Election results to yield positive sentiment on high-beta property

We expect to see continuity in the various proposed Economic Transformation Programme projects with the BN staying in power. Alliance Research

KUALA LUMPUR: The 13th General Election results are expected to yield positive sentiment on high-beta property stocks, said RHB Research.

The conclusion of the general election had at least provided a clear visibility for the property sector, it said in a note yesterday.

“The positive sentiment arising from the election outcome is likely to buoy the sector,” it said.

“The high-beta sectors, which include the property sector, are likely to perform when the equity market rebounds,” it added.

RHB Research said the expectation was supported by the favourable sector fundamentals, which included positive population growth cycle, influx of liquidity led by low interest rate, consistent gross domestic product growth and the catalytic developments such as MRT Line 2 and 3 in the Klang Valley.

The research house said the growing young demographics would continue to underpin the property market in Malaysia, particularly for the mid- end mass housing segment.

“The increase in the middleaged population will lead to the formation of higher number households,” it added.

RHB Research also said the upcoming potential listing of Iskandar Waterfront Holdings and Medini Iskandar were likely to create positive spillover to other developers with sizeable exposure to Iskandar Malaysia region.

Mergers and acquisitions and joint-ventures in the property scene would also potentially surprise the market, it added.

“Having downgraded the sector for almost two years, we believe the timing is right to overweight the sector again, considering the more reasonable current valuations after the recent election sell down,” said RHB Research.

The research house favoured Sunway Bhd with a ‘buy’ call and target price ( TP) of RM3.50, IJM Land with a ‘ buy’ call and TP of RM3.42 and UOA Development also with a ‘ buy’ call and TP of RM2.60. — Bernama

POSITIVE PERFORMANCE AHEAD: RHB Research says the 13th General Election results are expected to yield positive sentiment on high-beta property stocks as it provides a clear visibility for the property sector. — Bloomberg photo

CONFIDENCE RESTORED: Alliance Research has maintained its ‘overweight’ call on the construction sector as the election risk has been removed, coupled with robust gross domestic product, strong contract awards and strong job flows. — Reuters photo