PETALING JAYA: Malaysia is the best-performing Asean benchmark index year-to-date, up 10%, as policy execution and foreign direct investment inflows lift sentiment.
According to Maybank IBG Research, the Johor Baru-Singapore special economic zone (SEZ) and technology upcycle will drive the next leg of gains.
It picked Solarvest Holdings Bhd
, ITMax System Bhd, S P Setia Bhd as beneficiaries of the JB-Singapore SEZ, while Frontken Corp Bhd and Sam Engineering & Equipment (M) Bhd stood to benefit from the higher demand in the tech sector.
“Malaysia and Thailand, the markets we are ‘overweight’, also happen to be the most underweighted markets by active funds vis-à-vis MSCI Asia ex-Japan weightings.
“The fact that all the Asean-five markets remain underweighted appears consistent with the net foreign selling/relative underperformance of these markets over the past decade,” the research house said.
It added that given the strong run-up in Malaysian equities market, it advocates investors to take exposure in stocks with low volatility such as QL Resources Bhd, CAB Cakaran Corp Bhd and Sentral-REIT, which are rated “buys”.
“We flag the relative underweights in Sime Darby Plantation Bhd and Hong Leong Bank Bhd, both stocks being rated ‘buy’ and seeing positive rating momentum.
“Aside from the relatively narrow market-leading sectors (utilities, property, tech), the other market sectors remain discounted versus historical on price earnings ratio, especially consumer discretionary with top picks Aeon Co (M) Bhd and MR DIY Group (M) Bhd.
The research outfit believed that Asean equity markets were proving resilient in the face of “higher-for-longer” Federal Reserve interest rate guidance, geopolitical tensions and sustained net foreign selling.
