Malaysia Stock Market Review for Week Ending 18-July-2008

As we had predicted in last Friday's market review, we expect Malaysia market to have a 70% chance of heading downwards this week and it did. KLCI this week lost -3.4% (39 pts) to 1,105.04 after heavy selling on plantation stocks. For the last 3 days, IOI Corp lost -95sen (-14.5%), KL Kepong lost -RM1.40 (-9.2%) Sime Darby lost -35sen (-4.3%), Asiatic -65sen (-9.3%) & IJM Plant lost -59sen. (-16.7%).

This week was also the first week for some companies reporting their Q2 (Apr08 - Apr08) performance results. Among the notable ones are Public Bank, British American Tobacco and Bursa Malaysia.

Public Bank was basically in-line with analyst expectations, and the results were generally good. However, stock price of Public Bank was relatively unchanged, -10sen from RM10.30 to RM10.20.

British American Tobacco - Results were also generally OK with some worries of cigarette tax hike in the upcoming budget this coming August. The government's "TAK NAK" anti-smoking campaign is also taking a toll on cigarette manufacturers. Upcoming efforts are pictorial health warning, higher taxes & restriction on smoking areas and the somewhat profileration of non-smoking zones. (If you still do not know, Ministry of Sound Euphoria the new club in Sunway Resort has a designated smoking room, you can't smoke in the club.) :( Sorry guys, but some of us in YouInvest are smokers. hehehe... The stock is down -25sen from RM41.50 to RM41.25.

Bursa Malaysia - Bursa reported a set of really, really poor set of results due to poor stock market sentiment and participation in Jan to Jun and it is still heading downwards. The stock was down -15sen from RM6.60 to RM6.45.

RECOMMENDATIONS: Unfortunately, the buy indicators had not appeared yet, so for the mean time we are still pretty much grounded on the sideline not doing much but keeping ourselves alert for any turn around news in terms of political stability in the domestic scene. For those who wants to know the market direction for the next coming week, we think there is again 70% chance of heading downwards, 25% chance for staying mutely unchanged and now even lesser chance of 5% of going up. Why? Cause we think selling of plantations stocks will persist this week by foreigners and local investors as they unwind their position for profits made from 2 years ago. Indeed plantation stocks had performed very well in the last couple of years and general long-term investors are sitting on decent profits, hence amidst difficult times, stocks that made money previously will be the ones to be sold first.

STRATEGY: For fresh and existing investment positions, we advise to buy on any market dips when the KLCI falls -50pts or more during a day. If the market does not drop as much then we will hold on to our investment with no actions taken.


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