bimbsec - strategy - market outlook 2h2012 - 20120613

BIMB SECURITIES RESEARCH MARKET INSIGHT 13 June 2012 Strategy PP16795/03/2013(031743) | 1 Strategy Market Outlook 2H12 Hampered by “ Euro-geddon”... Kenny Yee [email protected] 603-2691 1251 We asked ourselves if recent events will mirror that of 2011. Although the epicentre has moved venue, the manner and timing of the entire scenario is rather similar. This time, the Euro zone will be the torch bearer unfortunately not for the 2012 Olympics. Though investors are now more resilient having seen through the 2011 vagaries, how far will they stay resolute remains to be seen. In this report, we will try to analyse the impact if and when such situation arises and our stance on the local bourse. Already we have seen some downgrades on the FBMKLCI for 2012 pre- empting that the situation may turn for the worse. Judging by the recent earnings report for 1Q2012, we see no reasons for us to change our interim 2012 target of 1,630 at this juncture. “Euro-geddon”? Recent financial relapse in the Euro zone had many of us recalling the incidences in 2011. The Greeks and now the Spanish had rendered Europe now as the epicentre for another potential meltdown of the global financial markets. The ongoing saga in Greece coupled with Spain’s potential financial time bomb could very well derail any faint hopes for a global recovery. Spain in particular is our main concern with a reported €300bn required to recapitalise its banking sector and if the EU leaders do not act swiftly to arrest the nation’s mounting problem, a “Euro- geddon” could be in the offing . Let’s hope this can be averted. Corporate Malaysia. Subsequent to the 1Q2012 earnings, apart from some minor tweaks to our forecasts primarily on the CPO Planters attributed to higher operational costs there were no major revisions. However, we believe bearish undertones are getting louder and whether the research fraternity prefers to wait until the next quarterly reporting season for an earnings overhaul remains to be seen. As for now, our FBMKLCI estimates for CY12 and CY13 are maintained at 10.2% and 9.6% not far from our initial forecasts of 10.5% and 9.1%. Our 2012 target? We are maintaining our 2012 FBMKLCI target at 1,630. Though there could be a likelihood of a surprise upside, we reckon it would only be during 4Q2012 as Europe and GE13 are still dictating investment sentiments. Over the immediate term, there could be some knee jerk reactions in tandem with the negative news out of Europe, the US and now possibly from China. What we like. We remained staunch advocators for the Consumer based and selective Oil & Gas stocks. Though we are positive on Plantation, recent hike in costs coupled with the softer CPO price may curtail any strong buying interests for now. The weakening RM and latex may be positive to the Rubber Gloves makers but again the sector is plagued by negative sentiments at the moment. The Construction sector remains enigmatic as there is a massive lag against expectations. The Banking sector though well capitalised we are wary of its growth momentum for 2H12. We may also opt to look at high yielding stocks which are usually deemed as defensive amid the mounting uncertainty. All said, 2H12 may pose yet another testing period for most. Then again as always, “We’ll be back”!

Upload: bimb-sec

Post on 05-Apr-2018

220 views

Category:

Documents

0 download

Report

Download

Embed Size (px):

TRANSCRIPT