SINGAPORE (Jan 9): The Asean countries posted mixed performances in 2016, as Thailand and Indonesia outperformed the MSCI All Country Asia ex Japan Index by 16.8% and 12.1% respectively.
Malaysia and Singapore turned in a less impressive report card, underperforming the index by 6.3% and 3.3% respectively.
In absolute terms, the performances were similar. Thailand’s index rose by 19.8% and Indonesia’s rose by 16.3%. Singapore’s performance was flat and Malaysia’s was lower by 3%.
But how would these countries fare in 2017?
On a global level, CIMB expects growth to improve from 3.1% to 3.4% for the coming year, driven by the US and its projected recovery coupled with the three rate hikes mooted by the Federal Reserve.
Individually, the brokerage has assessed each of the four countries based on whether they are shown to have ample and rising liquidity, a strong earnings growth, an attractive market valuation, low interest rates, and an improving market sentiment with positive market catalysts.
From that assessment, the brokerage is now “overweight” on Indonesia and Thailand, “neutral” for Malaysia and “underweight” for Singapore.
Are there still opportunities to invest in these countries? CIMB seems to think so.
Across different sectors, CIMB notes that the key industries for the region lie in infrastructure and construction, consumer and property development.
The brokerage is “overweight” on the infrastructure and construction sector for Malaysia, Indonesia and Thailand, and recommends IJM Corp and Gamuda from Malaysia, CH Karnchang from Thailand, and Wijaya Karya Persero in Indonesia.
In the consumer space, the brokerage recommends CP All in Thailand and Gudang Garam in Indonesia. Property companies recommended by CIMB also include UOL Group in Singapore and Sime Darby in Malaysia.
On top of that, CIMB believes dividend play remain in favour, with the low interest rates in Malaysia, Indonesia and Thailand to be expected for 2017.
To that end, the brokerage recommends Venture Corporation in Singapore, Malaysia’s Signature International, Star Media Group and Bermaz Auto, Thailand’s Advanced Info Service and Jasmine Broadcast, and Telekomunikasi Indonesia and Ramayana Lestari from Indonesia.
Shares in UOL Group and Venture Corp are trading at S$6.25 and S$9.84 on Monday.