Weekly Market Update - 1 June 2015

Market Outlook

Equity Market Outlook

• Although the stock market has been going through another correction lately, we sense there is still underlying strength in the non-index stocks.
• We maintain our stock-picking strategy for the funds. The funds’ outperformance in the midst of market correction in May is testament to the appropriate application of our stock-picking strategy.
• We are not concerned by recent newspapers quoting that a large number of companies have been reporting results that were below market expectations.
  • ​Most of the companies reporting poor results are in the banking, plantation and telco sectors and; our funds are underweight in these sectors.
  • In the past 3 quarters, our funds have been doing well despite a large number of companies reporting lacklustre results.

Fixed Income Outlook

• Generally, secondary market was quiet as focus was on the primary market, particularly on the credit market. There was a re-opening of 7-year Government Investment Issue (GII) which recorded a Bid-to-Cover (BTC) of 2.09x. Even though the BTC was higher than 2.0x, it was lower than the average BTC of year-to-date GII auctions of 2.78x.
• On the credit market, the primary market was active with new issuances of Jambatan Kedua Sdn Bhd (RM2 bil), THP Suria Mekar Sdn Bhd (RM1 bil) and Malaysia Building Society Berhad (RM900 mil). Overall, we expect the credit yields to be supported by lower primary issuances to-date.

Source: Lipper for Investment Management, as at 31 May 2015


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