The local market experienced volatile trading in the month of August with foreign funds exiting the market on: (i) fears of the US stimulus coming to an end, (ii) a slowdown in the global economy; and (iii) geopolitical tension in the Middle East. The FBMKLCI fell 2.5% MoM to settle the month of August at 1,727.58 while our On Our Radar (OR) tracker registered a loss of 7.3% over the month. Last month, we had taken profit and closed position on three OR stocks, booking in gains of 50%-105% and introduced three new stocks with Trading Buy calls. We remain cautious on the market as the sold-down towards the end of last month could prolong on lack of fresh positive leads while concerns over economy and geopolitical jitters remain unresolved. We believe selective bashed down blue chips such as DIALOG, GAMUDA, MAYBANK and GENTING, could provide good value plays while defensive plays like DIGI and TM should fare well in this volatile market.

Locking profits on three stocks in August. After an aggressive approach to review our OR call in July, we started the month of August with the introduction of three new OR stocks with Trading Buys, such as ENCORP (FV: RM1.25); DAYA (FV: RM0.38) and PTARAS (FV: RM6.16) on the conviction that traders may be drawn by their value. We have attached a NOT RATED rating on ECS after we switched the stock from our core coverage to this retail coverage given its lightinstitutional profile. Towards the end of the month, we turned cautious after the foreign funds sold down the heavyweights. Subsequently, we closed positions in three OR stocks with Take Profit to lock in our gains. We made 104.7% profit on FABER since our first report in Sept last year while booked in 50.0% gain on OCK in the past nine months. We also made a handsome return of 62.8% in two months on GHL.

First losses since January. There is no change of 16 Trading Buys in our OR tracker portfolio list after Taking Profit on three stocks and adding three Trading Buys last month. Against the market where the FBMKLCI posted a 2.5% MoM decline, our OR tracker portfolio reported a contraction of 7.3% on an average total monthly return in August. This is the first loss since Jan-13 and the worst monthly performance so far since we started our monthly review in January this year. The previous month winners, SBCCORP (-17.6%) and YEELEE (-14.2%) were the biggest losers in August as investors locked in their gains in view of the uncertainty of the market. Our newly introduced OR stock DAYA (-13.2%) was also one of the main losers. On the other hand, on a YTD basis (as at 30 Aug), our OR tracker portfolio, which comprises of stocks that we still have Trading Buy ratings on, recorded a total return of 4.3% which is in line with the FBMKLCI’s total return of 4.5%.

FABER topped the realised gain list. Our OR tracker portfolio has posted an average total return of 4.1%% since its inception, which is slightly lower than the total return of 4.9% reported by the index in the same period. This is also lower than the average total return of 17% registered in July. The significant decline in return is basically due to the fact that we took profit on the three OR stocks, namely FABER, OCK and GHL. PESTECH remains as the top best performer with 100.1% returns in our OR tracker portfolio for stocks that we still have Trading Buy ratings on. The other best performers were TGUAN (+16.8%) and GOB (+11.0%). On the other hand, FABER (+104.7%) replaced PWROOT (total returns: 91.3%; 67.8% in Mar and 23.5% in Jul) as the top realised OR portfolio tracker list. BONIA remained the worst performer list after we closed our position in Mar with a total realised loss of 17.1%.

Source: AmeSecurities