Market Commentaries & Technical Analysis as at 28 Dec 2009

Investment Theme For 2009

*** UNCERTAIN ***
1. Privatization And M&As Deals
2. A Stronger Ringgit Policy
3. Implementation Of the Ninth Malaysia Plan
4. Asset Reflation Theme
5. Eastern Corridor Development Programme (Petronas-Led)
6. Northern Corridor Economic Region
7. Sarawak Region Corridor
8. The Sabah Development Corridor
9. The Asia Petroleum Hub In Johor
10. The Solid Waste Management Play
11. Flow of OPEC Petrodollars
12. The Trans-Peninsula Pipe Project
*** UNCERTAIN ***
13. Sarawak Corridor Of Renewable Energy (SCORE)
14. Iskander Development Region (IDR) In South Johor
15. RM40 Billion Public Transport Expenditure
16. Water & Water-Related Play
17. A U-, V-, W- Or L-Shaped Global Economic Recovery
18. Fiscal & Monetary Pump-Priming
19. The Economic Stabilization Plan, Mini Budget & Budget 2010
20. Interest Rate Cycle (End Of Easing Cycle As Economy Recover)
21. Decoupling – Emerging Economies Is Disconnected From Developed Countries (Uncertain)
22. Liberalization Of The Services/Financial Sector
23. The Malaysian Government’s Reform “Train”
24. GLCs Revamp
25. The ‘Third’ Link Bridge (Eastern Johor) To Singapore (Uncertain)
26. A ‘Third Stimulus’ Package (Uncertain)
27. Second Wave Privatization 1.2
28. 10th Malaysia Plan And Capital Master Plan

Watch List In The Coming Week
Mega projects to be announced.

Market Commentaries
Refer To Economic Outlook 2010 & Investment Strategies

Technical Analysis
There are only few trading days left before we say goodbye to 2009 and from what we can see, there are already signs of the traditional “window-dressing” activity at work, although limited for now. But with the Federal Reserve voicing optimism about a stabilising US economy, investors may have gained more confidence to take greater risk going forward.

Technically, indicators are painting a mixed landscape. Unless volumes expand positively, there is still a chance of Bursa Malaysia being trapped within a box on extended consolidation over the next couple of weeks.

To the upside, initial resistance can be expected at 1,280 points, followed by the 1,300-1,305 point band. The next upper barrier is seen at 1,332 points. Important support line is pegged at the 50-day simple moving average of 1,260.89 points, of which a clear breakdown may trigger a fresh bout of selling pressure. Then, the lower floor of 1,250 points, 1,230-1,233 point band will be much weaker.

Undermining Factors
1. Fear, Uncertainties, Global Liquidity Crunch & Economic Fallout (Dubai’s Debt Crisis
Stabilizing)
2.Volatile Foreign Exchange Market (Volatile Due To Dubai’s Debt Crisis … Stabilizing)
3. State Of The Global Economy (Though Recovering Since March 09 But Dubai’s Debt Crisis
Added To Uncertainty … Stabilizing);
4. Commodities Prices (Volatile Due to Dubai’s Debt Crisis … Stabilizing);
5. A Global Deflationary Threat -> Hints Of Recovery – > Fear Of Inflation;
6. Threats Of High Commodities Prices And US Dollar Crisis;
7. Tightening Of Global Monetary Policy & Unwinding Of US Dollar Carry Trade
8. Easing Of Fiscal Stimulus Packages

Unpredictable Risks/Surprises
1.Terrorist Attack –
2.Oil Supply Disruptions –
3.A Pandemic Disease – Swine Flu
4.Financial Crisis – Dubai’s Debt Crisis (Stabilizing)
5.Major Social And Geopolitical Upheaval –

Equity Strategy: Easing Malaysia Political Uncertainty, Outcome Of The Credit Crunch And Subprime Loans Crisis Stabilizing, Strengthening Commodities Prices, Stable Global Growth, Moderating Inflation, Easing Monetary Policy & Fiscal Stimulus Measures …

Recession – Recovery – Growth – Boom – Burst

(With Global Valuations Fair To Approaching Expensive, Investors Should Begin Shifting Focus To Corporate Earnings)

a.Economic Outlook 2010 & Investment strategies
b.One Of The Greater Risk For Emerging Equities Market – Unwinding Of US Dollar Carry
Trade … Spot For Bernanke’s Statement On Monetary Policy
c.State Of The US (Jobless Recovery), Japan (Recovering Stage But Still Uncertain), China
(Gaining Momentum) & The Middle East (Dubai’s Debt Crisis … Stabilizing) Economy as at
Dec 2009
d.Shifting Focus From Economic Growth Surprises (which drove upgrades to earnings and
valuations) To Other Factors To Drive (or protect) Returns Going Into 2010. (Latest)
e.Global Equities Outlook …
f. Global Monetary & Fiscal Policy (The Exit Strategy): Recovering Economy, Weakening US
Dollar, High Commodity Prices & Inflation Expectations Building Up
g.The US Equities Market: A Bubble Is In The Forming
h.The Malaysian Equities Outlook: 6 (Optimistic), 7 (Neutral), 6 (Pessimistic)

a. Economic Outlook 2010 & Investment Strategies: Refer To Special Report (My Clients Only)