Market Outlook Kong Seh Siang CIMB Investment Bank 2Q 2017

Transcription

1 Market Outlook 2017 Kong Seh Siang CIMB Investment Bank 2Q 2017

2 Important Notice This presentation has been prepared by CIMB Group exclusively for the benefit and internal use of the recipient in order to indicate, on a preliminary basis, the feasibility of possible transactions. Terms contained in this presentation are intended for discussion purposes only and are subject to a definitive agreement. All information contained in this presentation belongs to CIMB Group and may not be copied, distributed or otherwise disseminated in whole or in part without the written consent of CIMB Group. This presentation has been prepared on the basis of information that is believed to be correct at the time the presentation was prepared, but that may not have been independently verified. CIMB Group makes no express or implied warranty as to the accuracy or completeness of any such information. CIMB Group is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessment of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. CIMB Group or its affiliates may act as a principal or agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be,or should be construed as an offer tobuy or sell, or invitation to subscribe for, any securities. Neither CIMB Group nor any of its their directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (express or implied) arising out of, contained in or derived from or any omission from the presentation, except liability under statute that cannot be excluded. 2

3 TrendSpotter - focuses on equity markets, currencies, commodities, and stock picks. 3

4 TrendSpotter (2.7%, KLCI 6%) 4

5 TrendSpotter (8.7%) 5

6 TrendSpotter (4.6%) 6

7 Dow Jones Industrial Average To inch higher (20,523) 7

8 Euro Stoxx 50 Major and minor diverge (3,410) 8

9 MSCI Asia Ex-Japan New bull run? (579) 9

10 KLCI A tad more upside (1,739) The bullish count a (b) a c c=0.618x of a (1783) (ii) (d) (e),b (1645) (a) b (c) (i) The bearish count (iii) 10

11 Ringgit (4.4070) Double Top? 11

12 US Dollar Index (99.61) 12

13 Gold to outperform ( ) but? 13

14 Is the rebound over for Oil(52.53)? 14

15 World Markets

16 Welcome to 2017 Some of the global themes we have seen kicking into 2017: 1. Donald Trump s proposed policies and ideas 2.The start of a new uptrend for US interest rates 3.Isn t BREXIT behind us? 4.Major European elections France (Apr23-May8), UK (June8), German (Oct) 5.Automation boon or bane? 6.The rise of populism 16

17 Dow Jones Industrial Average Uptrend intact (20,523) *Source from 17

18 End of the low interest rate environment? 18

19 10-year government bond yield forecast 19

20 High market expectation of US interest rate hike 20

21 US Govt 10-year yield A new beginning? (2.2018%) 21

22 Euro Stoxx 50 Remains the key (3,410) 22

23 MSCI Asia Ex-Japan Corrective rebound over? (579) 23

24 What about Malaysia?

25 KLCI Into the weakening phase of the LT cycle 25

26 How do you feel about the market right now? *Source from Elliott Wave Principle: Key to Market Behavior - Frost and Prechter 26

27 Trading value/volume on Bursa surged Value traded RMbn Volume traded billion 27 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 *Source: Bloomberg, StarBiz

28 KLCI - Head & Shoulders still in the making 28

29 KLCI A bit more upside (1,738) a c=1.0x of a (1842) c=0.618x of a (1754) (b) (d)1700 (a) (c) (e),b (1616) 29

30 Small Caps The easy money is in the past (17,202) (b) (c)=(a) (17,307) (a)16141 (c) (a) (b)14281 (c) *Source: Bloomberg, StarBiz, Financial Daily 30

31 Ringgit (4.40) the pain is over? *Source: Bloomberg, StarBiz, Financial Daily 31

32 Malaysian Govt 10-year yield Still in a range (4.105%) *Source: Bloomberg, StarBiz, Financial Daily 32

33 14 th General elections GE14 musttake place on or before August 2018 Stock market performances postge eventdepends on (1) degree of selling pressure during the campaigning period; and (2) the actual polling results Market is likelyto stage a relief rally if incumbent wins, leading to continuity of existing policies KLCI performances during election campaign period and one week after election Election date Election year During campaign period 1 week after election 24-Apr % -2.4% 29-Nov % -2.6% 21-Mar % -1.0% 8-Mar % -7.8% 5-May % 4.6% 33

34 14 th General elections KLCI performances before and after general elections Election date Election year 12m before 9m before 6m before 3m before 1m before 1m after 3m after 6m after 9m after 12m after 24-Apr % -5.0% -12.1% 14.7% 1.8% 5.3% 7.2% -1.6% 8.4% 20.4% 29-Nov % 44.4% 0.4% -2.8% 0.4% 7.9% 31.9% 21.6% 7.2% -1.0% 21-Mar % 32.6% 21.5% 17.5% 5.0% -4.8% -9.1% -5.0% 0.0% -2.1% 04 8-Mar % -4.7% -0.7% -9.6% -8.4% -5.8% -3.7% -17.4% -34.6% -33.8% 5-May % 3.6% 2.3% 4.1% 0.4% 4.8% 5.2% 6.8% 6.4% 9.8% Average ( ) 4.9% 0.4% 0.4% 1.5% -1.1% 2.5% 5.8% 6.3% 9.7% 16.5% 34

35 An eye on Risks Factors to watch out for: 1.Continued poor corporate earnings results fell in 2015/ Weak commodity prices oil prices rebounded as expected but is it sustainable? 3.Further weakness of the MYR stayed below the 3.80 Asian financial crisis peg 4.Fears of the quantum of the Fed rate hike(s) 5.Flash crashes Brexit(Jun), Pound Sterling (Oct), Trump win (Nov 8th)?? 6.More corporate defaults Swiber(SG), Perisai, Deutsche Bank?? 35

36 Stock Picks

37 Tan Chong Motors (RM1.82) 37

38 Iris Corp (RM0.18) 38

39 Datasonic (1.26), a squeeze?? 39

40 Prestar Resources (0.94) to breakout soon? 40

41 JKG Land (0.115) accumulation? 41

42 Summary

43 Conclusion A handful of markets still look positive but the rest of the world are looking kind of shaky. The rising trend in global rates would act as dampener in the coming years. Could potentially be the trigger. Locally, the ST leg up for KLCI could continue for a while longer but we are wary about the upside potential. No change in the overall call. Investors and traders should remain in trading mode and if trading is out of the question, stay in cash. 43

44 2016 was full of surprises! 2017 would likely shape up to be even more EXCITING!! Good trading and Happy Investing (if you are still at it)! THANK YOU!