Budget 2012

RM9bn In The Pockets!

'''' Truly Welfare for the rakyat, well-being of the nation Budget.

'''' Estimated RM9bn boost to disposal income could potentially boost GDP growth by up to 1ppt in 2012.

'''' Coupled with SMEs and rural development as well as mildly expansionary fiscal spending, will provide support for economic growth in 2012 amid external uncertainties.

'''' Official forecasted fiscal deficit of 4.7%.'' New civil servant remuneration scheme would pressure deficit and inflation..''

'''' Official forecasted GDP growth of 5-5.5% and 5-6% for 2011 and 2012, could be on the high side.''

'''' Revenue projected to grow 1.9%, operating expenditure by 0.7% while development expenditure by -0.1%.

'''' 93.3% of deficit financing from domestic sources, Federal government external debt to decline to RM16.2bn.

'''' Neutral to slightly positive on market.

'''' Biggest winners are consumers stocks, MBSB and RCE.

'''' List of consumer stocks that have underperformed that could catch up on the back of the positive impact.

'''' Banks will also benefit as it alleviates concerns about high household debt and rise in delinquencies.

'''' Property relief by a mild hike in RPGT.

'''' FGVH and SARA 1Malaysia positive for participation.

'''' No sin tax hikes but still possible "outside" of Budget.

'''' Only loser group is the shipping sector with lower income tax exemption.

''

Rebound in August Gross Exports

'''' Export growth picked up to 10.9% yoy in Aug (Jul: +7.1% yoy), higher than market consensus of 7.9%, while import growth rebounded to 6.9% yoy (Jul +2.9% yoy). Trade surplus widened to RM11bn due to commodity exports

'''' E&E segment remained the main culprit as it declined by 5.6% yoy (Jul: 8.3% yoy). Excluding E&E, export growth would have been significantly higher at 22.1% yoy. The commodity export boost was mainly from palm oil (+86.6% yoy), chemical products (+26.2% yoy) and rubber products (+22.4% yoy).

'''' Boost from palm oil may start diminishing in October as (i) high base of CPO prices beginning Oct'10, hence yoy price growth turning negative, and (ii) peaking of CPO output.

'''' The modest growth in intermediate imports (+1.2% yoy) suggests subdued IPI and export growth in the coming months, in line with the latest PMI readings for advanced economies.

'''' We expect BNM to hold the OPR steady as risks to growth have increased while inflation appeared to have peaked.

''

FBM KLCI: Any profit taking is likely to be well-absorbed

'''' If current short term uptrend line support or UTL (near 1374) is maintained, the KLCI is likely to extend its gains along the upward channel. Immediate resistance levels are 1410 (5-d SMA-weekly chart), 1420 (30-d SMA-daily chart) and 1446 (10-d SMA-weekly chart). Immediate supports zones are the 1377-1387 gap (23 Sep). A breakdown below UTL will trigger further selldown towards 1354 (last week's low).

''

KIMLUN: Well-poised to retest RM1.30-1.43 targets

'''' After plunging from 52-wk high of RM1.99 to recent low of RM0.995 on 26 Sep, KIMLUN is consolidating upward along the uptrend line support. We believe current rebound has further legs given its improving weekly and daily technicals. Immediate upside targets are RM1.30-1.43 whilst supports levels are near RM1.00-1.10.are Cut loss below RM1.00.