PETALING JAYA: The Perlindungan Ekonomi dan Rakyat Malaysia (Permai) assistance package worth RM15bil unveiled by the government had a generally muted effect on the market but there are thematic plays to bank on as the market trends higher towards the second half of the year.
UOB Kay Hian Research said in a report to its clients that it expects the market to move higher as investors price in the economy’s re-opening in the second half of this year.
“Thematic plays which appeal include re-opening laggards, dividend catch-ups and relatively cheap stocks with strong earnings momentum, ” it advocated to clients.
“The upcoming results season is expected to usher in re-rating catalysts in the form of strong quarter on quarter earnings growth or fat dividends for all of these stocks except Sunway, ” UOB added.
It noted among the banks, AMMB Holdings Bhd has been a significant laggard and should appeal to longer-term investors.
Meanwhile, in its report to clients yesterday, Hong Leong Investment Bank Research (HLIB Research) said on the whole, the Permai stimulus which was announced on Monday, “seems to be largely targeted at both the rakyat and SMEs that have been hit by the negative ramifications of Covid-19.”
“From a market perspective, our sense is that the stimulus initiatives were largely reiterations of previously announced ones, ” it said.
The research house has maintained its target for the FBM KLCI for now at 1,780.
It told its clients that among the measures announced under Permai, the extension of the 10% electricity special discount to six industries will help alleviate some burden for the aviation and real estate investment trusts or REITs sectors.
For Tenaga Nasional Bhd, the initiative is neutral as it (the discount) will come from the Electricity Industry Fund while the rebate (2sen/kwh) is part of the usual ongoing Imbalance Cost Pass-Through mechanism.
HLIB Research said the acceleration of the Micro SME e-Commerce Campaign and Shop Malaysia Online campaign should bode well for courier logistics and players that facilitate online transactions like Revenue Group Bhd.
“For the private healthcare sector, while allowing them to treat Covid-19 patients presents a new revenue stream, this may come at the expense of ‘non-critical’ treatments as people may now view hospitals as a “high risk” area.”
Under Permai, a moratorium facility by banks, including extension of the moratorium and restructuring of loan repayments will continue to be offered by banks to those who have been affected by the pandemic.
Despite opening higher, the FBM KLCI succumbed to mild profit-taking activities as the key index lingered mostly in the negative territory in the afternoon session.
At 5pm, the benchmark index closed 7.64 points, or 0.47%, down at 1,601.88. The index opened 1.54 points higher at 1,611.06 in the morning.