TRADERS CAUGHT BY SHARP MARKET PULLBACK

PETALING JAYA: The sharp market pullback this week caught many traders by surprise but analysts feel that the uptrend remains intact in the longer term.

“Valuations were too rich and a correction is healthy,” Kenanga Research head of research Yeonzon Yeow said.

The index had climbed 30% since the middle of March before correction set in earlier this week. From a peak of 1,095.91 points on June 12, the KL Composite Index (KLCI) dropped to a low of 1,052.48 on Thursday.

“I think there’s still about 10% to 15% of correction to go from the peak,” Yeow said.

“When we start seeing real economic recovery after the third quarter of this year and fresh catalysts come onstream, the market will react positively.”

Areca Capital Sdn Bhd chief executive officer Danny Wong also remains bullish on the market in the medium to longer term. “I actually think this is the start of a bull run and investors should accumulate on weakness,” he said.

“Asia will take the lead in the next couple of years. Compared with the pre-Asian financial crisis days, our gearing levels are lower, earnings stronger and we have a more resilient banking system.

“Already, we are near the bottom or off bottom, of an economic recovery.
“As equity recovery generally moves six months ahead of an economic recovery, I would say we are at the beginning of a bull run,” Wong said.

Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose concurs. “With interest rates down all over the world, money tends to find its way to the most attractive investment and to me, that’s Asia,” he said.

However, he feels that the KLCI is going to “wobble around in this trading range for a very long time”.

“I don’t feel a soaring confidence about the West; my gut feel is that momentum has gone there, and if we are going to be following them, it’s going to be difficult,” Ambrose said. “Certain quarters have priced in a full recovery there (but), I don’t believe in that.”

Pong Teng Siew, head of research at Jupiter Securities, believes the liquidity, which had been driving the market up in the recent rally, has reached its tail-end.

“The recent rally in Malaysia was supported primarily by domestic funds. The next peak might not happen until later this year as foreign funds gradually move into emerging markets following the easing of the interest rates there,” he said.


Source : The Star Saturday June 20, 2009
By Yvonne Tan



east43street:

Yes it is a heavy correction. After correcting downward, it will start to correct upward. There are so many companies so cheap out there. It is still not too late to own a good pick.

WHATEVER HAPPENS TO OUR STOCK MARKET?

My Ms. Pretty remiser texted me a few days ago.
"Our msian gov is not helping our mkt wt the announcement of proton".

I replied.
"The present leadership memang tak market friendly pun. So many market unfriendly issues. How are you?"

She texted back.
"Our leaders r very dumb. They r just not thinkin bout msian welfare. Cakap aje byk. Im ok., just angry wth d govt thats all"

Well.... I can smell it that the people in the market are becoming more and more restless. They want to see some market friendly moves. Issues of failure to get Proton's foreign partner, Bersih Rally, Hindraf Rally, VK Lingam saga, wasting money on Angkasawan and so many more are damaging our reputation and our market.

Our government's damage control failure is hurting the market. Just admit it.

I am pulling my money from the market, at a lost, as for now. Cash is King, but stock market is not. At least for now.

CASH IS KING

Asian Financial Crisis 1997-1998, I was in KL. Our stock market went down to the drain. Good and strong companies suddenly became so cheap to own. I was attracted to Maybank, the price went down to RM2.87 from the peak of RM20++. What a great bargain, couldn't get it in a lifetime. But, alas.... I have no money. I did have a little saving of RM30K and it was for my running budget, I couldn't touch it.

I knew that I need RM200K and I will be on my way to be a multi millionaire. But I don't have RM200K.

Maybank went up to RM15 after the dust of Asian Financial Crisis settled. That RM200K should have been above RM1 million already.

So I miss the biggest boat ever, just because I don't have that 'King'.