GLOOM, DOOM & 1MDB

USD3 billion, if 1MBD cannot pay, the government will bailout for 1MDB.  The figures seems to escalate from RM950 million to RM11 billion. iCapital.biz, in its latest piece during its quarterly announcement wrote a good piece on Malaysia economy, about global trade growth has shrink from 1997-2007 of 7% to about 3% after 2008.  No thanks to China, Eurozone and USA and Japan.  Glut in many areas, commodities, shipping industry, construction and property industries, consumptions, no thanks to easy money.

Now that we know that the real economy is kind of disconnected with the financial market.  Lets have a look:

NYSE market cap vs USA GDP = USD25 trilion vs USD16.6 trllion.

KLSE market cap vs Malaysia GDP = RM1.7 trillion vs RM1.0 trillion

Sell, the sky is going to fall.  Get out before it is too late.  On a contrary, it is a good time to slowly do your bargain hunting for VALUE DEFENSIVE STOCKS.  Although there are not many, there are some.  We just need to find it.

Some of which I like is DIGI, GAMUDA, NESTLE & PUBLIC BANK (No rush for plantation company).  This are the large cap companies.

For smaller cap, I like GADANG, VITROX, WELLCAL, PADINI (with strong ROE, DY, PAT growth, Strong Margin)

So, it is up to you to rebalance your portfolio.  Technically, some are good value stocks, i.e. with good potential.  For smaller cap, the tenure of holding may be shorter than the large cap companies.