sector. Many of these views also coincide with our own perspective of the market and sectors we like. No changes to our end-2015 KLCI target of 1,800pts and preference for the construction, transport, utilities and smaller-cap sectors.
What Happened
We hosted a half-day conference yesterday featuring two speakers from CIMB and renowned feng shui expert Dato' Joey Yap. Around 100 people attended the conference, with a good number arriving just for the feng shui talk. Mr. Kong Seh Siang presented some basics of technical charting and explained why he was cautious about the outlook for US and European stock markets. Dr. Suresh Ramanathan believed the new normal for oil prices could be US$30-35/barrel and forecast the ringgit to ease to 3.70 to the US$ by year-end. Dato' Joey Yap was cautious about the outlook for the stock market in general but believed there were significant trading opportunities. He was also cautious about the property sector but was more optimistic about the construction, plantation, healthcare and education sectors.
What We Think
We, too, are somewhat cautious about the equities market in 2015 on the back of cost pressures from the implementation of GST and its likely effect of prolonging weak corporate earnings growth in Malaysia. We are still hopeful of a better 2H or 4Q as there will be greater visibility of the impact of GST on consumption and corporate earnings as well as a stronger likelihood that oil prices will have stabilised by then. We are also concerned about a slowdown in property sales after GST comes into force while we remain bullish on the construction sector given the upcoming award stages for mega projects. We agree with our speakers that selected smaller-cap stocks still have legs as strong newsflow and promising prospects will continue to re-rate stocks.
What You Should Do
Our preferred bigger-cap picks remain Gamuda for construction, Westports for transportation and Petronas Gas for utilities. For smaller caps, we like MyEG, Prestariang, Karex, IFCA MSC and GHL Systems. Many of our smaller-cap picks have started the year with a bang but we believe there is still substantial upside to these stocks due to their strong balance sheets and exciting earnings outlook.
Source: CIMB Daybreak - 12 February 2015
Yesterday, CIMB hosted three speakers at a half-day conference on technical analysis, the currency outlook and the feng shui perspective for 2015. There were some overlapping views shared, including a weak stock market and forecast oil price, a positive outlook for smaller-cap and trading-oriented stocks as well as bullish prospects for the construction sector. Many of these views also coincide with our own perspective of the market and sectors we like. No changes to our end-2015 KLCI target of 1,800pts and preference for the construction, transport, utilities and smaller-cap sectors.
What Happened
We hosted a half-day conference yesterday featuring two speakers from CIMB and renowned feng shui expert Dato' Joey Yap. Around 100 people attended the conference, with a good number arriving just for the feng shui talk. Mr. Kong Seh Siang presented some basics of technical charting and explained why he was cautious about the outlook for US and European stock markets. Dr. Suresh Ramanathan believed the new normal for oil prices could be US$30-35/barrel and forecast the ringgit to ease to 3.70 to the US$ by year-end. Dato' Joey Yap was cautious about the outlook for the stock market in general but believed there were significant trading opportunities. He was also cautious about the property sector but was more optimistic about the construction, plantation, healthcare and education sectors.
What We Think
We, too, are somewhat cautious about the equities market in 2015 on the back of cost pressures from the implementation of GST and its likely effect of prolonging weak corporate earnings growth in Malaysia. We are still hopeful of a better 2H or 4Q as there will be greater visibility of the impact of GST on consumption and corporate earnings as well as a stronger likelihood that oil prices will have stabilised by then. We are also concerned about a slowdown in property sales after GST comes into force while we remain bullish on the construction sector given the upcoming award stages for mega projects. We agree with our speakers that selected smaller-cap stocks still have legs as strong newsflow and promising prospects will continue to re-rate stocks.
What You Should Do
Our preferred bigger-cap picks remain Gamuda for construction, Westports for transportation and Petronas Gas for utilities. For smaller caps, we like MyEG, Prestariang, Karex, IFCA MSC and GHL Systems. Many of our smaller-cap picks have started the year with a bang but we believe there is still substantial upside to these stocks due to their strong balance sheets and exciting earnings outlook.
Source: CIMB Daybreak - 12 February 2015
