Investors lock in gains on KLCI

Sentiment on the local bourse remained broadly negative last week. While there was no massive selloff, investors appear keen to lock in gains, especially for blue chip stocks that have performed well, as we near the end of the year. The FBM KLCI ended lower for the fourth straight week while trading volume stayed comparatively subdued.

This was in stark contrast to sentiment in key regional stock markets where most bellwether indices closed in positive territory for the week, tracking gains on Wall Street.

There were not a whole lot of market moving developments last week. But the handful of economic data out of the US and China gave support to budding optimism that growth is gradually regaining traction after hitting a bottom in the third quarter of the year.

US manufacturing grew the fastest in five months, adding to cheer on more upbeat data on the housing sector. Investors were also buoyed by early indications that a compromise will be reached to avoid the “fiscal cliff”. Elsewhere, the Chinese manufacturing sector expanded for the first time in more than a year, offering more support to the recovery picture. By most accounts, risks of a hard landing in the world’s second largest economy have all but receded.

On the local bourse, the headline KLCI ended in the red four of the last five trading days. The benchmark index closed at 1,614.3 last Friday, for a cumulative loss of 15 points for the week. Daily on-market trading volume improved slightly to 959 million shares, on average, compared with the daily average of 855 million shares transacted in the previous week.

Under prevailing sentiment, we suspect trading on the local bourse will continue to be subdued for the rest of the year. There is no clear motivation for investors to take on any fresh positions at the moment.

Most of the listed companies will be rushing to report their earnings results for the third quarter of the financial year ending Dec 31 this week. Better than expected results may provide fresh catalysts to individual companies. But overall, especially given the hit and miss earnings track record so far this year, chances are this result season too will be lacklustre.

Portfolio review

Stocks in our model portfolio underperformed the headline benchmark index’s decline last week. Total market value for our basket of 19 stocks was down by 1.37% to RM489,335, compared with the KLCI’s 0.92% loss.

Only six stocks in our portfolio closed higher and 11 ended in the red last week. Two others traded unchanged. Our top gainers for the week included Pantech Group Holdings Bhd (4.5%) and JT International Bhd (2.4%). At the other end, DiGi.Com Bhd (4.5%), My EG Services Bhd (4%), TSH Resources Bhd (5.7%) and Magna Prima Bhd (3.2%) were some of the notable losers.

We have been standing pat on our model portfolio for some weeks despite a relatively high cash holding. Our cash balance, which currently stands at RM296,477, accounted for a significant 38% of our total portfolio value.

As mentioned previously, based on prevailing valuations there are few compelling buys right now. And with the weak sentiment we would rather err on the side of caution.

Including our cash holdings, for which no interest income is imputed, our total portfolio value was down by a lower 0.85% to RM785,812. Last week’s losses pared our model portfolio’s cumulative returns since inception to 391.1% on our initial capital of just RM160,000. We continue to outperform the KLCI, which was up by about 149.6% over the same period, by some distance.

Our total profit remains substantial at RM625,812, of which RM464,064 has already been realised from previous share sales.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

 

This article first appeared in The Edge Financial Daily, on Nov 26, 2012.

 

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Market Data

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    Currencies
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    EURSGD=X
    2.1133-0.0005-0.02%
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    6.1666+0.0039+0.06%
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    SGDMYR=X
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    4.9763+0.0093+0.19%
    SGDCNY=X
    1.1661+0.0009+0.07%
    AUDSGD=X
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    Commodities
    NamePriceChange% Chg
    1,292.10+1.50+0.12%
    GCM14.CMX
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    SIK14.CMX
    91.62-1.25-1.35%
    ^XAU
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    HGK14.CMX
    101.99+0.05+0.05%
    CLM14.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.74+0.03
    ^FVX
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MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    2.23+0.020+0.90%
    JS8.SI
    1.18+0.030+2.61%
    U6C.SI
    0.122-0.001-0.81%
    B22.SI
    1.34-0.015-1.11%
    G13.SI
    0.61-0.005-0.81%
    E5H.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    1.315+0.084+6.82%
    O9A.SI
    0.16+0.008+5.26%
    5HH.SI
    0.935+0.035+3.89%
    M01.SI
    0.193+0.009+4.89%
    KF4.SI
    0.13+0.005+4.00%
    I9T.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.10-0.010-9.09%
    CL7.SI
    0.151-0.009-5.63%
    A03.SI
    0.30-0.015-4.76%
    K29.SI
    0.20-0.010-4.76%
    5CH.SI
    0.205-0.010-4.65%
    510.SI