KUALA LUMPUR (April 9): Hong Leong IB Research has maintained its end-2015 target of 1,880 points for the FBM KLCI.
In a strategy note today, the research house said the FBM KLCI had broken above previous downtrend and 200-day simple moving average.
It said momentum could carry it higher, but potential upside to its unchanged year-end target of 1,880 was only circa 1%.
“While we still firmly believe earnings growth will remain in teh positive territory and nit canging our year-end target, the market could experience gyration, especially after the recent impressive run-up,” it said.
It said that technically, it was normal for breakout point(s) to be retested.
Fundamentally, it said there were lingering concerns, including the US rate hike (albeit delayed to 3Q), oil price, 1MDB, traditional volatile May, uninspiring 1QCY15 results (seasonal and GST uncertainties) and Fitch rating.
“However, unlikely mirror mid-2014 and end-2014 and opportunity as aggregate net foreign inflow halved from peak, ample liquidity, Fitch rating somewhat factored in, Invest Malaysia in late Apr and 11 MP in May.
“Advocating combination of defensive and value proposition from 5 major themes: 1) sector upturn; 2) resilient and/or visible earnings growth; 3) high yield and/or defendable earnings; 4) US$ and/or raw material; and 5) values in battered stocks.
“Top picks are Air Asia Bhd, Axiata Group Bhd, Evergreen Fibreboard Bhd, Faber Group Bhd, IJM Corporation Bhd, Malayan Banking Bhd, Mitrajaya Holdings Bhd, Quill CapitaMall Trust, SapuraKencara Petroleum Bhd, Tenaga Nasional Bhd and Unisem (M) Bhd,” it said.