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Given the persistent headwinds from the external sector and general election overhang on the home front, we are of  the view that the market will likely be stuck in a range-bound trading pattern in the 4Q. Consequently, we believe  investors would still need to accumulate fundamentally-robust stocks on weakness in order to outperform the  market, while staying defensive on the core holdings will provide greater stability to the portfolio performance. In  addition, as the search for yield will likely remain a key driver for both retail and institutional investors in the 4Q, high  divided-yielding stocks will also continue to outperform the market, in our view. A list of our top picks is reflected in t able below, which includes “buy on weakness” tactical stocks. Which Sector to look at? Sector-wise, our key overweights are telecommunications and banking , although we also have an overweight stance on the consumer, utilities, gaming and rubber gloves unde...

Global Rally ex Malaysia. While global markets rallied in Jan 2012 to post their best January performance since 1994, Malaysia languished as an exception among all the major markets in East Asia, thus strangely validating our Sell call on the Malaysian market in January. Globally, the economic outlook in the US remained stable with 66% of companies that reported earnings thus far beating estimates. While the situation was different in Europe with the European Financial Stability Fund (EFSF) losing its AAA rating with S&P, nonetheless, the slush of liquidity unveiled by the Long Term Refinancing Operation (LTRO) allowed European markets to rally accordingly as bond yields in Italy declined dramatically. Takeover spare continues . While December saw the privatization offers for KFC, QSR and YTL Cement as well as rumours of Proton’s stake sale by Khazanah, January saw more of the same including: DRB-Hicom acquiring Khazanah’s 42.7% stake in Proton fo...

We still feel that there is downside to the KLCI although with non-GLICs supposedly close to maximum cash levels and GLICs supposedly not aggressively supporting the market up till now, further downside maybe somewhat less than our recession market bottom of 1086 points. OSK: Normalised performance of September’s top stock picks With Budget 2012 (to be announced on this Friday 7th Oct) around the corner, OSK has no major expectations of the budget except that it will probably be people friendly and include: No further tightening of regulations with regards to the property sector which should be positive for property stocks No hike in Brewery Tax which will be positive for Carlsbergy and Guiness A 4.5 - 6.8% hike in Tobacco excise duties which will be mildly negative for BAT and JTI A likely hike in Civil Servants salary as the last hike was in 2008 which will be positive for MBSB OSK: Defensive Top 10 Buys OSK remain defensive for now with expectations of a further drop i...