KUALA LUMPUR: Investors wondering where to put their money during uncertain times may want to consider ECM Libra Research’s basket of high dividend yield stocks.
The research house noted that much of the action in the current range-bound market has shifted to penny stocks which have been punished due to their lack of fundamentals.
“Although providing potentially exciting returns, [penny stocks] can be highly speculative and risky,” it said in a note yesterday.
ECM Libra expects the FBM KLCI to trade within the range of 1,300 to 1,520 points over the next six months, with economic growth staying positive but its path hampered by global uncertainties.
“As we are now in the higher end of this trading range, the downside risk is more than the upside risk,” it said.
The more conservative alternative is to invest in high dividend stocks, which offer better yields than the 12-month fixed deposit rates at 3.2% per annum, ECM Libra said. Moreover, given that the outlook for interest rates “is flattish with a downward bias”, chances are that fixed deposit rates would only stay flat at best.
In the event the overall market sees further weakness, some shelter may be found in ECM Libra’s basket of defensive stocks, which offer better yields than fixed deposit rates, have relatively stable businesses and low correlation to the FBM KLCI.
The basket of counters, which only include companies with more than RM300 million in market capitalisation for liquidity, have been ranked in ascending order of beta — where the lower the beta, the less correlated the stock price is to the FBM KLCI.
Most counters on the list are real estate investment trusts. Others include Maxis Bhd, White Horse Bhd, Berjaya Sports Toto Bhd, Telekom Malaysia Bhd, Guinness Anchor Bhd, Malayan Banking Bhd and Lafarge Malayan Cement Bhd.
This article appeared in The Edge Financial Daily, November 24, 2011.
The research house noted that much of the action in the current range-bound market has shifted to penny stocks which have been punished due to their lack of fundamentals.
“Although providing potentially exciting returns, [penny stocks] can be highly speculative and risky,” it said in a note yesterday.
ECM Libra expects the FBM KLCI to trade within the range of 1,300 to 1,520 points over the next six months, with economic growth staying positive but its path hampered by global uncertainties.
“As we are now in the higher end of this trading range, the downside risk is more than the upside risk,” it said.
The more conservative alternative is to invest in high dividend stocks, which offer better yields than the 12-month fixed deposit rates at 3.2% per annum, ECM Libra said. Moreover, given that the outlook for interest rates “is flattish with a downward bias”, chances are that fixed deposit rates would only stay flat at best.
In the event the overall market sees further weakness, some shelter may be found in ECM Libra’s basket of defensive stocks, which offer better yields than fixed deposit rates, have relatively stable businesses and low correlation to the FBM KLCI.
The basket of counters, which only include companies with more than RM300 million in market capitalisation for liquidity, have been ranked in ascending order of beta — where the lower the beta, the less correlated the stock price is to the FBM KLCI.
Most counters on the list are real estate investment trusts. Others include Maxis Bhd, White Horse Bhd, Berjaya Sports Toto Bhd, Telekom Malaysia Bhd, Guinness Anchor Bhd, Malayan Banking Bhd and Lafarge Malayan Cement Bhd.
This article appeared in The Edge Financial Daily, November 24, 2011.
