Domestic jobs for 3Q totaled RM5.2bn, dipping 6.7% y-o-y but soaring >200% q-o-q after 3 consecutive quarters of declines. We expect jobs flow to slow in 4Q before picking up in 1Q12. Given the sector’s high beta coupled with the risk of further market downside, we downgrade our rating to NEUTRAL. We believe that in an economic slowdown, positive factors such as lower material prices and Govt pump priming will be offset by slower private sector jobs and risk of provisions. Our top large cap pick is Gamuda while KimLun is our choice among small caps.
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