We are unmoved!

Stumbled into this article by AmResearch this morning. It is titled "Market Strategy : Five high conviction SELL ideas in a counter-cyclical rally." Another conviction to sell is noted below this article. Those who are bullish may not be too happy to read this. Incidently, all markets are in a sea of red today.

We are unmoved by the recent strength in the market, which may be attributable to the ‘January-effect’ and some rotational index-linked buying from portfolio funds looking to raise exposure to equity in the new year. Sure, there are growing calls for a recovery in Asian equities in the second-half of this year. The massive fiscal as well as monetary stimulus on the global front is expected to take hold, albeit with a time lag to lift the regional economies out of recession perhaps in 2010. But for now, we do not think that this extended counter-cyclical rally can be sustained as the near term macro cycles are fast deteriorating: the economic inflexion point will remain a moving target. After the steep and swift run where select big-cap stocks have already risen by more than 20% in the past month alone, valuations may not withstand the onslaught of negative macro news and earnings disappointment as we enter the 1Q earnings reporting season starting from the third week of January 2009. Furthermore, catalytic policy pronouncement to seriously prod the market’s immediate focus beyond upcoming weak earnings season also appears unlikely ahead of the transition in political leadership. We are advocating locking profits in the current counter-cyclical rally. In this report, we highlight five high conviction SELL ideas, namely Bumi-Commerce, SP Setia, IJM, MAS and TMI, where earnings may seriously disappoint.

Similarly, JP Morgan wrote this morning on IOI. " We would take profit after strong outperformance; share price already implying CPO prices above RM2,000/T. TP is RM3.50"

* Satyam's "enron" type scandal will erode confidence in software/outsourcing companies and India in general.

* Bloomberg: BOE is expected to cut interest rates by 50 bp today to 1.5%, an all time record low. Why is the pound rallying mate?

* Bloomberg: Bank of China falls in HK after Li Ka-Shing sells 2 b shares at HKD1.98 (or 7.5% discount of its previous day closing price).