Assessing Bursa's Run Up

Out of the blue, the Bursa woke up like a giant disturbed from its sleep. Investors were gleefully shouting that this is the general election run up or the Chinese New Year routine run up, or both.

Well, lets look at the candidates shoring up the index.
Please re-read my posting Macro Predictions For 2008 on Wednesday 2 January. Following the US jobs data report, which was dismal, it looked like equity strategists and asset allocating team globally came to the same conclusion - forget about USD assets, commodities and agriculture products are the way to go for 2008. The rush for taking up new positions in palm oil by investment pros was largely due to that conclusion.

Fresh statements by OPEC (not upping production) and problems at a couple of the biggest wells sent oil prices skywards. Taking into account inflation and a weaker USD for 2008 (as the Fed would be pressed to reduce rates by a bigger quantum), traders piled into oil futures. There were significant big bets for oil to hit US$200 in 2008 options as well.
Oil & gas plays followed naturally as a second tier play from the outlook for oil prices.

There is some truth in that a general election driven rally has started as well judging from the jumps in IDR plays, MRCB and even Maybank (which has been dormant for more than a year).


So how do you play the markets in Malaysia? Trade with the trend, I guess. As I have said before, the only things worth holding are palm oil and O&G stocks in 2008. Anything else you should cut once there is any wobble. Thats because other than the two sectors, anything else being pushed higher looks to be driven by pure liquidity, thus pushing them to over valued territory. Take note. Ride the trend but be prepared to cut if things start to look iffy.


Comments

sahamgurl said…
dear salvador, do u have a call on KNM? My target was RM8.00...it looks pretty expensive now, but at the same time, I don't see anything negative on it.. thanks!!
rusty said…
Dali, Happy New Year....
I am a great fan of yours. What you have written are very insightful and funny.
Keep up the good work.

p/s I do occasionally read your chat/comments on Seng's blog.
So very unlike you :)
Salvatore_Dali said…
Rusty,

when i chat, that is how i talk... even when i blog, i blog the way i talk (hence the occassional profanity)... a blog can do and say what i cannot in The Star, its so cleaned up... I tell you, the editor always takes out my best jokes.
rusty said…
Hi Dali,chatting paints a more colourful picture of you, kinda more human with a develish sense of humour.Yup, the editors' have the tendency to do that,not knowing a good JOKE when they read one. Perhaps a bit too "chim" (deep) :)
I hope 2008 is a good year for all Malaysians.
Salvatore_Dali said…
rusty,

yea right... this weekend's article was about funds management... and I concluded that finding a good funds management company is like finding a good hotel in Johor, its there but its pretty difficult.

and that was taken out...lol...
6th AOSD said…
hi dali,
what about gold? very few have as yet woken up to this asset class. With an depreciating USD, high inlfation and general doom and gloom facing us for the next few years, gold looks like it's about to take off. unfortunately exposure to gold in malaysia is limited. but it could be one of the few safe havens in the coming months. your thoughts on this?
Lone said…
Can anyone tell me how one can invest in gold?
Dumbo Malaysian investor.