Results to change ASI’s course?

With the 3Q2012/4Q2011 corporate results trickling in DNH Financial expects the ASPI to change course over the next few weeks with a gradual re-rating.

“We advise investors to maintain a selective approach concentrating on blue-chip counters focusing on a medium to longer term investment horizon. We recommend an asset allocation strategy focusing on key sectors such as Banking & Finance, manufacturing, Diversified and Hotels which we believe would outperform the market and generate alpha on a sustainable basis,” DNH added.

At least judging by the lukewarm response to some companies impressive results (examples include Royal Ceramics which posted a half a billion quarterly profit in addition to end 3Q performance surpassing FY2011 full year results yet share price didn’t gain on sentiment), it remains to be seen whether investors will react positively when results of top blue chips such as JKH and others are released.

Whilst noting that predicting the bottom of the market is a difficult task, Arrenga Capital on the other hand expressed the belief that the time is right to focus on selected banking and manufacturing sector counters which have returned to levels that are comparable against regional peers. However, it advised accumulation should be done at a slower pace in the declining market.