2014 Annual Strategy 3R: Regain, Resume, Reaccelerate

by **Cals** Mon 06 Jan 2014, 14:32

2014 Annual Strategy 3R: Regain, Resume, Reaccelerate

Business & Markets 2013

Written by Rosnani Rasul of M & A Securities Research

Saturday, 04 January 2014 10:55

KUALA LUMPUR (Jan 4): 2014 year-end FBM KLCI target of 1,980 based on forward PER of 17.4x, broadly in line with the pre-liquidity rally average PER (2000-2008). With the market gradually entering normalisation period following the deceleration of US quantitative easing measures in 2014, we believe the local funds will be supportive of the local market reinvigorated by the reacceleration of the economy as the impact of fiscal consolidation will finally bear its fruits. We believe foreign institutions will re-enter the local market in rising speed in the second half of 2014 boosted by improving economic dynamics chiefly emanating from the GST implementation in 2015 and improving fiscal condition.

Promising 2014.

The world will finally enter into a period of normal growth now that the top 3 economy can breathe on its own next year led by the re-charging of the US economy and Japan’s improving outlook. China economy will grow in a more convincing fashion as the economy embark on massive restructuring effort with private consumption is expected to take the front lead.

Catalyst in 2014.

Several factors will shore up the trading sentiment in 2014 including 1) strong global trade growth of 4.5% with strong spill over impact to Malaysia’s open economy 2) depreciation in Ringgit that will boost export momentum 3) rapid implementation of ETP anchored by RM220 billion of committed investment 4) status quo on OPR 5) reacceleration of top 3 global economies namely the US, China and Japan. Eurozone is the only the thorn in the flesh next year

Overweight.

We have an Overweight call on auto, banking, construction, media and oil and gas sectors.