Nomura sees improved consumer confidence, loan growth
KUALA LUMPUR: The zero-rated Goods and Services Tax (GST) and Bank Negara Malaysia keeping the base lending rate at 3.25 per cent are boosting consumer confidence and supporting loan growth this year, says Nomura.
“After the 14th General Elections, the government had zerorated GST for three months from June to August.
“We’ve seen strong consumer confidence, particularly in car sales,” said Nomura Malaysia head of equity research Tushar Mohata at a briefing, here, yesterday.
“With Bank Negara keeping the base lending rate at 3.25 per cent, we think banks would be able to achieve average six per cent loan growth this year,” he added.
Nomura views positively Housing and Local Government Minister Zuraida Kamaruddin’s recent statement that Bank Negara would advise banks on a “more relaxed” housing loan scheme to help the Middle 40 per cent (M40) and Bottom 40 per cent (B40) income earners to own their first homes.
“This should spur demand for affordable houses. With the three-month zero-rated GST period and exemption of many building materials from the Sales and Services Tax (SST), residential units in select areas could be cheaper,” he said.
Mohata said Nomura was bullish about banking, consumer and tourism-related stocks, although macro risks and regime change weighed on equity markets.
“Our top (stock) picks for the banking sector are Malayan Banking Bhd and Public Bank Bhd. As for the consumer sector, we like MyNews Holdings Bhd,” he added.
He said telcommunications and plantation might continue to disappoint, in terms of earnings growth.
While dark clouds hang over plantation stocks, Mohata is positive about the government’s move in appointing Tan Sri Mohd Bakke Salleh as Malaysian Palm Oil Board’s new chairman.
“Bakke’s insight into the global vegetable oils trade would guide the board in the right direction in finding resolutions to tackle hindrances by the European Union,” he said.
On the whole, Mohata thinks Bursa Malaysia’s benchmark FTSE Bursa Malaysia KLCI would run up to 1,830 points by yearend from 1,810 currently, supported by local institutional funds.
He favours oil and gas-related counters, such as Petronas Chemicals Group Bhd and Yinson Holdings Bhd.
With oil prices hovering around US$70 (RM285.25) a barrel, Mohata sees Petroliam Nasional Bhd expanding its capital expenditure and still able to pay more dividends to the federal government.
On the impact of the ongoing trade war between the United States and China, Mohata said: “Funds seem to be flowing back into Malaysia as Asean is seen as a safe haven.”