KUALA LUMPUR (May 21): IOI Corporation Bhd and Tropicana Corporation Bhd could possibly lose their Syariah-compliance status in the upcoming Securities Commision’s semi-anniual review, according to AffinHwang Capital Research .
In a strategy note today, the research house said SapuraKencana Petroleum Bhd and Bumi Armada Bhd may, however, be included in the list.
Meanwhile, the research house said the Employees Provident Fund’s proposal to offer the Syariah compliant investment option by 2017 reinforced its view that the valuation disparity against non-Syariah listed stocks would further widen and likewise support the FBM KLCI’s longer term PE premium against its regional peers.
AffinHwang Research said the ample domestic liquidity and a build-up of assets around Syariah compliant stocks further underscored the defensiveness of the FBM KLCI.
“Longer term, we believe teh FBM KLCI’s valuation will become increasingly more expensive and the valuation premium that it commands over its regional peers will only grow in our view.
“Near term, however, we remain Neutral on the FBM KLCI and believe that there is downside risk in view of a potential short term pullback in global oil prices, which would stoke renewed concerns over Malaysia’s fiscal position.
“Our 2015 year-end target of 1,820 is maintained, based on 15x CY2016 market earnings,” it said.