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August historically a negative month for the KLCI, says CGSCIMB Research

TheEdge Mon, Aug 05, 2019 08:09am - 6 months ago

KUALA LUMPUR (Aug 5): CGSCIMB Research said the FBM KLCI fell 2.2% month-on-month (m-o-m) in Jul and 3.3% in 7M19 to close at 1,635 points, as concerns over slower growth more than offset optimism on monetary easing.

In a strategy note Aug 2, the research house said the KLCI underperformed the broader market and the small-cap index in July.

It said based on past performance, the market tends to be negative in Aug, having posted m-o-m declines of 0.6%/1.8% over the past 10-year/40-year periods.

“We maintain our end-2019F KLCI target of 1,596 pts. Our KLCI target is based on 15.5x 12M forward P/E (1 s.d. below its three-year average mean P/E) to reflect potential earnings risks from domestic policy reforms, OPR rate cuts and reescalation in US-China trade tensions.

“We project the KLCI to remain volatile in 3Q before recovering in late-4Q19 when all the earnings risks are priced in.

“Our top three picks are Malaysian Pacific Industries Bhd, Dialog Group Bhd and Supermax Corp Bhd,” it said.




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