Malaysia Asia Pacific Investment Review

1
Malaysia Asia Pacific Investment Review
Outlook
2Q06 Presentation to MAAKL
2
OVERVIEW

• A quick recap of 1Q2006
• Current market snapshot
• Key issues ahead
• Better opportunities outside Malaysia?
• Fund performance review
• Fund focus for 2Q2006

3
1Q2006 Rather eventful

• Minor Cabinet reshuffle in mid-Feb
• OPR increased by 25 bp to 3.25
• Petrol price raised by 19-23
• Earnings momentum still weak in the latest
  results season 46 below expectations, 42 in
  line, 12 above
• Source JP Morgan

4
1Q 2006 Rather eventful

• A strong January as Ringgit/USD rose from 3.78 at
  end-2005 to about 3.70 currently, closely
  tracking the Renminbi
• Reversal of foreign flows into net INFLOWS of
  USD1.7bn in first two months of 2006 from net
  OUTFLOWS of USD6.6bn in preceding two months

5
1Q 2006 The Ringgit push

• KLCI rose from 899.79 at end-2005 to a high of
  929.39 on 6 Feb before consolidating sideways

6
Improved Ringgit outlook
7
2. Current market snapshot
8
Current market snapshot

9
Dividend returns exceed FD rates
10
Current market snapshot

11
Recapping GLCs timetable

• Up to mid-2005 - mobilisation, diagnosis
  planning
• Up to 2006 generate momentum
• 2007 onwards tangible results
• 2010 full national benefits
• In 2005, only 5 out of 24 Khazanah-owned stocks
  outperformed the KLCI
• About one third of companies were in losses
  another one-third reported flat to lower profits

12
3. Key Issues/Events Ahead
13
Key issues ahead

• GLC restructuring Invest Malaysia Conference
  22-24 Mar 2006
• The 9th Malaysia Plan - 31 Mar 2006
• The National Automotive Policy still pending

14
Key issues ahead

• Further interest rate hikes ? Watch out for FOMC
  meetings on 28 Mar/10 May, BNM policy statements
  on 26 Apr/31 May
• The direction of palm oil prices?
• Listing of China-based companies?

15
Still awaiting decisive turning point
Still a case of downside limited, while
sustainable upside hinges on among others,
earnings, interest rates, currency and key issues
such as politics and GLC progress
16
4. Better opportunities outside Malaysia???
17
KLSE catching up in performance gap?
chg
2005
2006YTD
KLCI
(0.8)
2.5
China-H shares
12.4
20.2
Hong Kong
4.5
6.2
Indonesia
16.2
10.2
Korea
54.0
(3.9)
Philippines
15.0
1.9
Singapore
13.6
5.3
Taiwan
6.7
(1.0)
Thailand
6.8
2.2
up to 17 Mar 2006
18
Malaysia Still Trading At Premium
Source JP Morgan and IBES
19
KLSE Highest dividend yield in region
20
Better opportunities outside Malaysia?

• Except Malaysia and Taiwan, all regional markets
  have risen by double-digit levels since 2005
• Sell in May and go away???

21
2Q 2006 Outlook Fairly subdued

• Downside limited with support from dividends,
  domestic liquidity and reduced foreign
  shareholding
• Positive turning point hinges on interest rates,
  currency, earnings momentum and GLC reforms
• Concerns over post-9MP lull buy on rumours,
  sell on news
• Regional markets may need a breather

22
Still neutral for 2Q2006
KLCI INDEX 1Q 2006 2Q2006 3Q2006 4Q2006
POSITIVE
NEUTRAL
NEGATIVE

KLCI 899.79 (end- Dec 05) 910 (end March 06) 910 (end June 06)

23
Fund Focus Slightly defensive
Previous Focus Current Focus  
Bond/Money Market Bond/Money Market MAAKL
As-Saad MAAKL As Saad   Equity Funds Equity
Funds MAAKL Equity Index MAAKL Al-Fauzan MAAKL
E80 MAAKL Dividend MAAKL Syariah Index MAAKL
Al-Umran MAAKL Al-Fauzan MAAKL Pacific (?) MAAKL
Pacific
24
Fund Performance Review 17 Mar 2006
25
Thank you
26
Disclaimer
Please note that the price of shares in, and the
income from, any Meridian Asset Management fund
may go down as well as up and may be affected by
changes in currency exchange rates. Past
performance is not indicative of future
performance. An investor may not get back the
amount invested. Any products mentioned herein
are for illustrative purposes only and are not
intended as an offer to subscribe for any
funds. Meridian Asset Management is owned by MAA
Holdings and NTY Enteprises Sdn Bhd.