KUALA LUMPUR: As the prospect of a weaker global economic landscape batters global stock markets, the experts are recommending a defensive stance in their investment strategy.

While analysts and fund managers believe Asian equities might see a rebound after the sharp correction in the last two days, they are also mindful that these gains might be technical and temporary as they factor in the still weak global economic backdrop as growth slows in advanced economies.

Below are several stocks recommended by OSK Research for their longer term prospects:

AirAsia Bhd
The largest low-cost carrier in Asia will gain from declining jet fuel prices in tandem with the fall in crude oil rates. Although an economic downturn will result in less travel, the drop in corporate and  personal income may prompt business and leisure travellers to switch from full-service to budget airlines.

Trading of AirAsia was suspended in conjunction with a share swap exercise with rival Malaysian Airline System Bhd. Prior to the suspension, AirAsia’s last traded price was RM3.95 per share as at last Friday. The stock has gained 56% this year.

KPJ Healthcare Bhd
The largest private hospital chain in Malaysia will continue to see good business in spite of an economic downturn due to the relatively recession-proof nature of the healthcare sector. While some may argue declining income may prompt consumers to switch from private to public healthcare, analysts said the disparity between the two in Malaysia is quite large.

With the lower cost advantage in Malaysia, it is believed KPJ will lure back Malaysians who used to seek treatment abroad and attract cost-sensitive medical tourists. KPJ shares closed unchanged at RM4.50 yesterday. The stock has advanced 21% this year.

Media Chinese International Ltd
The largest Chinese newspaper company in Malaysia is expected to gain from declining commodity prices, which in turn lead to cheaper newsprint, a major cost component. Demand for newspapers is anticipated to stay firm in the event of an economic downturn given the relatively inelastic purchase of newspapers. Media Chinese shares ended unchanged at RM1.09 yesterday for a year-to-date (YTD) advance of 27%.

QL Resources Bhd
The country’s second largest producer of chicken eggs and Southeast Asia’s largest producer of fish paste could see demand for its products increase as consumers downtrade to cheaper food products during an economic downturn. 

While QL’s expansion plans in Indonesia and Vietnam may slow down, earnings from domestic operations would be enough to sustain the company. QL shares fell five sen to close at RM2.93 yesterday. The shares have gained 0.34% this year.

SEG International Bhd
The country’s largest private education provider with a student base of 23,000 is expected to gain from more students seeking more affordable courses locally as a possible recession and a stronger US dollar will inflate the cost of overseas education. SEGi saw its shares decline six sen to RM1.83 for a YTD  gain of 71%.

Supermax Corp Bhd
The world’s second largest rubber glove producer by capacity is expected to gain from cheaper natural rubber in tandem with declining crude oil prices. Analysts said cheaper raw materials will improve the company’s profit margins as demand for healthcare-related rubber gloves remains resilient. Supermax shares shed 18 sen to RM3.26 yesterday for a YTD decline of 18%.

This article appeared in The Edge Financial Daily, August 10, 2011.