Since the beginning of the year, analyst has predicted what a bumpy and hollistic 2010 it's going to be. Any true to their words, and with 1H'10 just ended, moving forward the second half of the year is slated to be in moderate pace. With M'sia's GDP peaked to over 8% for 1H'10, Bank Negara is expecting the GDP to down to ~6% to close Year 2010.
From Jan'10, KLCI has now risen to its all-time high at 1395pts, +120pts from early of the year. However, market did not come in a direct upward trend (refer chart above). Throughout the year, stocks stumbled to its lowest point at two occasions; one in Feb and another in end of May. And from the latter, the bulls charged up himself and rallied with no turning back. With KLCI potentially going into overbought territory, coupled with poor economic data especially in the U.S and uncertainty still arise in Europe, market will be eventually pull its break and begin its correction mode.
With the underlying data pinning potential downside turn, what would be the best bet (haven't we mention this before since the end of Year'09 where we were so worried about how this year would turn around?) for investors to put their money at, in order to minimize the "expected" risk involved? One basic ground rule is through Portfolio Diversification and this has been the tactic I'm adopting, and gosh... although there were 2 dips in the year, my net returns from stocks still give me +$1,000! My returns peaked at +$1,300 in early Aug'10. The setback was partly contributed by the regional poor economic data plus the selloff across gloves industry. And back to topic of "safe investment", my personal call is to buy-in the lows of glove stocks. These stocks have good fundamental and proven to give decent return especially when the market turns fragile.
Particularly in domestic region, besides investing in rubber, other commodities product that worth to invest in would be in steel. With governments direction pushing into massive construction and infrastructure projects, these supporting materials will be the best beneficiary. In these 2 field, my pick is CSCSteel (pays good dividend and sound financial data) and Sunway (share price comparatively attractive to its peers). Another preferred blue chip company which has just recently announced outstanding quarterly report would be YTLPwr. I'm expecting a potential upside for this share throughout the year, especially once Tanjong Plc completed its privatisation moved. This will eventually diverge some of the power utilities investors to other players; i.e Tenaga and YTLPwr.
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