Strategy 2014 to be a stock-picking year, says Maybank IB Research

by **Cals** Mon 23 Dec 2013, 11:21

Strategy 2014 to be a stock-picking year, says Maybank IB Research

Business & Markets 2013

Written by Surin Murugiah of theedgemalaysia.com

Monday, 23 December 2013 11:04

KUALA LUMPUR (Dec 23): Maybank IB Research has maintained its 1,940 end-2014 target for the FBM KLCI and said 2014 would very much be a stock-picking year and advised investors to focus on the value stocks in the near term, and notice the big-caps on broader market dips.
In a strategy note Monday, the research said it sees continuous re-rating for the Shariah stocks and higher upside for the Shariah mid-caps. Visit Malaysia Year 2014 will benefit those in the hospitality industries.
Maybank IB Research said that it expects a faster global economic growth of 3.5% in 2014 as major advanced economies simultaneously expand for the first time since 2011.
It said that in contrast, Asean's growth trends were expected to be mixed on factors ranging from favourable impact of external demand rebound on Singapore and Malaysia, to transitory effects of domestic macroeconomic turbulence, political uncertainties and natural disasters on Indonesia, Thailand and the Philippines.
The research house said it was constructive on Malaysia's macroeconomic picture given the steady growth momentum (GDP 2014E: 5%), clarity and credibility in fiscal policy to address the budget deficit via spending and tax measures, sustainable current account surplus, and the removal of domestic political uncertainties.
“The key thing to watch is domestic consumer spending as inflation accelerates and inflationary expectations rise in reaction to subsidy rationalisation and price adjustments.
“We think that Malaysian equities' defensiveness will stand out yet again in 2014. While the KLCI’s 16.3x one-year forward PER on an 8.1% earnings growth offering implies a rather "pricey" PEG of 2x, the sustainability of Malaysia's longer term growth on strong macro-economic policies and banking and corporate balance sheet strength will continue to lend support to the premium rating. Political concerns have diminished, fiscal balance issues are being addressed and domestic liquidity remains ample,” it said.