New Straits Times - - Business -

KUALA LUMPUR: Maybank In­vest­ment Bank Bhd (Maybank IB) has raised its FTSE Bursa Malaysia KLCI (FBM KLCI) yearend tar­get to 1,800 points from 1,750 points on higher vis­i­bil­ity for eq­ui­ties’ core earn­ings to re­sume their growth and ex­pected higher av­er­age of oil prices this year.

The bank de­rives 7.1 per cent core earn­ings growth for the FBM KLCI this year and seven per cent next year from its bot­tom-up ap­proach.

Maybank IB also ex­pects loan growth of banks to mod­er­ate, stocks in the util­ity sec­tor to re­cover on clar­ity of reg­u­la­tory de­vel­op­ments, telecom­mu­ni­ca­tion com­pa­nies’ mo­bile rev­enue to re­turn to growth and bet­ter earn­ings for plan­ta­tion com­pa­nies on op­ti­mism in crude palm oil prices.

It also ex­pects size­able job awards this year for the con­struc­tion sec­tor with the largest likely to be from the East Coast Rail Link worth RM50 bil­lion, of which 30 per cent would go to the lo­cals.

Real es­tate in­vest­ment trusts’ (REIT) ten­ant sales would re­main en­cour­ag­ing as prime malls had recorded ten­ant sales growth of three to 10 per cent year-onyear in the fourth quar­ter of last year.

Maybank IB said a higher av­er­age of oil prices would ease a ma­jor pres­sure point in the oil and gas sec­tor, and this would fur­ther be “en­hanced” by Saudi Aramco’s US$7 bil­lion (RM31.18 bil­lion) in­vest­ment for two strate­gic as­sets in the Re­fin­ery and Petro­chem­i­cal In­te­grated De­vel­op­ment, Pengerang, as it could catal­yse higher lev­els of cap­i­tal ex­pen­di­ture spend­ing by Petro­liam Na­sional Bhd this year and next, thus ben­e­fit­ing the oil and gas value chain.

How­ever, the bank is mind­ful of the ex­ter­nal de­vel­op­ments with fis­cal and mon­e­tary de­vel­op­ments in the United States and elec­tions in the Europe be­ing key risk events.

“The US Fed­eral Re­serve will act on its first rate hike for this year in its March 14 and 15 meet­ings.

“On March 15 too, the Hol­land par­lia­men­tary elec­tion will be held, which ‘kick-starts’ the string of elec­tions in Europe for this year,” it said.

With ex­ter­nal head­winds to re­main driv­ing volatil­ity, Maybank IB has re­it­er­ated a de­fen­sive core eq­uity strat­egy.

It con­tin­ued to place “over­weight” calls on util­ity, REIT, con­struc­tion, oil and gas as well as tourism sec­tors with top buys that in­clude Te­naga Na­sional Bhd, Gas Malaysia Bhd, IGB REIT, MRCB-Quill REIT, Ga­muda Bhd, Malaysia Air­ports Hold­ings Bhd, Inari Amertron Bhd, Yin­son Hold­ings Bhd and RCE Cap­i­tal Bhd.

Maybank IB is fore­cast­ing 7.1 per cent core earn­ings growth for the FBM KLCI this year.

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