KUALA LUMPUR: After the disappointing day on March 11 where the market failed to take the cue from the RM60 billion stimulus package and strong overnight close on Wall Street, investors are likely to stay sidelined on March 12 until there are clear signs that the US financial services sector crisis is resolved. 

Of main concern is the government’s forecast that the Malaysian economy could swing into a recession with negative growth of 1% for this year, which reaffirmed investors’ worst fears and hence their reluctance from picking up banking stocks and companies with broad exposure to the local economy. 

However, the challenge ahead for investors is to pick stocks which can be resilient to withstand the downside of the economy. Plantation stocks could benefit from the higher threshold for levy payment especially efficient producers like KL Kepong and IOI Corp.

Crude palm oil prices, which have been trading RM1,900 to RM2,000 per tonne, could still provide comfortable margins. 

Public Bank and Maybank have been sold down in recent days on concerns about the weakening economy and slower loan growth.

Public Bank is trading at higher valuations than all the banks, trading at price-to-book value (P/BV) of 3.98 times compared with BCHB’s 2.08 times and Maybank’s 1.78 times. The average for the banking stocks is 1.55 times. 

LCL Corporation’s Singapore subsidiary secured three contracts from Marina Bay Sands Pte Ltd, Singapore for interior fit-out works worth a total  RM103.4 million. 

Water-related counters could see some trading activity after Pengurusan Aset Air Bhd sealed its third water revamp deal by buying RM4.03 billion worth of water-related assets in Johor.

PAAB is still in negotiations to acquire the water-related assets in Selangor. 

MAS expects to save RM30 million from the discount on landing charges for two years and this takes effect on April 1, which was announced under the RM60 billion stimulus budget.