BLBG: Buy Malaysia Banks, Property on Economic Rebound, HWANGDBS Says
By Chan Tien Hin
Jan. 5 (Bloomberg) -- Investors should buy Malaysian banks such as CIMB Group Holdings Bhd., and property and energy stocks including Tenaga Nasional Bhd. that will benefit most from the nation’s economic rebound, HWANGDBS Vickers Research Sdn. said.
“On the back of strong growth outlook and positive market drivers, the longer term upward trend is intact,” Wong Ming Tek, an analyst at HWANGDBS said in a report today. He expects the benchmark stock index to rise to 1,448 by year-end, he said.
The FTSE Bursa Malaysia KLCI Index advanced 1.1 percent to 1,289.55 as of 11:50 a.m. local time, set for the highest close since May 16, 2008.
The index climbed 45 percent last year, as Prime Minister Najib Razak announced stimulus plans valued at 67 billion ringgit ($20 billion) to pull the economy from its first recession in a decade. He has also eased rules governing overseas investors, initial public offerings and property purchases in a bid to lure more foreign money.
HWANGDBS’s report reflects similar views by other researchers. Today, Maybank Investment Bank Bhd. raised its end- 2010 index target to 1,410 from 1,370, based on improving corporate earnings and consumer confidence.
The reforms and initiatives introduced by Najib to help stimulate growth and boost income in the economy should continue this year, Wong said.
Malaysia’s economy may be set for a “sharp rebound,” with gross domestic product expanding 5 percent this year after shrinking an estimated 2.4 percent in 2009, Wong said.
“We like banks as proxies to the strengthening of the economic recovery,” he said. Tenaga will also benefit as every 1 percent improvement in electricity demand would bolster earnings by 9 percent, he said.
His picks include builder Gamuda Bhd., SP Setia Bhd., Malaysia’s biggest property developer, and rival Malaysian Resources Corp.
The ringgit, Malaysia’s currency, will gain about 5 percent against the U.S. dollar by end-2010, adding appeal for overseas investors, he said.
The ringgit has gained 3.3 percent against the dollar in the past 12 months. The local currency today reached 3.3577, the strongest level since Nov. 17.
To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net
