The KLCI sprang a surprise with a strong rally in the 2nd half of July just as it looked as though the run-up might be losing steam. Although it took the cue from the US markets which rallied on strong banking results, the KLCI still underperformed almost all its East Asian peers despite the flow of interesting news surrounding Maxis’ relisting and progress on the Selangor water issue. With the KLCI over-valued, we maintain our Sell into Strength call for August although the index may just be able to hold off the bears for a few more months. Stock picking is vital as there are still selective good buys. We are largely carrying forward our Top Buys from July except for Public Bank, which we replace with MRCB.
Same Strategy. We continue to advise an overall Sell into Strength stance although selected stocks remain good buys for now. With 3 out of our Top 5 picks in July outperforming the FBM KLCI, we are generally maintaining our strategy of having mixed cyclical and defensive stocks in our basket of Top 5 stocks. We replace Public Bank with MRCB as the latter may draw interest ahead of more property launches at KL Sentral.
Axiata 2.94 3.40 24,828.7 20.7 15.3 0 1.3 BUY
Genting Malaysia 2.94 3.25 17,349.0 12.9 12.3 2.4 1.9 BUY
Top Glove 6.90 8.50 2,094.2 13.7 12.1 1.9 2.7 BUY
WCT 2.70 3.24 2,088.4 15.1 16.1 2.0 1.7 BUY
MRCB 1.41 1.69 1,279.6 212.5 84.3 0 2.1 TRADING BUY