What Kok You Tok?

When money is on the line, whose lead do you think investors would follow? "The Boss" or finncial advisers?

==================

Wednesday July 9, 2008
Najib: Investors not swayed by politics

KUALA LUMPUR: The global economic outlook and not the current local political scenario may be causing investors to think twice about coming to Malaysia, said Deputy Prime Minister Datuk Seri Najib Tun Razak.

“There might be some apprehension but it is a question of perception,” he told reporters yesterday after chairing a Cabinet committee meeting on cleanliness and health.

“The reality is that our fundamentals are still strong but there is a worldwide concern about a possible global recession. Whatever it is, we will intensify our efforts to assuage investors concerned about investing in Malaysia,” he said, when asked to comment on whether the current political situation in Malaysia had affected investor confidence.

When pressed further about the drop in the local stock market, he said: “This is a worldwide phenomenon, not only in Malaysia.”

The KL Composite Index yesterday closed at 1,121.25 points - down 6.01 points from Monday when it closed at 1,127.26.

[source: The Star]

===========================

CLSA lowers Malaysia equities rating
Published: 2008/07/08

The research house says the political bickering gives a negative perception to foreigners that will cause further de-rating, and cuts its year-end target for KLCI to 980 points

CLSA Asia-Pacific Markets has cut its year-end target for the Kuala Lumpur Composite Index (KLCI) by 15 per cent to 980 points, believed to be the lowest estimate in the market.

The foreign research house also downgraded its rating on the Malaysian market to "underweight" from "neutral".

It cited political uncertanities, inflationary pressures and an economic slowdown as major drags on market sentiment in the medium term.

"Investors have always viewed Malaysia as a politically stable country and a defensive market.

"However, the current political bickering portrays a negative perception to foreigners that will cause further de-rating," CLSA said in its report on strategy outlook yesterday.

In March, it had a year-end target of 1,150 points.

The KLCI closed at 1,127.26 points yesterday.

Some research firms recently cut their year-end targets as well, but none had set them below 1,000 points.

TA Securities cut its target by 200 points to 1,210 last month, while RHB Research slashed 257 points to 1,128 last week.

CLSA said it lowered its earnings forecasts and target prices for selected stocks to reflect a higher earnings risk. Its top "sell" calls include AMMB, Bursa Malaysia and SP Setia.

"Banks, construction, property and consumer-related companies are the worst hit by rising operation and material costs, weaker sales and higher default rates.

"Independent power producers will be hit severely by the windfall tax," it said.

It recommended buying gaming, telecommunications and plantation stocks since the former two have relatively defensive earnings.

CLSA also expects high crude palm oil prices to sustain plantation companies' earnings growth.

Its top "buys" are DiGi, Kuala Lumpur Kepong and Resorts World.

CLSA said that while Malaysia's move to cut fuel subsidies will lead to short-term pain from higher inflation, in the long term, it will enhance productivity and energy efficiency.

It expects Malaysia's economic growth to slow to 3.3 per cent in 2009 from 5.3 per cent this year.

[source: Business Times]

----------------------------------------------------------------