CIMB Equities Research believes the selling this week has been excessive and that it is a good time for investors to bottom-fish.
“Our preferred sectors remain the Economic Transformation Programme (ETP) winners, that is oil and gas, construction and property,” it said on Friday, maintaining the end-2013 FBM KLCI target of 1,850.
The research house said although Malaysia faces several macro headwinds that need to be addressed, it is still Positive on Malaysia in the longer term and view the stock market's sell-off this week as an opportunity to accumulate positions on weakness.
“The re-rating catalysts include a return to stability for regional markets and potential
government policies to assuage macro concerns,” it added.
To recap, regional stock markets have come under heavy selling pressure this week. For instance, Indonesia's Jakarta composite index fell by as much as 5% intra-day on Monday and Tuesday, leading the entire region’s decline.
“However, the real culprit was investors' jitters regarding Indonesia, India and Thailand’s currencies and stock markets. On Thursday, the KLCI was sold down again as it was swept along by the downward regional trend,” it pointed out.
CIMB Research said Malaysia’s macroeconomic figures released on Wednesday including GDP growth and the narrowing current account surplus, magnified that uneasiness.
The share prices of the KLCI component stocks were the first to be hit, but that has spread to second and third-liner stocks. The early losers were companies with high foreign shareholding and exposure to Indonesia.
“While there are macro headwinds that our economics team has warned of and is concerned about, we are optimistic that the government will address these issues in the 2014 Budget in October,” it said.
“Our preferred sectors remain the Economic Transformation Programme (ETP) winners, that is oil and gas, construction and property,” it said on Friday, maintaining the end-2013 FBM KLCI target of 1,850.
The research house said although Malaysia faces several macro headwinds that need to be addressed, it is still Positive on Malaysia in the longer term and view the stock market's sell-off this week as an opportunity to accumulate positions on weakness.
“The re-rating catalysts include a return to stability for regional markets and potential
government policies to assuage macro concerns,” it added.
To recap, regional stock markets have come under heavy selling pressure this week. For instance, Indonesia's Jakarta composite index fell by as much as 5% intra-day on Monday and Tuesday, leading the entire region’s decline.
“However, the real culprit was investors' jitters regarding Indonesia, India and Thailand’s currencies and stock markets. On Thursday, the KLCI was sold down again as it was swept along by the downward regional trend,” it pointed out.
CIMB Research said Malaysia’s macroeconomic figures released on Wednesday including GDP growth and the narrowing current account surplus, magnified that uneasiness.
The share prices of the KLCI component stocks were the first to be hit, but that has spread to second and third-liner stocks. The early losers were companies with high foreign shareholding and exposure to Indonesia.
“While there are macro headwinds that our economics team has warned of and is concerned about, we are optimistic that the government will address these issues in the 2014 Budget in October,” it said.
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