(TheStar-March 15, 10)PETALING JAYA: The FTSE Bursa Malaysia KL Composite Index (FBM KLCI) may find it difficult to breach its all-time high of 1,516 points this year although the index is currently just 13% shy of that record.
While the stronger ringgit and government initiatives generally are expected to boost market sentiment, aggressive monetary tightening measures in the region could exert pressure on the index.
This article conincides with my thinking to review what kind of strategy should I adopt as KLCI seems to have limited upsides. The market is selling for 16.59X which is very close to its historical 10-year average.
From money flow point of view, Ringgit appreciations is a short term catalyst. To break the previous all time high, yes I could agree that it will take at least a few attempts. The real catalyst under this environment is EARNING! If the 2010 earning is able to grow between 10 - 15%, the fair value of KLCI is around 1,450 to 1,525. In view of this, I'm going to hold on to my positions but will not want to add new positions aggresively. So, timing is not that critical to me whether 1,450 target will be attained in 1H '10 or 2H '10. I still do not feel at this point to chase laggards as sharp corrections will trigger sell down across the board. In short, I'm taking a defensive stance for now.