KUALA LUMPUR: HwangDBS Vickers Research expects progress in key domestic projects in the second half of this year, with the Mass Rapid Transit (MRT) groundbreaking on track for July while the winner of the Light Rail Transit (LRT) phase two project, is likely to be announced by end-June.

It said in a statement today, the recent subsidy cuts will allow
funds to be channeled towards public transportation projects such as the MRT.

However, HwangDBS said the rise in inflation and slower growth might continue to result in further weaknesses in the near term but Malaysia is likely to be better off relative to other markets.

'This is because of its defensive quality with relatively low foreign shareholdings and support from domestic funds as well as implementation of key catalyst projects.

'Yield stocks may also gain interest if the regional markets remain weak,' it said, while adding that for this year, the year-end KLCI target is expected to be at 1,730 points.

The top yield pick of HwangDBS includes Boustead Holdings Bhd, Axis-Reit Managers Bhd, Maxis Bhd and DiGi.com Bhd.

Meanwhile, OSK Research Sdn Bhd said aside from the consumer sector for which first quarter was strong due to festivities, others such as steel, construction and oil and gas tend to have a weak first quarter owing to the fewer number of working days.

The research house foresees earnings to pick up a little in the second quarter, although the auto and technology sectors may still remain weak due to supply problems in Japan.

It stated that the year-end target for the KLCI will be at 1,680 points and sees merger and acquisition excitement among banks as one of the catalysts to achieve it.

However, OSK sees the 1,600 points level as tough resistance prior to the month of October, when an election-friendly Budget 2012 may be announced. - Bernama