CIMB IB Research expects stock market to be volatile due to short-term domestic policy

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KUALA LUMPUR (Aug 3): CIMB IB Research expects the stock market to be volatile due to short-term domestic policy uncertainty but said July was a good month for the FBM KLCI as the market ended on a positive note in line with therecovery in emerging markets and bargain-hunting by investors.

In a strategy note Aug 2, the research house said the FBM KLCI gained 5.5% month-on-month (m-o-m) and outperformed the MSCI Asia Pacific ex-Japan Index (MXASJ), which rose 0.3% m-o-m for the same period.

“We find that the market’s historical performance tends to be negative in August.

“Key events to watch for in August are 2Q18 corporate earnings, 2Q18 gross domestic product and delivery of the 100 days manifesto promises by the government.

“We expect the stock market to be volatile due to short-term domestic policy uncertainty,”it said.

CIMB Research maintained its end-2018 FBM KLCI target of 1,675 points, which is based on 15.4x 12M forward P/E and top three picks (Dialog Group Bhd, Genting Bhd and Westports Holdings Bhd).