I spy with my little eye: Introducing Suitpossum’s map of Global Energy Geopolitics

Recently Google Maps has been blowing my (admittedly somewhat unstable) mind. It all started when I thought it would be great to travel around China, looking at Special Economic Zones. In the absense of cash to get a ticket to China though, I used Google Street View to drive through the outskirts of Hong Kong and to look longingly across the bay at Shenzhen, an economic engine on overdrive.

Virtual driving with Google streetview requires no petrol, but the system does rely on giant Google data centres sucking up huge quantities of electricity, so it ain’t exactly carbon-free travel yet. That’s a goal for the future, and in the spirit of a great transformation from carbon-intensive economies to a carbon-free one, I thought it would be interesting to use Google’s software to map the harware of global energy. Thus, I'm happy to introduce Suitpossum’s Map of Global Energy Geopolitics.

View Suitpossum's Global Energy Geopolitics in a larger map

It's the beginning of an ongoing project to break the global fossil fuel nexus down into easy-to-digest chunks. It's being created in conjunction with another map (to be introduced later), tracing the emergent geography of renewable energy. Ideally, over the next ten years or so, the importance of the former map will diminsh vis-a-vis the latter

The map is still under development, but thus far, the points of interest are split into 4 categories:

1) Oil (and gas) fields

This includes the gigantic Ghawar and Shaybah Oil Fields in Saudi Arabia, and badass fields in other important oil-exporting nations, like the Samotlor Field in Russia and the Tengiz Field in Kazakhstan. I recommend checking out the enormous dying Burgan oil field in Kuwait, which can literally be seen from the sky (seriously, it looks like pools of oil are coming to the surface). That's the field that was set alight by Iraqi troops during the first Gulf War. Nowadays though, it appears to be the Rumaila oil field in Iraq that's on fire.

Another aim of the map will be to profile unconventional and controversial oil and gas operations, such as shale gas deposits, and the obnoxious tar sands excavations in Fort MacKay, Canada. These are the focus of much environmental concern, not to mention dubious economics.

2) Oil (and gas) Terminals

The map has some special points for those who are interested in the world of commodity futures trading. To the left is Cushing, Oklahoma, the theoretical delivery point for all those WTI oil futures contracts that the financial press always talks about. I say 'theoretical', because about 95% of oil futures trades are made by daytrading speculators who have never actually seen real oil, never mind actually taken delivery of it. Cushing has however, recently seen some interesting investigations into oil market manipulation by physical oil traders. Another point of interest on the map is Sullom Voe, stuck out on the wilds of the Shetland Islands. That's where the ICE Brent Crude futures get settled, and you can use Google Streetview to drive right up to the entrance.

Another fun one is Henry Hub, south of Erath Louisiana. This is where a load of natural gas pipelines in the US meet, and it's also where NYMEX natural gas futures get settled. A particularly interesting curiosity just north of Erath is Lake Peignure, made famous when oil prospectors in the lake accidently drilled through the ceiling of a salt mining operation below, causing the entire lake to drain in a swirling vortex of doom that made the river flow backwards from the Gulf of Mexico. More recently, the salt caverns of Lake Peignure have become somewhat controversial storage facilities for natural gas.

Do take a look at the other oil and gas terminals. There's a really interesting one in the murky delta at Bonny, Nigeria, and another in the far reaches of De-Kastri, Russia. There's the Sangachal Terminal in Baku, Azerbaijan, right in the heart of the oil and gas operations of the Caspian sea. Finally, there is the amazing R’as Tanura Oil terminal in Saudi Arabia. Take a look at the town - it hosts Najmah, one of the gated communities for foreign expats that work for the world's largest oil company - Saudi Aramco. See if you can spot the golf course. One might say that political opinions on all this are somewhat fractious: Check this pissed off dude.

3) Coal fields

This aspect of the map remains underdeveloped. Coal tends to be less of a geopolitical issue than oil, due to it’s wide geographic spread and large quantities, but it's certaintly the dirtiest fossil-fuel of them all. Over the next few weeks I will be identifying key coal zones, which shouldn't be too hard, considering that the coal strip mines are about as subtle as bomb zones.

4) LNG operations, and other curiosities: This is going to be a section to trace exotic curiosities like Gas-to-Liquids (GTL) plants, coal liquefaction facilities, and liquified natural gas facilities like the one at Ras Laffan in Qatar. Ras Laffan looks like a cross between Star Trek and Mordor, except set in a desert. Take a look at some of the photos available on the Panaramio tool on Google Maps.

5) Strategic transportation routes

Finally, the map will seek to point out various chokepoints in energy transportation systems, including areas of pipeline vulnerability, and shipping lanes like the Strait of Hormuz that keep US generals up at night, popping Valium.

This project remains a work in progress, so any suggestions are most welcome. Hope it can be useful.

What if US failed to increase Debt Ceiling? (31 July 2011)

Deadline gets closer and closer, yet US have not come out a concrete solution to calm the world. Whether tax increases should be included in a deficit reduction agreement or not, both Democrats and Republicans are standing firm without compromise. Republicans insist that any deal to cut deficits should involve spending cuts only while Democrats have been demanding both spending cuts and tax increases.

Although Finance Malaysia reckons that the Congress would pass the bill to increase debt ceiling, let us analyzed and prepare for the unfortunate outcome. What if the debt ceiling limit is not raised by 2nd August?

1. US bondholders will get paid first, while other payments such as social security, military payment, and Medicare services will stall.
2. Downgrading by rating agencies is unavoidable, which will lead to an increase in Treasury's borrowing costs.
3. US will be losing its AAA ratings, damaging the important role of USD as one of the world's preferred currency.
4. USD will slump to yet another all-time low, while Gold price will recorded yet another all-time high
5. Commodities prices traded in USD will shoot up.
6. Inflation rate in Emerging Markets will pushed up by rising resources and food prices.
7. Hence, this will dampen the growth of the economy and China being the world's growth engine will stall by high inflation, lower domestic consumption.

It's such a nightmare for the world's economy. Anyway, Finance Malaysia thinks that both Democrats and Republicans will reach a solution and pass the debt limit increase. Ultimately, who is going to blamed for if US default? Both sides of politicians, not only Obama. The world is just not prepared for such unfortunate events while recovery is just started.

US Debt Ceiling: What is that exactly?

Time is running out. We still have 3 more days to the very decisive day of 2nd August 2011 for US politicians to reach an agreement to increase the US debt ceiling. Everyday we heard this word "Debt Ceiling" repeating be it via TV, radio, newspaper and social media, but do we exactly know what does it mean?

Once again, Finance Malaysia blog strive to provide the knowledge to public regarding the most discussed economic issue now. So, what is debt ceiling?

The debt ceiling is a cap set by Congress on the amount of debt that the federal government can legally borrow. The cap applies to debt owed to the public plus debt owed to federal government trust funds such as those for social security and Medicare.

Why US need debt ceiling?

With debt ceiling, US can only borrow to finance their budget with the limit given. This will put a stop on the amount US can borrow to avoid US from over borrowing, which is very dangerous for the economic health of US.

What is the current limit?

The current limit was USD 14.29 trillion, which was raised in Feb 2010. It was not the first time, yet it would not be the last. The first limit was set in 1917 with USD 11.5 billion. Since then, it has been increased nearly 100 times.

New Fund: AmAsia Pacific REITs

Despite the current high level of share market globally, especially in Asia, there is still hanging fruits waiting for investor to grab. One of it was REITs, which lags behind its share market peers in terms of valuation. With this, AmMutual launched their latest fund which focuses on REITs investment on 18th July 2011.

The fund aims to provide regular income and to a lesser extent capital appreciation by investing in REITs. To achieve the investment objective, 70% to 98% of the fund's NAV will be invested in REITs listed in Asia Pacific region, which includes but not limited to Australia, Hong Kong, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand. In addition to country diversification, the Fund will also diversify into different REITs sectors such as residential, commercial and industrial. The fund will hold between 2% to 30% of its NAV in liquid assets.

Strategy Employed...

The manager employs an active allocation strategy, which means the asset allocation decisions will be made after reviewing the macroeconomic trends and REITs market outlook of the respective countries in the Asia Pacifc region. Among the criteria are:

• track record
• investment portfolio
• financial status
• income distribution policy
• cost factors of REIT

Any distribution?

Subject to availability of income, distribution is paid at least once a year.

AmAsia Pacific REITs is suitable for investors who:

• wish to have investment exposure through a diversified portfolio of REITs in the Asia Pacific region. Portfolio diversification is obtained by investing in REITs of various sub-sectors (for example, residential, commercial, industrial within the REITs sector) listed in various countries; and
• seek regular income and, to a lesser extent capital appreciation over the Medium to Long Term.

Source: AmMutual and the Fund's prospectus

Click here to download the fund's prospectus

Sell European Bank Stocks? Part III

Everyone who has followed this blog knows about my long lasting skepticism (4 years now, and I am just waiting for a reason to change my mind) when it comes to bank stocks. For instance, one year ago, August 16th 2010, I wrote the following on this blog in Sell European Bank Stocks?

* August 16th, 2010: “my n-month verdict for the EU banking sector is underperform!”

That was a good call (and actually confirmed by my academic research on banking assets and not only a gut-feeling produced by media digestion) since the FTSE Eurofirst Banks index has underperformed the overall European stock market (FTSE Eurofirst 300) with a whopping 25% since then! The banking index is down more than 20% and the general index is up about 5%


* July 20th, 2011: “the 12-month underperformance of the EU banking sector has been 25%!”

Well, I still have opinions on the EU banking sector and it is mostly negative! I am not as negative as I have been earlier but I believe in a continuing underperformance of the banking sector, nonetheless. Despite the drastic fall in valuation! Caveat emptor, though, this is not based on my research since I have to wait for some data I need to be released but it is more a result of some other more or less obvious facts related to European banks. For instance, banks are clearly becoming more regulated, almost utility-like, and this will affect them more than people think, I believe. Also, ROE will be much lower than before (perhaps halved) and I think this has not been acknowledged enough. And finally, the Euro zone will either collapse or undergo significant stress which is bad for European banks. I think it is inevitable. All of this is quite obvious, I admit, and the issue is just that I estimate that I am more negative than consensus!

I will be back on my research and on whether that confirms my negative outlook. Until then, caveat emptor! And do your own research!!

New Fund: HwangDBS China Select Fund

The Fund is a wholesale feeder fund that aims to achieve capital appreciation over the long term by investing in a collective investment scheme, namely the China Select Fund, a Cayman Islands-domiciled sub-fund of Citi Investment Trust (Cayman) II managed by Citigroup First Investment Management Limited (the "Target Fund"). Being a wholesale fund in nature, this Fund is open for sale to Qualified Investors only.

The Manager will invest a minimum of 95% to maximum of 99.8% of the Fund's NAV in units of the Target Fund and a maximum 5% in deposits. The base currency of the Target Fund is US dollar.

3 reasons to invest in this fund:

What is the permitted investments for the Target Fund?

It is expected that approximately 70% to 100% of the Target Fund's portfolio will be invested directly and indirectly in equity securities issued by companies which are listed or being offered in an initial public offer on official stock markets in Hong Kong, China (A Share and B Share markets), the United States, Taiwan, Singapore and other countries.

Other than that, the fund may also use financial derivative instruments (including index futures, index options and index and currency swaps) to hedge market and currency risk only.

How about China A shares?

NO. The Target Fund will not directly invest in China A shares, but may use Access Products to gain exposure. Access Products will generally account for approximately 10% to 30% of the Target Fund's portfolio.

What is Access Products?

It represents an obligation of the relevant Access Product issuer to pay to the Target Fund an economic return equivalent to holding the underlying A Shares. It will be valued on a mark-to-market basis on each valuation day by the relevant Access Product issuer and independent verification (at least on a weekly basis).

A 10% performance fee will be charged to the fund if the appreciation in the NAV during the relevant performance period is above the high watermark of the Target Fund.

Click here to download the Product Kit

Click here to download the Information Memorandum

Source: HwangDBS Investment Management

New IPO: Bumi Armada

Bumi Armada Bhd (BAB) is seeking a listing on 21st July 2011 with an enlarged share capital of 2.93bn shares of RM0.20 each on the Main Market of Bursa Malaysia. Based on the retail IPO price of RM3.03 per share, BAB will have a market capitalization of RM8.87bn. It expects to raise gross proceeds of about RM1.95bn from the flotation. Some 38% of the proceeds will be used to pare down bank borrowings while 29% and 28% will be used for capital expenditure and working capital respectively. The balance 5% will be used to pay listing expenses.

Company Profile

Bumi Armada Berhad is the largest owner and operator of offshore support vessels in Malaysia and is an established and trusted service partner in the oil and gas industry. It had established a strong position in FPSO systems, a growing Transport & Installation business and competency in management of large projects.

With head office in Kuala Lumpur, Malaysia and shore-bases in several countries around the globe, BAB currently serve clients in South East Asia, Congo, India, Mexico, Africa, Venezuela and the Caspian Sea region

Principal Activities

BAB has 4 main business units, which are:

1. floating production, storage and offloading system (FPSO)
2. offshore support vessel (OSV)
3. transport and installation (T&I)
4. oilfield services (OFS)

It also has 2 support units, which are:

1. fleet management services (FMS)
2. engineering, procurement and construction (EPC)

Nevertheless, the company’s bread and butter is its FPSO and OSV business, which generated about 45% and 55% of revenue in FY09 respectively and 44% and 34% in FY10. BAB’s record of consistent execution and its in-house expertise throughout the value chain allows the group to expand its vessel deployment footprint beyond its base in Malaysia to more than 10 countries in Asia, Africa and Latin America.

Investment Catalysts:

1. High oil prices to support E&P spending
2. Higher energy demand from global economic recovery
3. Industry moving towards 1-stop solutions, where BAB's 3 combined core businesses would qualify it as a 1-stop solution provider
4. Targeting a niche market in FPSO, which only a few FPSO owners in the market due to the high capex required
5. Strong RM5.8bn order book and customer base, which should keep BAB busy over the next 2-3 years
6. Active corporate branding

Valuation given by OSK Research:

We are initiating coverage on BAB with a Subscribe/Buy recommendation with fair value of RM3.65 based on sum-of-parts valuation. This is equivalent to a PER of 18x FY12 EPS, a valuation which is fair given the company’s sheer size and its ability to provide 1-stop solutions starting from the O&G exploration to decommissioning stage. Also, since an estimated more than 70% of its business provides recurring income and constant cash flow, the stock deserves a premium valuation over other local O&G supporting companies, who are dependent on one-off jobs.

Source: OSK Research dated 7 July 2011

Should we invest in Commodities or Resources? (July 2011)‏

Unlike real estate, assets type such as commodities and resources investments tend to be highly volatile. This kind of assets classes is suitable for high risk takers. Knowing the characteristic of the assets classes is important to suit your investment objectives so that a correct investment decision was made. However, I noticed that many investors confused about Commodities and Resources, and they often lumped them as SAME. Is it true? Let's look at it separately (not together).

Commodities vs Resources?
Yes. Both is similar, yet there are some differences between them. First, let's talk about commodities. Commodities for me were comprised of metals such as copper, iron ore, silver, gold, platinum... Although many of us includes energy assets such as oil and gas into it, we can categorize it as an asset class which we can't consume with our mouth. Sometime, it was called hard commodities.

Meanwhile, Resources are soft commodities. They comprises agriculture products and food, etc sugar, corn, wheat, soybean, palm oil... These are closely linked with our food and beverages. After understanding the basic of these two assets, let's us examine the next question.

Should we invest in Commodities or Resources now?

In view of the current scenario, I prefer Resources rather than Commodities. Why? Demand for wheat, rice and other resources tends to be more sustainable. Even if the global economy is going to slow down, we still have to eat or consume as it was a necessity.

Other than that, bad weather (due to global warming?) and natural disaster (due to end-of-the world?) had disrupted the supply of resources. Although commodities such as coal mining in Australia was affected too, food do more harm to human being. Without adequate resources, people may trade commodities for resources!!! Don't you?

What if the current high price of commodities was driven up by speculation? Even though demand and supply play their role here, but speculation and traders tend to make profit from the game. By manipulating the demand-supply story, they're in to drive up the prices, making it more pricier rather than purely based on the fundamental.

After all these points highlighted, would you invest in Commodities or Resources?

New IPO: OldTown

OldTown Bhd is a home-grown proprietor involved in the white coffee business that also operates with an extensive chain of cafes in Malaysia. The group has a total of 182 café outlets in Malaysia, Singapore and Indonesia. It also distributes its coffee and other beverage products particularly in Malaysia, Singapore and Hong Kong although its products are also marketed worldwide.

Inspired to provide quality white coffee to Malaysians, the group's founders Go Ching Mun and Tan Say Yap created their own instant white coffee formula in 1999. The duo established their manufacturing operations in the same year under the "OLDTOWN" brand name and in 2005, expanded vertically into the food services segment under the "OLD TOWN WHITE COFFEE" brand name until today.

How far can the coffee's aroma go?

OldTown plans to open 27 more outlets in FY11, which will bring the total number of outlets to 209. The group also plans to relocate its food processing operations and manufacturing plant to a central location in Ipoh. Construction of the new plant started in 2Q2011 for completion by 2013. The new plant, once completed, is expected to ramp up the group‟s production capacity by 500%.

Valuations...

We remain neutral on the prospects of OldTown's F&B segment which contributes the bulk of its revenue due to stiff competition and rising costs. We value OldTown at 12.5x FY11 EPS, which translates into a fair value of RM1.34, or a 7.2% upside from the listing price of RM1.25. The group has recommended a dividend payout of no less than 50% for FY11/12, which translates into a divided yield of 4.3%-4.8%.

OSK Research

Source: OSK Research

Interviewing Young Malaysian Josheen Ma

Young, talented, and with a "God-heart". This is my descriptions on Josheen, who came from a small village in Kedah. She become popular after emerging as the winner of UTAR Model Search (UMS) 2010, Project One and Only Inter-varsity pageant. After winning the title of UMS 2010, she start to blog about her life and her dream via josheen.net. Via her blog, she managed to get some modelling jobs.

Currently, Josheen had just finished her internship. However, she chose to work differently from others by doing some charity work for underprivileged children. She love the kids unconditionally and coached them dare to dream and work to win.

"I told myself, I should work harder to pursue my dream, thus they will know that I can do it, they can dream and win as well," said Josheen.

What course are you studying in UTAR? And, why you suddenly decided to participate in UMS 2010?

I am bachelor of social science-psychology year 3 students. I am a girl who really low self esteem before I participated in UMS 2010. My friends told me I always said 'sorry' to them whatever I am right or not. And I can't reject people's request whether I want it or not. My best friend last time (now is my boyfriend), encouraged me to participate in this competition because he knows that I always envy those who involves in modelling jobs and I read a lot of magazine about fashion. Finally, I make a decision to boost up my confident level as well as dare to dream and win.

Now, you have gained some modelling experience. Will you join a modelling agency in the future?

I might join and I might involve in beauty industry as well.

Do you think that your blog "www.josheen.net" helps you a lot in getting modeling jobs? Have you ever get cheated via it?

Luckily, I have never been cheated so far. And the blog really benefiting me, where many people can know more about me and find me for modelling job. I managed to get some modelling jobs in Singapore and Malaysia, via my blog. Josheen.net also let me to share more information such as my modelling experiences and also helping out the orphanages. Through blog, I can influence more people to do the meaningful stuffs as well as dare to dream.

How do you deal with life from doing charity work, which do not earn much?

Although charity won't earn money, but you can get more than just $$$. The value underneath can enhance your life experience and how you deal with the real world. Happy can be easy. But, money cannot buy the happiness of helping others, especially those innocent kids. In the future, I might busy with my career, but once a week or twice a week, I will still pay a visit to the orphanages home and make them happy. Be flexible but not invisible. They need our unconditional love more than money. Just love them when you see them. When they love you back, you will feel how amazing the feeling is.

Finance Malaysia is grateful that Josheen spent her time with us. We hope Josheen can inspire more youth to do charity and dare to dream. If Josheen can take the first step to change her life, why not YOU?

Cuba Cola!

Tänkte följa min princip om att inte snöa in för mycket på det område som alla andra för tillfället diskuterar (just nu Grekland). Det gäller ju att lyfta blicken lite om man vill ha ett försprång på marknaderna. Är det consensus-läsande du är efter så finns ju alltid ”standardmedia”....

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Ända sedan jag drack min första Cuba Cola någon gång på 70-talet har jag varit fascinerad av Kuba. [För den som ej vet vad Cuba Cola är för något kan jag berätta att det är den första cola-drycken som lanserades i Sverige, innan Coca Cola, och den var mycket populär i Sverige när jag var liten. Kanske p.g.a. Sveriges flört med socialism?]
Hur som helst, detta inlägg ska inte handla om Cuba Cola, även om jag ser kontrasten mellan Cuba Cola och Coca Cola å ena sidan och kommunistiska Kuba och kapitalistiska USA å andra sidan som en intressant metafor. I stället vill jag kort lyfta fram landet Kuba som möjlig framtida ”investering”. För ngn månad sedan anordnade Castro (Raul) en av de sällsynta kubanska partikonferenserna. Det var den 6:e i ordningen, efter 50 års med en kommunistisk regim, och en viktig nyhet är att det är Raul, inte Fidel, som satt vid rodret denna gång. Som jag förstått det ser många kubaner dessa konferenser mer som byråkratisk fernissa, snarare än kongresser där betydelsefulla förslag mejslas fram. Möjligen var det annorlunda denna gång?
20 år efter sovjetimperiets fall är Kuba mer desperat än någonsin. De reella lönenivåerna på (den faktiskt ganska stora) ön är idag en knapp tredjedel av vad de var i slutet av 80-talet och ojämlikheten är dramatiskt mycket högre. Kirurger tvingas jobba som turistguider och de med släktingar i USA blir automatiskt en dollar-spridande bourgeoisie. De flesta utomstående anser förstås situationen vara ohållbar. Medan Kuba halkar två steg bakåt för varje steg framåt har grannländer som Costa Rica och Brasilien, som valt en mer socialdemokratisk väg, sett sina ekonomier växa och fattigdomen minska. Socialismo o muerte! Passar kubanerna sig inte kan de få både och…..
En av de viktigaste sakerna att komma ur partikonferensen är planen att tillåta privata företag inom en stor del av servicenäringen. Samtidigt ska en miljon statligt anställda sparkas och denna chock-terapi ska enligt planen vara ett första steg till en mer dynamisk, kanske kan man säga mer Kina-lik, ekonomi. Jag är en stor supporter av denna plan och kanske kan det vara ljuset i tunneln?! Jag är ingen expert på området men jag tycker mig ha förstått att utländska investerares utlåning till Kuba minskat kraftigt sedan början av 2000-talet, då många investerare spekulerade i en snar död för Fidel och en därpå följande motrevolution. Färre tror kanske på en motrevolution idag men kanske kan en mer successiv reformering av systemet leda till något ännu bättre? ==> mitt råd till den som råkar springa på några kubanska statsobligationer (de lär faktiskt finnas!!) är att köpa dem innan någon annan gör det!===================

Personligen ska jag fortsätta hålla ett öga på denna fascinerande karibiska ö med sin särpräglade historia och sitt unika samhällsskick. Jag har aldrig besökt Kuba men när jag väl gör det hoppas jag att jag kan ta in på det klassiska Habana Hilton (numer mer känt som Hotel Habana Libre, Fidels högkvarter under den första tiden vid makten) innan det blir för dyrt för en svensk professor…..

OSK Stock Picks for July 2011

While fears of an European sovereign debt default reverberating worldwide, Malaysia quietly outperformed most of the world in June as the Banking sector led the KLCI higher after the potential M&A of RHB Cap was called off . We had expected the KLCI to trend higher led by banks but our hope was founded on potential excitement driven by the merger rather than on sighs of relief that there would be no overpaying for RHB Cap.

OSK Research: Top Gainers and Losers of FBM 100 during the month of June 2011.

July looks to be a Strategist’s fantasy?

With numerous announcements related to economic reform and infrastructure developments lined up for July, namely:

• 1 July – The launch of the ETP River of Life project involving the rehabilitation of the Klang River;
• 5 July – The 7th ETP update during which the PM will also unveil PEMANDU’s efforts to classify some 37 policy change recommendations made in the NEM into 6 Strategic Reform Initiative (SRI) clusters that will signal real economic reform and serve as enablers to the ETP projects;
• 8 July – The ground breaking ceremony of the ETP KL MRT project.

Coupled with what appears to be increasing foreign interest in the Malaysian market, July looks to be every optimistic strategist’s dream as the market may well scale higher from its already record levels. Only the risk of unrest related to the planned rallies (now banned) on 9 July appears to be casting a cloud over the July outlook. Even the global outlook has improved with problems in Greece appearing resolved until another day.

OSK Research: Foreign shareholding level still depressed as of March 2011

ETP has been well marketed...

The heightening foreign interest in Malaysia appears to have stemmed in part from the marketing efforts of PEMANDU in promoting the ETP. As economic reform moves into the next gear with the mapping out of details on how the New Economic Model’s policy reform can serve as enablers of the ETP, we believe that the buoyant foreign sentiment can be sustained. Thus we continue to advocate buying of sectors which will benefit from the ETP, namely Banking, O&G, Construction and Property.

Top Buys reflect our 2H2011 outlook

For July, we stay with our favourite sectors in naming our Top Buys, with Banks (Maybank), Construction (Gamuda), Property (UEM Land) and O&G (Dialog) all fielding a representative each. We also present a Top Buy from the Steel sector (Perwaja) in line with our recently upgraded view on the sector on account of potential M&As and handing out of Iron Ore mining concessions.

OSK Research Top Picks for July 2011

Source: OSK Research