Rakuten Trade: Investors shift to recovery play from healthcare related stocks

Rakuten Trade: Investors shift to recovery play from healthcare related stocks
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KUALA LUMPUR (Jan 5): Rakuten Trade Sdn Bhd’s research head Kenny Yee said recovery stocks play was leading the way for investors as 2020 ended. He pointed out that there is a change in sectors that are now in the spotlight with the rise in plantation related stocks among others, and a shift away from healthcare related stocks.

Yee pointed out that global recovery post-Covid-19 is creating pent-up demand for most commodities. 

“We continue to be bullish on plantation stocks despite the return of the palm oil export duty come January 2021. As for CPO prices, we reckon it may stay above the RM3,000 per tonne level with RM4,000 being the main hurdle in the coming months,” he noted in a Jan 4 statement.

Yee also noted the implementation of the Malaysian biodiesel mandate will remain a challenge in 2021 despite its advantages as a more sustainable fuel for the future.

“With crude prices at current levels, biodiesel remains a not too attractive proposition given its price point and the expected export levies being a source of revenue for the industry,” he said.

Yee also thinks that technology stocks will remain in favour, but that also depends on the valuation of individual stocks.

“As for our top picks for technology stocks, we would recommend VisDynamics Holdings Bhd, JCY International Bhd, Elsoft Research Bhd, Inari Amertron Bhd, and Mi Technovation Bhd,” Yee said.

Despite the challenges of 2020, he believes smaller caps will take the lead in 2021 following the completion of re-jigging of portfolios and supported by the persistent inflow of funds from retail investors who will continue to be key market participants.

“Small caps stocks which we would recommend are Supercomnet Technologies Bhd, AppAsia Bhd, RCE Capital Bhd, TCS Group Holdings Bhd, and D'nonce Technology Bhd,” he said.

While blue chips and big cap stocks will still play a dominant role, he expects to see heightened and sustained participation in small caps after a point given their value and growth potential.

“While the intention is to enhance the vibrancy of the equities market, the immediate impact of regulated short selling (RSS) would be the cap on gains especially for blue chips,” he said.

The suspension of RSS on Bursa Malaysia was lifted on Jan 1 this year, after the sanction was imposed by the regulators for nine months since March last year.

Joyce Goh