KUALA LUMPUR (June 16): Short-term macro headwinds in the coming months should give way to medium-term catalysts later in the year, according to CIMB Research.

In a strategy note yesterday, CIMB's Terence Wong said that present macro worries could provide investors with good entry points into the market as stability should eventually return.

“We view likely weakness in the market as a potential buying opportunity as the outlook may start to brighten in 4Q or towards the end of the year,” he added.

Wong said that as oil prices stabilise and consumers adjust to the goods and services tax, their negative impacts are expected to be factored into share prices by the later part of 2015.

He added that Umno party elections at the end of 2016 could be a catalyst to stocks as the elections have been very positive for the stock market historically.

Wong said CIMB’s preferred sector picks are construction, utilities and smaller caps, with Gamuda Bhd, RHB  Capital Bhd and Petronas Gas Bhd as their top 3 larger-cap picks and Only World Group Holdings Bhd, Kawan Food Bhd and Salcon Bhd as their top 3 smaller-cap picks.

Meanwhile, he said the government-linked companies revamp exercise which was started 2004 was viewed to have been very successful, although marginal returns in the lower years could become increasing lower.

He explained that the revamp exercise is now in its fourth and final phase.

Wong maintained his FBM KLCI target of 1,800 points for the end of 2015, which he said was still based on the 3-year moving average price to earnings ratio (P/E) of 15.5 times.