OSK Equity Research said although it believed the KLCI was already fairly valued, having run past its 2009 KLCI fair value of 1,040 points, it continued to see opportunities to trade in the current market given the positive sentiment and ample liquidity.
"In line with previous rebounds, we see the KLCI possibly rallying some 10% more before the inevitable retracement," it said in its 2H09 strategy outlook report today. "We recommend a three-pronged strategy focusing on the beneficiaries of the stimulus packages and Development Corridors while stocking up on defensive counters ahead of the retracement.
"Our Top 10 picks are therefore mainly from the construction, steel and oil and gas sectors, with a sprinkling of defensive plays. Uncertain economy but market sentiment positive."
OSK Research said while it was hopeful that the worst was over, it believed the economic outlook remains cloudy as the key risks including rising unemployment and easy money from the stimulus measures possibly creating a government stimulus bubble.
"For Malaysia, we remain slightly more positive than the government in projecting a 3% GDP contraction in 2009 followed by 2.5% growth in 2010," it said.
"Nonetheless, liquidity and rising confidence has spurred the KLCI ahead of fundamentals as is typical in any rebound from a bear market. We see the market rallying slightly further with historical comparisons, which suggests a possible target of 1,190 points, before retracing to the 1,000 point-level."
The research house however maintained its earlier strategy of calling a sell should the market head towards 1,150 points (our 2010 fair value) as it maintained its 2009 fair value of 1,040 points for the KLCI.
"We are currently overweight on seven sectors, namely consumer - food, gaming, O&G, rubber gloves, steel, technology and utilities, reflecting our forecast growth in 2010 earnings."
"For 2H2009, given our view that the market has a little more to run before the inevitable retracement, we recommend a three-pronged strategy, focusing on: (1) stimulus package beneficiaries, (2) Development Corridor beneficiaries, and (3) defensive stocks," it said.
OSK Research said its top buys therefore reflected its investment strategy, with the exception of blue chip Axiata.
"In line with previous rebounds, we see the KLCI possibly rallying some 10% more before the inevitable retracement," it said in its 2H09 strategy outlook report today. "We recommend a three-pronged strategy focusing on the beneficiaries of the stimulus packages and Development Corridors while stocking up on defensive counters ahead of the retracement.
"Our Top 10 picks are therefore mainly from the construction, steel and oil and gas sectors, with a sprinkling of defensive plays. Uncertain economy but market sentiment positive."
OSK Research said while it was hopeful that the worst was over, it believed the economic outlook remains cloudy as the key risks including rising unemployment and easy money from the stimulus measures possibly creating a government stimulus bubble.
"For Malaysia, we remain slightly more positive than the government in projecting a 3% GDP contraction in 2009 followed by 2.5% growth in 2010," it said.
"Nonetheless, liquidity and rising confidence has spurred the KLCI ahead of fundamentals as is typical in any rebound from a bear market. We see the market rallying slightly further with historical comparisons, which suggests a possible target of 1,190 points, before retracing to the 1,000 point-level."
The research house however maintained its earlier strategy of calling a sell should the market head towards 1,150 points (our 2010 fair value) as it maintained its 2009 fair value of 1,040 points for the KLCI.
"We are currently overweight on seven sectors, namely consumer - food, gaming, O&G, rubber gloves, steel, technology and utilities, reflecting our forecast growth in 2010 earnings."
"For 2H2009, given our view that the market has a little more to run before the inevitable retracement, we recommend a three-pronged strategy, focusing on: (1) stimulus package beneficiaries, (2) Development Corridor beneficiaries, and (3) defensive stocks," it said.
OSK Research said its top buys therefore reflected its investment strategy, with the exception of blue chip Axiata.