KUALA LUMPUR: RHB Investment Bank Bhd expects that Bank Negara would call for a 25-basis-point cut in the overnight policy rate (OPR) by year-end to ensure the sustainability of economic growth.
Its head of regional equity research Alexander Chia, however, said the reduction would not further drag down the ringgit, which currently trades at around 4.14 versus the US dollar.
“Our house forecast for the ringgit is to trade at RM3.80 against the US dollar by year-end.
“And I would say that the ringgit has already priced in the one OPR cut expectation, as it has been moving from 4.06 to the current level of about 4.14 versus the greenback,” he told a press conference after the launch of the RHB Small Cap Book 20 Jewels 2019 edition.
Yesterday, RHB unveiled the 15th edition of the RHB Top Malaysia Small Cap Companies 20 Jewels 2019 book. The stocks, with a total market cap of RM10.3bil, are part of a larger RHB Regional Small Cap Compendium that annually lists stock investment ideas from the bank’s research teams in Malaysia, Indonesia, Singapore and Thailand.
The book features companies from nine different industry segments, with the biggest representation from the technology and industrial sectors.
During the launch, Robert Huray, CEO of RHB Investment Bank Bhd, said, “Despite the slower pace of the regional economy, small-cap companies offer good prospects. These companies offer excellent potential and are an attractive proposition for both institutional and retail investors, supported by Malaysia’s strong economic fundamentals.”
In a statement, Chia noted that the FBM Small Cap Index has outperformed the domestic benchmark index so far in 2019.
“We believe our book launch could not have come at a better time, as we are seeing strong demand for alpha-rich, small-mid-cap stock ideas. Despite the challenging market environment, we have identified 19 new names (the highest in recent years) this year, which we hope our diverse client base would be able to leverage on.”
In this year’s book, the largest-cap stock – at RM1.71bil – is GUAN CHONG BHD, while the smallest, with a market cap of RM119mil, is Ideal United Bintang International Bhd. Some 80% of the jewels listed in the RHB Top Malaysia Small Cap Companies 20 Jewels 2019 book have a market cap of less than RM1bil. The trailing median price earnings (PE) and return on equity of this year’s jewels are (12.8 times) and (14.4%), respectively.
The Malaysian business landscape includes a vibrant and entrepreneurial SME segment with various high-growth companies. On Bursa Malaysia, there are 757 listed companies that command a market capitalisation of below RM1bil, offering investors many opportunities to select profitable winners.
The RHB Top Malaysia Small Cap Companies 20 Jewels 2019 book, as with other books in the series over the past 14 years, has a strong track record of unearthing hidden gems.