Muristek
As a net oil exporter, AmInvestment said Malaysia is partially buffered from higher crude oil prices compared to Indonesia and Thailand. — Reuters pic
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KUALA LUMPUR, April 4 — AmInvestment Bank Bhd raised its year-end FBM KLCI target from 1,651 points to 1,745 points, pegged to its five-year median of 16.4 times without any discount.
In a note today, the research house said the target was backed by expectations that ample liquidity and the reopening of international borders, which support economic recovery and an in-house gross domestic product (GDP) growth projection of 5.6 per cent, will cushion potential downward earnings revisions.
“This is amid volatile commodity price swings, further supply chain shocks from Russia being shunned by the global economy and political noises running up to the 15th general election (GE15),” it said.
As a net oil exporter, AmInvestment said Malaysia is partially buffered from higher crude oil prices compared to Indonesia and Thailand.
“While still exposed to imported inflation, driven by commodity prices and supply chain disruptions, we believe Malaysia remains an attractive equity destination compared to the ASEAN region.
“Our worst-case outlook envisions the FBM KLCI to drop to 1,415, pegged to one standard deviation (SD) below its five-year median, driven by substantive earnings disappointments, fresh Covid-19 variant outbreaks and further geopolitical shocks,” it said.
AmInvestment noted that under a blue-sky scenario with a stronger 2022 GDP growth at six per cent, it expects the index to rise to 1,820, pegged to 0.5 times SD above its five-year median.
The research firm said the equity market is likely to remain range-bound in the near term within a 1,500-1,600 threshold given the volatility in commodity prices, supply chain disruptions and geopolitical shocks.
“Towards the end of the year, we expect the market to reach an inflection point as local institutional funds switch to long positions on probable window-dressing activities.
“This is amid clearer visibility to our FBM KLCI 2023 earnings per share (EPS) growth recovery of 14.9 per cent, which will be the fastest expansion since 2012, excluding the 2021 sharp rebound of 31 per cent year-on-year from Covid-19 lockdowns,” it said.
AmInvestment has recommended an “overweight” rating on the automobile, banking, media, oil and gas, power and technology sectors.
Top “buys” are Maybank, Tenaga Nasional, CIMB, RHB Bank, MR DIY, Telekom Malaysia ™, Inari Amertron, MPI, UMW Holdings and Hibiscus Petroleum. — Bernama