Investor Positive On Malaysian Stocks:Macquarie

Published: 2009/02/23

Macquarie's top picks are Genting, AMMB Holdings, KNM Group, TM International and Tenaga Nasional.

INVESTORS still see potential upside in Malaysian stocks with the market expected to strengthen in 2009, Macquarie Research says.The research house, which spent a week marketing in Malaysia, Singapore and Hong Kong, said investor demand was surprisingly good."

The main questions that arose revolved around what bombed stocks should be bought."Additionally, investors were also wondering if the current strength in plantations should be bought or sold," it said in a research note.

Macquarie said most investors still thought of Malaysia as low beta, where risks and returns are low. They were also surprised that one can make money in the country and outperform regional markets in bear rallies.

This in itself probably led investors to rethink their positioning if they expect a rally in the second and third quarters of 2009."We recommend investors move out of cash into equities in first quarter because we expect a bear market rally this year," the research house said.

Macquarie's top picks are Genting Bhd, AMMB Holdings, KNM Group, TM International and Tenaga Nasional Bhd.Elaborating on the stock choices, it said TM International was chosen due to its cheap valuation and growth.

"Most investors felt they would wait till the potential cash call is completed," the research house said.It said TNB was quite topical in the second half of the week after the government adjusted tariffs in favour of the company.The main positive is that the regulatory regime continues to demonstrate favour for Tenaga and the introduction of a tariff formula is now more likely than in recent history.

"The main pushback was that investors wanted to wait for further clarity on the regulatory front," Macquarie said.As for Genting, the stock has been forgotten since the third and fourth quarters of 2008, and investors sat up when they realised how cheap it is - excluding the market value of its Singapore subsidiary.

The main concern for Genting is that a number of investors did not believe Sentosa would be a success because they compared it with Macau and Las Vegas.