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Thursday, February 7, 2013

Stock market rebound expected in second half (STAR)


PETALING JAYA: The market will rebound in the second half of this year while defensive stocks such as telecommunications and consumer stocks, which are in focus now, could de-rate then amid increasing investor appetite.

Maybank IB Research said this in a market strategy report, noting that investors were currently focused on the likely outcome of the impending general election slated for the first quarter, with most taking a neutral stand, saying they would be constructive once there was clarity on the political front.

The research house, which expects the market to weaken further before staging a rebound in the second half, remains defensive during this period, advising clients to take some profit off the table.

“We, however, continue to advise investors to buy at lower levels and raise weightings on the cyclicals post-general election, expecting the defensives (telcos, consumer) to de-rate as global risk appetite is increasing,” it said.

The FTSE Bursa Malaysia KLCI (FBM KLCI), the 30-stock gauge, shed 19 points to 1,614.14 points yesterday.

A total of 1.08 billion shares changed hands in trading valued at RM2.01bil.

According to Maybank IB Research, 13 times 12-month forward earnings or a FBM KLCI level of 1,550 points was a good level to accumulate.

At 13 times price earnings ratio, there should be more value in the banking, property and construction sectors.

Also, oil and gas should outperform post-general election as the country's broader energy agenda remained intact and Petroliam Nasional Bhd's capital expenditure spending gained traction, it added.

RHB Research at the beginning of the year had also advised clients to stay defensive in the first half of the year, while taking advantage of market weakness during the period to buy into fundamentally-robust stocks for “greater out-performance” in the second half.

UOB Kay Hian Research head Vincent Khoo, meanwhile, cautioned that post-general election, sentiment could be tempered by moderating economic growth amid slowing local consumption, stemming from the resumption of the previously-deferred energy and food subsidy reduction schedules, as well as the absence of pre-election fiscal packages.

Kenanga Research said it would continue to adopt its trading stance, buying-on-weakness below the 1,610-point level and selling-on-strength above 1,710 points in a range-bound market environment.

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