Top Story : Shifting Trends – Going with the flow
Market Update
- The economic concerns and volatile market should have pushed investors towards the large and liquid big caps. However, price data suggest otherwise. While non-cyclical consumer stocks had a good run in the 1H, investors appear to be in a short-term trading mode.
- Among the top 30 performers, 13-14 sectors were represented for YTD, 3M and 1M, but there were only 11 sectors for 1M. Dropouts included banks and technology (on fears of a sharper-than-expected slowdown), as well as gloves (due to potential earnings disappointment).
- The 1W rankings underscore the apparent lack of leads among big caps with the top 20 performers consisting almost entirely of mid caps of RM4bn or below. This trend has persisted since beginning-2010.
- We note that news flow played a key part in stocks’ performance including: 1) projects e.g. SCORE (for HSL), Federal land privatisation (for MRCB), and MRT (for Gamuda); 2) M&A (e.g. privatisation of Tanjong and Titan Chemicals, new shareholder for Tanjung Offshore, and the Parkway takeover bids which drew
attention to KPJ’s low valuations); and 3) earnings (e.g. Genting Singapore).
- In the absence of fresh sector catalysts, we expect news flow to continue driving the market. Nevertheless, we remain cautious as economic and earnings concerns could further reduce the number of investible sectors. This remains a stock-pickers’ market, although we advise investors to remain focused on the better-rated stocks.
RHB Equity 360°(Market, Motor, Ta Ann, Evergreen, ILB, MAS; Technical: MAS)-17/08/2010
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