PETALING JAYA: Bursa Malaysia ended the first trading day of 2020 on Thursday with the FBM KLCI above the key 1,600 level, underpinned by fund buying of bank stocks and IHH HEALTHCARE BHD.
At 5pm yesterday, the FBM KLCI was up 13.74 points or 0.86% to 1,602.50. Turnover was 3.36 billion shares valued at RM1.85bil. Advancers beat decliners two to one or 614 gainers, 308 losers and 368 counters unchanged.
The index managed to recoup about half of Tuesday’s losses which were due to selling pressure by foreign funds.
PUBLIC BANK BHD rose 46 sen to RM19.90, rebounding from Tuesday’s selling and pushing the FBM KLCI up 3.15 points. MALAYAN BANKING BHD added 11 sen to RM8.75 and nudged the index up 2.18 points, CIMB GROUP HOLDINGS BHD gained five sen to RM5.20 while AMMB HOLDINGS BHD added three sen to RM3.94.
HONG LEONG BANK BHD, meanwhile, was flat at RM17.30 while RHB Bank Bhd lost four sen to RM5.74.
CGC-CIMB Equities Research said it had a target price of RM23.10 for Public Bank, compared with its last closing price of RM19.44.
“We tag Public Bank as an ‘add’ as we believe that it is one of the most defensive among its peers against the increases in the industry’s gross impaired loan ratio and credit cost.
“Its valuations are reasonable, with 2020 price-to-earnings of 13.3 times and price-to-book value of 1.6 times, below its five-year historical averages of 14.3 times and 2.2 times, respectively, ” it said.
AllianceDBS Research said in a report that market sentiment had improved considerably, given the positive progress on US-China trade talks and sustained accommodative monetary policy, pursued by central bankers globally which has raised the prospects of a better economic outlook in 2020.
The research house said the leadership succession issue is likely to continue to be the lingering concern for investors, especially in the face of intra-coalition infighting.
“We believe more clarity on the timeline of the premiership succession is required for a strong rally of the FBM KLCI, which is hovering at a four-year low. Barring any potential disruption to the administration of the existing coalition government, our end-2020 FBM KLCI target remains at 1,620 points based on 16-times 2020 earnings.”
Nevertheless, AllianceDBS said the government’s pro-growth Budget 2020 is likely to sustain economic growth, which is projected at 4.5%.
“Meanwhile, Bank Negara could be looking at another round of interest rate cut in the first half of 2020 should there be more downside risk to our economic growth, in view of the persistently weak sentiment among consumers and corporates, which is undermining private investment activities.
“This could help further stimulate the economy.”
Kenanga Research, meanwhile, said 2020 could see more disposals by government-linked companies, notably Khazanah Nasional Bhd and Petroliam Nasional Bhd (Petronas).
“Petronas has just raised RM6bil from selling down stakes in Petronas Gas, Petronas Dagangan and MISC.
“That RM6bil, a huge sum as it is more than 6% of the collective market capitalisations of the three stocks which can be disposed of in such an orderly manner at one go, speaks well of the market’s demand appetite, ” it said.
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