HLIB: BN win to boost market but gains will be limited. Buy Dayang, Sunway, Genting, TNB…

Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Monday, 06 May 2013 08:50
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KUALA LUMPUR (May 6): Hong Leong Investment Bank (HLIB) sees
market forces returning to the stock market after Barisan Nasioanl (BN)
retains power with a reduced majority of 7 seats at 133 seats in the
just-over 13th general election.
“Despite reduced majority, the certainty is continuation of government
and policies which we believe will be well received by investors,” said
the investment bank in its research report this morning.
But it added: “With the major event risk out of the way, we believe
market forces will come back into play and KLCI may start to play
catch-up against its ASEAN peers.”
However, the investment bank said the market is still vulnerable to “Sell
in May and go away” omen, which could happen as market already priced in BN win. In addition, PLANTATION [] (16% of
KLCI) earnings are disappointing and there were negative technical readings.
The overbought market suggests that upside is limited. “However, after a brief consolidation to neutralise its overbought
positions, KLCI may retest 1725 and 1742 resistance zones,” it said.
The short term supports for the market are seen at 1674 and 1660 levels, with 1650 level as the crucial support.
Hong Leong IB now advocates focus on proxies to the COC (CONSTRUCTION [], Oil & Gas and Consumerism), and its top
picks in COC include KimLun and Sunway; Dayang, Perdana and Perisai; Genting, MAHB, Maybank, RHB Cap and TNB.
It expects laggards like Boustead, DRB, MRCB, Mudajaya, SK Petro and TDC to perform, Iskandar stocks to benefit from
BN’s continued efforts in developing the region.
HLIB is maintaining its end-2013 KLCI target at 1,750.

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