INVESTORS should buy banking group CIMB Group Holdings Bhd, mobile-phone operator Axiata Group Bhd and power utility Tenaga Nasional Bhd as they’ll outperform the “lackluster” Malaysian stock market, Credit Suisse Group said.
“Malaysia has become under-researched due to its liquidity, low beta nature and unexciting valuations,” Stephen Hagger, an analyst at Credit Suisse, said in a report today. Beta is an indicator of volatility. “This offers an opportunity in stock picking” and “the best opportunity is to look for value in under-researched stocks.”
The FTSE Bursa Malaysia KLCI Index has risen 38 per cent this year, trailing Southeast Asian benchmark indexes even as Prime Minister Najib Razak announced on June 30 stimulus plans valued at RM67 billion (US$19 billion) and unveiled efforts to liberalize the economy.
Najib, who took office on April 3, reduced limits on foreign investment, property purchases and initial share sales, peeling back decades of benefits to ethnic Malays as the nation sought to attract investors and restore economic growth.
While Najib has “laid the foundations” for the long-term development of the capital markets, the “momentum of positive change” has slowed, Hagger said, without giving details.
Malaysia’s stock market is trading at 23 times reported earnings compared with 15 times in the Philippines and 21 times in Singapore, according to data compiled by Bloomberg.
‘THE Stock to Own’
CIMB remains “THE stock to own in Malaysia” because the bank is “on a roll as it dominates the share of capital raisings both domestically and increasingly, regionally,” Hagger said.
CIMB will also benefit from a recovery in consumer banking and its presence in the Indonesian banking industry, he said.
Shares of Malaysia’s second-biggest bank have surged 85 per cent this year. CIMB is the index’s third-best performer this year. The stock jumped 3 per cent to RM10.84 as of 10:12 a.m. local time, set for the highest level since Jan. 18, 2008.
Axiata, Southeast Asia’s second-biggest mobile-phone operator, “stacks up well against peers” while state- controlled power utility Tenaga will benefit from a rebound in electricity sales, the report said. - Bloomberg
