Highlights

Bimb Research Highlights

Author: kltrader   |   Latest post: Tue, 12 Jan 2021, 6:11 PM

 

Market Strategy - Stocks Are Still in Early Recovery

Author:   |    Publish date:


  • Stocks higher on vaccine “game changer”. News that pharmaceutical company Pfizer has developed a coronavirus vaccine sent global shares higher. Investors rushed to reposition their portfolios, also back into EM. Key local indices are now back into positive YTD (Table 1), as the KLCI rose almost 5% for the week and climbed to the highest level since August. The KLCI has closed its performance gap with Asian stocks on a one-month basis, although local stocks suffered a net foreign outflow of RM246m versus week 45 net positive of RM115m.
  • Easy money and vaccine – powerful combination. On the back of the vaccine news, investors are now returning into EM stocks and into sectors that were hit the hardest by Covid-19, such as airlines, oil, and hospitality. We think this is an opportunity to add risk, especially now that stocks such as plantation are still off their recent July highs and some technology stocks have dipped last week due to so called “rotational” plays. However, we remain wary of badly hit sectors such as airline, whether the damage done could be repaired over the next 1-2 years.
  • Rise in yields pointing to further recovery. Since the pandemic broke out, we hear concerns that rising stock markets appear disconnected from reality. One argument in support of this view is that longer term bond yields have stayed depressed, which means the economic recovery from the bond market’s perspective is feeble. Nevertheless, Malaysia’s 10-year MGS yield has creeped up to 2.7% from its August level of 2.3%. Meanwhile, the 10-year US Treasury has risen from 0.5% to 0.9% during the same period. Another change in signal was performance of cyclical stocks, ie industrials and basic materials, which have done relatively well since 3Q20 as demand improved and commodity prices rose.
  • Our themes remain largely intact. For the past 6 months we have been calling for buying into cyclical stocks, ie industrial and basic materials. Our bullish stance taken for 2H20 and into early 2021 was based on V-shaped recovery – inducing investors to eventually gravitate into economic sensitive sectors – and have called for above-consensus KLCI target of 1,700. Recapping our 2 main themes are early-cycle recovery and digital technology. Risk-on positions would be positive for industrials, basic materials and consumer discretionary sectors, in our view. We believe technology is still a major beneficiary on the back of varying themes, driving semiconductor growth

Source: BIMB Securities Research - 16 Nov 2020

Share this

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards
 
 

457  576  569  492 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 VSOLAR 0.040.00 
 SAMAIDEN 1.72+0.04 
 PNEPCB 0.34-0.04 
 PA 0.1750.00 
 CYPARK 1.38+0.04 
 ARBB 0.29+0.015 
 KTG 0.265-0.005 
 QES 0.335-0.02 
 CONNECT 0.2250.00 
 SUNZEN 0.235+0.015 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
PARTNERS & BROKERS