Strategy Report

• Regional bourses are poised to stage a strong rally this week, in response to the US Fed’s “surprise” move to cut the discount rate by 50 bps
• The obvious winners for this week are the most depressed stocks, like EPIC, RCE, YNH, Petra Perdana, Sunway City and CB Industrial.
• However, the contagion effects of the US housing mortgage defaults may not be fully arrested yet, and higher risk aversion limits the KLCI’s recovery. Reducing YE KLCI target to 1,330 based on 15.5x 2008 PER.

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