SBB Securities Sdn Bhd has downgraded its forecast gross domestic product (GDP) growth for Malaysia to 3.5% from 4.5% following the Severe Acute Respiratory Syndrome (SARS) outbreak, provided the epidemic is contained within two to three months.
While the airlines, airline services provider and tourist related companies have suffered a decline in their business, there are also some sectors that will benefit.
With the high demand for health supplements and vitamins since the outbreak, pharmaceutical companies could be interesting plays, SBB Securities senior analyst Ng Jun Sheng said at a briefing on the KLSE's participation at the PNB Unit Trust Week.
On the performance of the stock market, he projects the KLSE Composite Index to trade range-bound between 610 and 680 points in the second quarter, taking into account the SARS, geo-political uncertainties surrounding Syria and North Korea as well as the mixed indicators in the US economy.
The downside risk for the market is quite minimum especially with the recent upgrade on Malaysia by Merrill Lynch. Overall, the market is waiting for stabilisation in this quarter, Ng said.
He added that the research house maintained its view to focus on quality counters with earnings visibility, good dividend payout, strong and proven management, healthy balance sheet and trading at attractively low valuations.
On the minimum commission rate effective May 12, SBB Securities manager for Institutional Settlement Selina Wong welcomed that move as it would stabilise the industry in the long term as intense competition amid weak market sentiment had led to wafer-thin margins for the stock-broking companies.
Malaysian Futures Brokers Association president Alvin Kwan also applauded the Association of Stockbroking Companies Malaysia on the announcement of the framework for minimum commission rates.
We do not have a formal proposal yet but we are discussing the issue with the industry players. We plan to make a submission at a later date, Kwan said, adding that commission rates for futures contracts were negotiable and were generally lower than the rates charged for trading shares on the stock market.
Investors can visit KLSE's booth at Stadium Merdeka in Kuala Lumpur during the PNB Unit Trust Week from April 20 to 27.
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