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Brokers Starting to Promote Cheap Stocks



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May 14 2007
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If you ever noticed since Kuala Lumpur Stock Exchange (KLSE) breached the 1,200 points (a plus-minus figure), the composite index has been slowly but surely reflects a “normal” market trend consistent with the fluctuation of global stock market direction. I said “normal” because prior to this Malaysia’s stock market has been defying the gravity and almost trades the opposite way of other regional bourses. For example, when the Dow Jones traded 3-figures lower, Malaysia tended to show to the world that it’s a super-special market which will not be influenced by others by simply traded higher, and vice-versa.
But then when the whole global stock markets were traded positively, Malaysia stocks would surprisingly traded lower – you can often heard the business news commentator repeatedly said the stock market was down because of profit-taking and without new direction. You would grown sick and laugh at the repeatedly used phrase over and over again.

Now, you would notice Malaysia stocks market is taking more cue from global market’s pulse more consistently – good news for future-index investors, speculators or punters. Moreover, I’m sure investors are getting used to 2-digit of composite index going up or down depending on external factors. However due to the small volume, chances are you would more likey be eaten up alive by market-makers in future trading.

Trading above 1,300 points now, KLSE is rather vulnerable though there’re different schools of thoughts. Also the daily “volume” has been on consolidation phase as most investors (aren’t they smart?) are sidelining simply because the perception is – the market is expensive. Who can blame them when 1,300 was equate to the 1993 Super-Bull run? What do you do in such scenario? Do you still buying? Yes, if you’re a newcomer or if you believe the stocks can go higher. No, if you’ve been badly burnt before and chances are you would have sold half if not all of your stocks portfolio.

BusinessTimes today release a list of so-called cheap under-valued stocks reasoning that these stocks are “relatively” cheap. The fact that foreign investors will never touch on these cheap stocks has caused such stocks to be ignored – coupled with syndicates who were not as active as before, men-on-the-streets are still waiting for someone to start the ball-rolling.

Some of the small-caps which attracted Nomura International (HK) Ltd are:
  • AirAsia Berhad (KLSE: AIRASIA, stock-code 5099)
  • Bintulu Port Holdings (KLSE: BIPORT, stock-code 5032)
  • E & O Property Development Berhad (KLSE: E&OPROP, stock-code 3468)
  • IGB Corp Bhd (KLSE: IGB, stock-code 1597)
  • Kossan Rubber Industries (KLSE: KOSSAN, stock-code 7153)
  • Lafarge Malayan Cement (KLSE: LMCEMNT, stock-code 3794)
  • Sarawak Enterprise Corp (KLSE: SARAWAK, stock-code 2356)
  • Sunrise (KLSE: SUNRISE, stock-code 6165)

Citigroup’s (NYSE: C, stock) list of six stocks actually consists of only one cheap stock namely AIGB.

Amongst my favorite from the lists are AirAsia, E&O Property and Sunrise. Talk about E&O Property, how I wish the minority shareholders of Maxis Communications Berhad (KLSE: MAXIS, stock-code 5051) can put up a good fight and deny the delisting exercise the same way those brave-hearts of E&O Property minorities did to the arrogant parent holding.

There’re some other potential stocks which were not covered but fit into my favorite lists are StemLife Berhad (KLSE: STEMLFE, stock-code 0137), Kencana Petroleum Bhd (KLSE: KENCANA, stock-code 5122) and others. Still, do your research and analysis before jumping into the ocean.

# TIP: You can expect more of such cheap-stocks recommendation from stock-brokers if the volume continues to dwindle.



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