Friday 29 Mar 2024
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KUALA LUMPUR (July 13): External and internal issues would continue contributing to a lacklusture market susceptible to event-driven volatility in the third quarter (3Q15), HongLeong IB (HLIB) Research has projected.

Headwinds such as the Fed rate hike, China’s economic slowdown, the 1MDB fiasco and a soft economic path in the second quarter, were expected to impact sentiment, they said in a strategy report today.

However, once more, clarity on such issues emerges and recovery is expected towards the year-end, on the back of economic and earnings recovery tension and anticipation of contracts from the 11th Malaysia Plan in 2016.

“We still firmly expect earnings per share growth to remain in the positive territory. Corporate earnings should gradually recover from 3Q15 onwards, in tandem with our expectation of gradual economic normalization post GST,” HLIB Research said.

They also noted a reversion to a lowered FBM KLCI year-end target of 1835 is still achievable, given lingering issues.

Meanwhile, preference for yield could reduce on the plunging of the benchmark and share prices and prospects of a Fed rate hike, HLIB research added.

Their top picks include UEM Edgenta Bhd, IJM Plantations Bhd, KNM Group Bhd (RAPID) and Mitrajaya Holdings Bhd, due to 11th Malaysia plan plays locked in their orderbook.

The research house also had favourable views on SapuraKencana Petroleum Bhd, Tenaga Nasional Bhd, Evergreen Fibreboard Bhd, Homeritz Corporation Bhd and Unisem (M) Bhd, due to strong fundamentals.

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