Market Watch M&A cuts KLCI year-end target to 1,600

Market Watch M&A cuts KLCI year-end target to 1,600
Business & Markets 2013
Written by Cynthia Blemin of theedgemalaysia.com
Friday, 06 September 2013 11:40

KUALA LUMPUR (Sept 6): M&A Securities expects deep selling pressure on the stock market and has lowered its year-end target for the benchmark index FBM KLCI to 1,600 from 1,838 previously.

One factor leading to this cut is the country's upcoming 2014 budget, to be tabled on Oct 25.

“We were right on our prediction for the month of August and foresee an intermittent deep selling pressure to take place until the end of the year.

“With no catalyst in sight to overpower the negative news flow, we revise our year-end FBMKLCI target to 1,600 based on PER of 15x. The floor target, should KLCI suffers prolong deep-selling momentum, is 1,500,” said its head of research Rosnani Rasul.

Rosnani said other factors deemed negative for the market include the escalating geo-political tension in the Middle East, US plan to unwind its quantitative measures and Bank Negara Malaysia (BNM) monetary policy meeting yesterday.

The trading sentiment in September will be driven to a large extent by external factors, she added.

But she foresees some rising interest in thematic stocks, underpinned by the coming Budget 2014.

Among those that could see some gains include sectors like consumers, auto, telcos and to small extent healthcare, in anticipation of a friendly Budget 2014 that aims to lessen the rakyat’s burden and continue to enhance the nation’s competitiveness, she added.

“We foresee greater news flow on these sectors as the budget date approaches and we recommend the investors to be ahead of the curve on this,” she advised.

The research house’s top five “BUY” calls for September are MBM (Auto), Telekom (Telco), Maxis (Telco), Digi (Telco) and Parkson (Consumer).