Stay out of Bursa Malaysia

My prediction is that Bursa will reach 900 point soon as long as political uncertainty prolong...

Also, do not forget about subprime issues, high oil price and latest Fannie Mae and Freddie Mac 's case does not help the sentiment of global equity market.

Switch your fund to Hong Kong and China stock instead if you still want to invest.....................

Read what Singapore Business Times said Malaysian stocks......


Some glitter despite lacklustre trading in Malaysian stocks

KUALA LUMPUR, July 14 – The Malaysian stock market may have fallen some 20 per cent since the beginning of the year, but analysts do not suggest that investors jump in just yet.
In the past few weeks, a number of stockbrokers have come out with new year-end targets, with the revisions pointing to a weaker market performance amid lacklustre trading.
Although currently trading at below its historical support of 12 times forward price earnings (PE), the market could test its historical PE low of 10.7 times – or around 1,106 points for the benchmark Kuala Lumpur Composite Index, warned UBS which has a year-end target of 1,186 points.
Even more bearish is CLSA's 980 forecast from 1,150 previously.
As with nearly every Asian economy, inflation – brought about by soaring food and energy prices – is proving a tough challenge for Malaysia. Wide and steep hikes in fuel, gas and power prices of as much as 60 per cent in June and July have sent consumers and businesses reeling.
Although fuel subsidies needed to be drastically reduced to ensure the budget deficit would not shoot beyond an estimated 5-6 per cent, its sudden implementation in a market cushioned by two decades of subsidies will have far-reaching implications.
For starters, government officials expect inflation, which reached 3.8 per cent in May, to breach 6 per cent in June – the last time that occurred was in 1998 in the aftermath of the Asian financial crisis.
UBS expects the consumer price index to hit a peak of 8 per cent in the third quarter – or a 20-year high – and to average 5.2 per cent for the year.
Rising inflation could force the central bank to raise the overnight policy rate from its present 3.5 per cent by 50 basis points over the next 12 months, economists say.
Economic growth is likely to be crimped to about 5 per cent – still decent even if at the lower end of earlier forecasts. Still, much will depend on private consumption which has helped drive the economy in the past two to three years but which data show has declined.
One positive from the late 1990s is that corporations are now thought to be more resilient, although their earnings growth will invariably be softer, estimated in the high single or low double digits.
Strong commodity prices will cushion some of the pain for the petroleum and crude palm oil exporter.
Despite slashing the fuel subsidy in an effort to contain the fiscal deficit at 3.2 per cent of gross national product, the government's decision to allocate an additional RM20 billion in the mid-term review of the 9th Malaysia Plan to counter rising food prices and the higher cost of building materials will lead to a swelling of the fiscal deficit, with some pegging it at closer to 3.5 per cent.
Adding to the economic issues is the present gloom on the political front. Investors have stayed on the sidelines as political chiefs on both sides of the divide continue to jostle for advantage following the drubbing received by the ruling Barisan Nasional coalition at the March polls, as well as leadership tussles within BN component parties.
Although “growing pains” are necessary, that they are taking place at a time of economic turmoil only compounds the issues. Market players say the political risk premium has risen and few see any let-up in the political stalemate in the short to medium term.
Except for the tabling of the 2009 national budget at end-August, it is the political dates – mainly all Umno-centred – that are expected to dominate attention for the remaining of the year.
The senior partner in the BN, Umno will be holding party elections this year, the process beginning with branch nominations in the middle of July and culminating in central elections in December.
Given that the president of Umno has traditionally also been the prime minister, the jockeying in the party has been particularly intense with incumbent Datuk Seri Abdullah Ahmad Badawi fighting to stave off his rivals.
A clearer picture may emerge then. For investors still on the prowl, analysts suggest defensive stocks with high dividend yields such as Public Bank, Digi.Com, BToto and Guinness.