KUALA LUMPUR (July 1): AmInvestment Bank Research has  maintained its end-2019 FBM KLCI target of 1,820 points, which is based on 19x FY19F earnings (+0.4%) and 18x FY20F earnings (+8.5%), in line with its 5-year historical average of 18x.

In a 2H 2019 strategy note today, AmInvestment Bank head for equity research Malaysia, Joshua Ng said his simulation shows that end-2019 FBM KLCI target of 1,820 points is within reach, assuming core FBM KLCI component stocks trade at these levels: Malayan Banking Bhd (RM9.65), Public Bank Bhd (RM24.95), Tenaga Nasional Bhd (RM15.05), Petronas Chemicals Group Bhd(RM9.25), IHH Healthcare Bhd (RM6.25), CIMB Group Holdings Bhd (RM5.65), Axiata Group Bhd (RM5.45) and Digi.Com Bhd (RM5.35).

“We believe the near-term catalysts to the local equity market could potentially come from: 1) FBM KLCI’s inexpensive valuations from a historical standpoint; 2) The easing cycle in the US, ushering in a new capital inflow cycle to emerging markets (EMs) including Malaysia, as investors return to the game of yield hunting;

“3) Earnings surprises from Corporate Malaysia driven by improved efficiency, particularly in government-linked companies (GLCs) and better pricing power amidst consolidation in various sectors; 4) The pendulum of the US-China trade/tech tensions swinging from escalating to easing; and 5) Optimism on Malaysia’s longer term economic prospects driven by trade/FDI diversion to Malaysia amidst the US-China trade/tech war,” said Ng.