CIMB IB Research expects stock market to be volatile, mixed in May

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KUALA LUMPUR (May 3): CIMB IB Research said April was an eventful month for the Malaysian market.

In a strategy note May 2, the research house said the parliament was dissolved on April 7 and the FBM KLCI index posted a new record high of 1,895 points on April 19.

“KLCI gained 0.4% month-on-month (m-o-m) and outperformed the MSCI Asia Pacific ex-Japan index (MXASJ), which fell 0.6% m-o-m in April, despite some short-term uncertainties.

“For May, we found that the historical performance of the market tends to be mixed.

“Key events to watch for in May are GE14 results, 1Q18 corporate earnings and Gross Domestic Product.

“We expect the stock market to be volatile and its performance will likely be driven by the outcomes of both local and external key events,” it said.

CIMB Research said it found that the historical performance of the KLCI in May has been mixed, registering average m-o-m negative return of 0.1% over the past 10 years and posting declines in five out of the past 10 years.

“However, over a 40-year period, it posted an average m-o-m gain of 1.4%.

“We maintain our end-2018 KLCI target of 1,880 points, which is based on 15.9x 12M forward P/E and top three picks (Axiata Group Bhd, Dialog Group Bhd and Westports Holdings Bhd),” it said.