3 Reasons To Be Bullish Despite KLCI down 15 points

1. I think that the worry on China interest rate is overdone.


According to The Edge, the decline in KLCI is caused by interest rate increase in China. Is the worry valid? NO from my point of view, due to: i) inflation is still manageable in Malaysia with the latest reading at 2.2% as of Dec-2011 (vs. China's 4.6%), ii) Malaysia economy seems to be on soft landing form with GDP expected to be 7% in 2010 and 5.5% in 2011 (meaning the growth is still there) and iii) increase in world oil price and CPO actually should be beneficial to Malaysia as a net exporter of these commodity


2. Sarawak election is coming soon

There are many versions of speculation when Sarawak election will be held... some say March, some May... My thought? Wait for the Merlimau by election on 6-March-2011, if BN win with bigger majority then March version should be a reality. Sarawak counters should continue to be in the limelight. (Note that NAIM has surged slightly yesterday).

3. Generally, Malaysia is still underowned by global fund manager

Sources indicated that average allocations of EM portfolio managers for Malaysia hovers around 1.8% (vs. MSCI neutral weight of 2.8%). This suggests that the chances of Foreign Fund Managers buying is more (vs. selling).