Bursa seen offering ‘trading opportunities’

File pic of Bursa Malaysia screens. CIMB lowered its end-2015 target for the KLCI to 1,700 from 1,800.

PETALING JAYA: While institutional investors in Hong Kong are “underweight” on Malaysia’s stock market, they see the market now as offering trading opportunities, said UOB KayHian Research.

“Institutional investors whom we met in Hong Kong remained ‘underweight’ on Malaysia, citing the lack of catalysts and expensive valuations,” the brokerage said, noting Malaysia’s appeal as a low-beta market.

“Nevertheless, most agree with our view that the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) now offers trading opportunities, having retraced 5.9% from its recent peak,” it wrote in its report.

According to UOBKayHian, besides fund managers sharing the view that the FBM KLCI was trading at the lower end of its assessed range of 1,600-1,750 points, there was also a consensus that there was little currency downside, with the ringgit having slipped 6.8% from its recent peak to RM4.12 against the US dollar, and thus providing selective opportunities.

“Thematically, we continue to like high yielders, infrastructure and beneficiaries of the El Nino impact,” UOB KayHian said.

Among its top large-cap picks were Genting Bhd, Malayan Banking Bhd (Maybank) and Gamuda Bhd.

But it noted that there was only sparse interest in Genting due to the group’s convoluted structure, uncertain territorial rights among sister companies and an ungenerous dividend policy; while there was no interest in Maybank due to expectations of rising non-performing loans for regional banks.

Positively, UOBKayHian noted that there was sparse interest in Tenaga Nasional Bhd, which could deliver good tidings on capital management.

There was also sporadic interest in small-to-mid-cap stocks.

UOBKayHian’s top picks for the small-to-mid-cap segment were Bumi Armada Bhd, BIMB Holdings Bhd, Heineken Malaysia Bhd and Kerjaya Prospek Bhd.