KPJ Healthcare Berhad

OSK advises investors to go defensive

KUALA LUMPUR: Investors should go defensive, given the likelihood of further wild swings in the local stock market as a result of global economic uncertainties, OSK Research said.

KUALA LUMPUR: Investors should go defensive, given the likelihood of further wild swings in the local stock market as a result of global economic uncertainties, OSK Research said.

"Given our downgrade on the market, we had recommended switching away from cyclical sectors towards defensive plays.

"Our top defensive sectors are telecoms, consumer, healthcare and media," Chris Eng, head of research of OSK Research, said in a report yesterday.

Its top 10 defensive stocks are Axiata Group Bhd, Supermax Bhd, KPJ Healthcare Bhd, AirAsia Bhd, QL Resources Bhd, Petronas Gas Bhd, Telekom Malaysia Bhd, Guinness Anchor Bhd, TBC and Media Chinese Bhd.

Bursa Malaysia continued to decline yesterday, with the benchmark FTSE Bursa Malaysia KLCI falling by 0.8 per cent or 11.82 points to 1,472.16. There were 207 gainers against 580 losers.

There were 31 companies traded at its 52-week low. They included Prestariang Bhd, Pantech Group Holdings Bhd, CCM Duopharma Bhd, Puncak Niaga Holdings Bhd, Tenaga Nasional Bhd and Texchem Resources Bhd.

Supermax, which is one of OSK Research’s top picks with a target price of’ RM5.90, is currently traded at its 52-week low level, At one point, it was traded at 52-week low of RM3.10 before closing at RM3.11 yesterday.

OSK Research, which downgraded Malaysian stock market from "overweight" to "neutral" expects the benchmark index to trade between 1,378 and 1,557 points.

"Reiterating our KLCI year-end target of 1,557 points, we feel that this could potentially be the market’s high point going forward for the next 12 months.

"On the hip side, we reiterate that in a nonrecessionary environment, the market’s potential bottom could be 1,378 points, or 13.4x 2011 KLCI EPS (earnings per share).

"As a medium-term landing point, our 2012 KLCI fair value of 1,466 points, which is not too far away from current levels, seems reasonable," Eng noted,

He said global market confidence has been shattered so far in second half this year. This was reflected in a major sell down as investors fear a global recession.

"In such an environment, the ETP (economic transformation programme) and upcoming elections will not be enough to drive the local market against the tide of global factors." he added.