Left Brain Right B - the DBS Vickers Securities Equities Research

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Regional Equity Strategy 4Q 2009 Country Assessment Market Data Indices Closed Chg Net -1 mth -3 mth -6 mth -12 mth 52-Week 17 Sep 2009 -1 mth (%) (%) (%) (%) High Low KLCI 1,219 50 4 14 4 22 1,219 829 KLCON Index 235 10 4 13 9 31 235 135 KLCSU Index 366 15 4 14 21 28 367 262 KLFIN Index 9,962 507 5 16 8 22 9,962 6,136 KLIND Index 2,663 88 3 14 7 23 2,664 1,995 KLPRO Index 91 1 1 5 (2) 9 93 64 KLPLN Index 5,980 41 1 11 (17) 28 6,067 3,119 KLPRP Index 796 16 2 5 7 27 809 495 KLSER Index 159 6 4 13 2 19 159 112 KLTEC Index 16 (0) (1) 10 (21) (5) 17 11 FBMSC Index 9,947 26 0 5 5 22 10,355 6,024 Transactions: YTD Volume (billion) 176 Value (RM billion) 204 Source: Bloomberg MARKET REVIEW For the quarter, the KLCI continued its strong momentum and went on to achieve YTD highs. At the close, the benchmark index gained 13% to 1219 points (as at 17 Sep), fuelled by a combination of improving economic activities, investor sentiment and risk appetite. 2Q09 GDP contracted 3.9% y-o-y, better than expected. It was a broad-based improvement as all sectors recorded better growth. The construction sector grew faster, possibly on the back of greater progress on government projects while recovery in the equity market helped lift financial services performance. On a q-o-q basis, the economy expanded 13.4%, indicating the end of the recession. We believe the market moved up in anticipation of stronger 2Q09 corporate earnings, which was announced by end- August. We saw good gains for the banking sector that beat market expectations. The improved stock market performance since March, cheap financing and incentives packages resulted in strong takeups for physical properties. The likes of SP Setia, E&O and IJM chalked up impressive sales within a few months. This in turn helped propel share prices of property counters on the stock market. On politics, it was another eventful quarter. The ruling Barisan Nasional coalition lost the Manek Urai, Kelantan (in July) and the Permatang Pasir, Penang (in August) state seat by-elections. There were also more developments on the Port Klang Free Zone (PKFZ) controversy and a tussle in MCA leading to an extraordinary general meeting (EGM) on 10 October that will see balloting on resolutions including a noconfidence motion against party president Datuk Seri Ong Tee Keat. For the quarter, crude oil prices gained 5% to USD72 per barrel. However, Malaysian crude palm oil futures slipped 4% to RM2,182/MT. The Ringgit strengthened against the US dollar, appreciating 1% at the end of 3Q09 to RM3.47/USD. Page 91
Regional Equity Strategy 4Q 2009 Country Assessment Kuala Lumpur Composite Index Key Events Index pts 1500 1400 1300 1200 1100 1000 Oct 08 8 - PM announced resignation in Mar 09 11 - Koh Tsu Koon became Gerakan president after winning uncontested 15 - Hindraf banned 19 - MCA party election Nov 08 2 - Deputy PM won the Umno president post uncontested 4 - RM7b stimulus package announced 25 - Bank Negara cuts OPR to 3.25% Dec 08 3 - Zaid Ibrahim sacked from Umno J an 09 9 - BNM cuts OPR to 2.5% 17 - PAS won T'ganu byelection Feb 09 6 - BN took over Perak 11 - Power tariff rev ised 18 - Perak MB and assembly men suspended 23 - Govt vetoed East@Labu airport 24 - BNM cuts OPR to 2.0% 27 - Toll hike defered Mar 09 3 - Perak's PKR held emergency sitting under a tree 5 - Anwar's sodomy trial transferred to High Court 10 - RM60b 2nd stimulus package unveiled 24-28 - UMNO General Assembly--Najib won No.1 post, Muhyiddin No.2 Apr 09 3 - Najib sworn in as new PM 7 - BN retained Btg Ai, PR regained Bkt Gantang & Bkt Selambau 8 - Cabinet re-shuffle 22 - Removal of 30% bumi equity for 27 service subsector 27 - Liberalisation for finance sector May 09 7 - Chaotic Perak State Assembly 13 - First H1N1 case 22 - Court of Appeal overturned High Court decision of declaring Nizar as valid Menteri Besar 27 - 1Q09 GDP contracted 6.2% 31 - PKR won Penanti byelection J un 09 3 - PAS agreed on unity government talks 13 - Zaid Ibrahim joined PKR 16 - 1st stimulus package spent 22 - First school closed due to H1N1 virus. 50 cases to date. 22 - Anwar sodomy trial on 1 & 8 J uly. Jul 09 6 - FBMKLCI index rebranding 11 - Najib annouced additional measures in conjuction with his 100th day as PM 16 - Death of Teoh Beng Hock 21 - First H1N1 death Aug 09 27 - 2Q09 GDP contracted 3.9% 26 - PAS won Permatang Pasir byelection 27 - Dr Chua sacked from MCA Sep 09 4 - Bagan Pinang state assemblyman died, 9th byelection on Oct 11 16 - MCA's EGM fixed on 10/10 18 - Maxis IPO exposure draft out 900 800 700 600 Mar- 08 Apr- 08 May- 08 J un- 08 Jul- 08 Aug- 08 Sep- 08 Oct- 08 Nov- 08 Dec- 08 Jan- 09 Feb- 09 Mar- 09 Apr- 09 May- 09 Jun- 09 Jul- 09 Aug- 09 Sep- 09 Source: DBS Vickers, various media Page 92
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Left Brain Right B - the DBS Vickers Securities Equities Research

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