PETALING JAYA: Despite the ongoing uncertainty in the global and local fronts, investors are advised to look out for stocks in the plantation, construction, technology, telco, oil and gas, and property sectors in order to sail through a potential recovery sentiment in 2020.
“We believe several local fresh leads may surprise the market to the upside in 2020 underpinned by recovery in commodities such as crude palm oil and crude oil prices, clearer policies in Budget 2020 and a recovering sentiment in the construction sector,” HLIB Research said in a report.
It has listed several key themes that may be seen as strong catalysts in the making, such as crude palm oil prices, crude oil prices, construction, Budget 2020, National Fiberisation Connectivity Plan, undervalued property stocks and potential mergers and acquisitions, amid sluggish share prices.
HLIB Research said crude palm oil prices have been rallying strongly in Q4’19, with an average price of RM2,588 a tonne.
“Should we put everything status quo, we should expect positive impact in sector’s earnings in February reporting season,” it said.
For the construction sector, it noted that trading interest may be seen on the back of improved development expenditure from Budget 2020 coupled with a potential news flows driven quarter.
As for the technology and communication sector, the research opined that with the shift to 5G, connectivity and technology advancement will be crucial for 5G to be successful.
“Hence, we anticipate cloud/data centres services and telecommunication services to boom throughout this shift of technology.”
Meanwhile, HLIB Research said the recovery in crude oil prices in Q4’19 will sustain a good trading momentum for the oil and gas counters. The energy index has rallied strongly by 12.5% led by steady Brent oil price above US$60 (RM246) per barrel.
Despite the lack of fresh of leads for upward re-rating for the property sector, it said the potential overnight policy rate cut in 1H’20 may improve affordability of house ownership.
On the economic front, the research house expects Malaysia to record a gross domestic product growth of 4.4% year-on-year in 2020, a slight decline from the estimated 4.5% growth recorded last year.
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