Technology : RHB Research upgrades Technology sector to Overweight
KUALA LUMPUR:RHB Research has urged investors to buy on weakness strategy, focusing on selective growth stocks that can create shareholder value, over and above defensives and yield stocks.
"We revise our end-2014 and end-2015 FBM KLCI target to 1,850 pts (from 1,940 pts) and 1,950 pts (from 2,100 pts) based on 16.8 times and 16.5 times one-year forward respectively," it said in a note on Tuesday.
While developed economies continue to struggle to transition into a self-sustaining growth stage from recovery, RHB believed the sharply lower crude oil prices will help to increase the disposable incomes of consumers thereby helping to hasten the global economic recovery and boost demand for exports.
"The risk of significant policy tightening in developed economies that could derail the recovery is also low, in our opinion. Lower oil prices will put pressure on revenues but is unlikely to derail Malaysia’s fiscal deficit target of 3% of GDP in 2015," it noted.
However, the research house said investments into the O&G sector will slow as will earnings growth for O&G companies.
"With the pickup in corporate earnings heading into 2015 and 2016, we continue to be optimistic on domestic equities, given the lack of appeal of other asset classes," it said.
Meanwhile, it has upgraded the tech sector to an Overweight rating as 15 out of 22 sectors contained earnings that were in line while seven (auto, plantations, banks, timber, construction, gaming and basic materials) disappointed, a similar ratio to the preceding June quarter.
"The tech sector was upgraded to Overweight as recent recommendation revisions means that we have five Buys and three Neutrals.
"The sector is generally expected to benefit from the expected recovery in exports and is a net beneficiary of the stronger USD. Notably, the aviation sector’s results were in line, breaking a cycle of three preceding weak consecutive quarters. The auto sector has the longest (seven quarters) streak of earnings below expectations," it said.
http://www.thestar.com.my
KUALA LUMPUR:RHB Research has urged investors to buy on weakness strategy, focusing on selective growth stocks that can create shareholder value, over and above defensives and yield stocks.
"We revise our end-2014 and end-2015 FBM KLCI target to 1,850 pts (from 1,940 pts) and 1,950 pts (from 2,100 pts) based on 16.8 times and 16.5 times one-year forward respectively," it said in a note on Tuesday.
While developed economies continue to struggle to transition into a self-sustaining growth stage from recovery, RHB believed the sharply lower crude oil prices will help to increase the disposable incomes of consumers thereby helping to hasten the global economic recovery and boost demand for exports.
"The risk of significant policy tightening in developed economies that could derail the recovery is also low, in our opinion. Lower oil prices will put pressure on revenues but is unlikely to derail Malaysia’s fiscal deficit target of 3% of GDP in 2015," it noted.
However, the research house said investments into the O&G sector will slow as will earnings growth for O&G companies.
"With the pickup in corporate earnings heading into 2015 and 2016, we continue to be optimistic on domestic equities, given the lack of appeal of other asset classes," it said.
Meanwhile, it has upgraded the tech sector to an Overweight rating as 15 out of 22 sectors contained earnings that were in line while seven (auto, plantations, banks, timber, construction, gaming and basic materials) disappointed, a similar ratio to the preceding June quarter.
"The tech sector was upgraded to Overweight as recent recommendation revisions means that we have five Buys and three Neutrals.
"The sector is generally expected to benefit from the expected recovery in exports and is a net beneficiary of the stronger USD. Notably, the aviation sector’s results were in line, breaking a cycle of three preceding weak consecutive quarters. The auto sector has the longest (seven quarters) streak of earnings below expectations," it said.
http://www.thestar.com.my
