Year ahead may not be smooth sailing for certain sectors
KUALA LUMPUR: 2018 may not be a smooth sailing year forewarned Kenanga Investment Bank Bhd (Kenanga Research), as challengest arise in the normalisation in interest rate, and uncertainties over the new tax reform in US.
On the domestic front, concerns over the impacts of pre and post General Elections 14 are raised as well.
“Sector-wise, we stay overweight on aviation, gaming, real estate investment trusts (REITs) and power utility sectors, while healthcare sector is the only underweight sector,” it said, adding that other sectors are neutral.
“However,wearealsomonitoring aviation and REITs sectors very closely.”
The performance of airlines such as AirAsia Bhd could be affected should crude oil price remains strong over the next few months, warned Kenanga Research.
“As for REITs, while we believe the movement of MGS yields is less sensitive to US interest rate hike and OPR changes to a lesser extent, higher risk-free rate normally reduces the attractiveness of REITs from a valuation point of view.
“As for gloves and semiconductor sectors, we are pretty selective as we are fully aware of the valuation cycles for these sectors.”
As for risks, Kenanga Research said investors should also realise and be ready to embrace the impact of interest rate hike should it materialise.