CIMB Yearbook - Malaysia's demographic dividend
Malaysia's march towards developed nation status by 2020 is being assisted by favourable demographics. The country's demographic dividend is not only a boost economically but it is also positive for a long list of sectors from consumer to properties. Although long-term prospects are promising, the outlook for 2015 is more challenging. We lower our end-2015 KLCI target from 1,970pts to 1,800pts after removing the 10% premium over our 3-year moving average P/E due to heightened nearer-term risks. Our preferred sectors for 2015 are the construction, transport and utilities sectors. We still like the smaller-cap stocks.
Although long-term prospects are promising, the outlook for 2015 is more challenging. We lower our end-2015 KLCI target from 1,970pts to 1,800pts after removing the 10% premium over our 3-year moving average P/E due to heightened nearer-term risks. Our preferred sectors for 2015 are the construction, transport and utilities sectors. We still like the smaller-cap stocks.
Demographic tailwind
Malaysia‟s favourable demographic ratios could unlock a potential source of demand and growth. Malaysia is in a sweet spot whereby the share of the working age population is rising, and, when complemented by higher wages to GDP, translates into positive dividends that could last up to two decades. Measures to enhance income infer that a number of people will enter the middle class and drive consumption. Malaysia can look forward to a relatively long period of favourable demographic dividends.
Short-term potholes
Malaysia will implement the goods and services tax (GST) on 1 Apr 2015 and could suffer the typical 6- to 9-month lull in consumer spending. Weak commodity prices, a lacklustre property market and earnings misses are other short-term negatives that could weigh down on the market.
Still a stock-picking year
2014 is coming to a close and while the KLCI's performance YTD has been poor, there are still gains to be made in selected sectors and stocks. We believe this will likely be the case again in 2015. Our top 3 bigger-cap picks are Gamuda, Petronas Gas and Westports while smaller-cap picks are MyEG, Prestariang and Karex.
Source: CIMB Daybreak - 10 December 2014
Malaysia's march towards developed nation status by 2020 is being assisted by favourable demographics. The country's demographic dividend is not only a boost economically but it is also positive for a long list of sectors from consumer to properties. Although long-term prospects are promising, the outlook for 2015 is more challenging. We lower our end-2015 KLCI target from 1,970pts to 1,800pts after removing the 10% premium over our 3-year moving average P/E due to heightened nearer-term risks. Our preferred sectors for 2015 are the construction, transport and utilities sectors. We still like the smaller-cap stocks.
Although long-term prospects are promising, the outlook for 2015 is more challenging. We lower our end-2015 KLCI target from 1,970pts to 1,800pts after removing the 10% premium over our 3-year moving average P/E due to heightened nearer-term risks. Our preferred sectors for 2015 are the construction, transport and utilities sectors. We still like the smaller-cap stocks.
Demographic tailwind
Malaysia‟s favourable demographic ratios could unlock a potential source of demand and growth. Malaysia is in a sweet spot whereby the share of the working age population is rising, and, when complemented by higher wages to GDP, translates into positive dividends that could last up to two decades. Measures to enhance income infer that a number of people will enter the middle class and drive consumption. Malaysia can look forward to a relatively long period of favourable demographic dividends.
Short-term potholes
Malaysia will implement the goods and services tax (GST) on 1 Apr 2015 and could suffer the typical 6- to 9-month lull in consumer spending. Weak commodity prices, a lacklustre property market and earnings misses are other short-term negatives that could weigh down on the market.
Still a stock-picking year
2014 is coming to a close and while the KLCI's performance YTD has been poor, there are still gains to be made in selected sectors and stocks. We believe this will likely be the case again in 2015. Our top 3 bigger-cap picks are Gamuda, Petronas Gas and Westports while smaller-cap picks are MyEG, Prestariang and Karex.
Source: CIMB Daybreak - 10 December 2014
