Ending the year on a strong footing
- December has always been a good month for the KLCI. On average, the benchmark registered a 2.7% return thanks to window dressing activities.
- Top ten weighted stocks could be the target for window dressing.
- Alternatively, rotational play among the laggards within the 30 constituents may also take place.
The KLCI has been registering positive returns in December for the past five years. Hence, we believe year-end window dressing could take place again. The top ten weighted stocks and laggards within the 30 constituents stand to benefit from possible rotational play. We reiterate our end-2013/14 KLCI targets of 1,830/1,940.
In the past five years (2008-2012), the KLCI, on average, registered a 2.7% return in December. The run-up, by and large, was due to window dressing of the local funds, in our view. This should sustain the KLCI above the 1,800 points for the current year.
Investors may buy the top ten weighted stocks: Public Bank, Maybank, CIMB, Axiata, Tenaga, Sime, Genting, IOI Corp, PChem and Petronas Gas, to ride on the window dressing activities.
Alternatively, one may look at the laggards among the 30 constituent stocks. YTD, the KLCI is upped by 7.3%. The underperformers are Telekom (-14.9%), YTL Corp (-14.7%), Digi (-7.9%), Hong Leong Bank (-4.5%), Felda (-3.5%), Astro (-2.7%), RHB Cap (-1.0%), CIMB (-0.7%), Sime (1.4%), BAT (1.5%), KLK (2.5%), Axiata (3.8%), UMW Holdings (4.2%), PChem (5.5%), Maxis (5.7%) and Maybank (6.3%).