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KUALA LUMPUR (Oct 5): As investors enter October, CGS-CIMB Research has noted that when analyzing historical data from FBM KLCI, the index performance tends to be positive in October with a monthly average (monthly ) positive. profitability of 1.5% during the last 10 years and 1.2% during the last 40 years.
Historically, the Malaysian stock market may have performed well in October due to anticipations of a feel-good budget announcement by the government, CGS-CIMB said in a report last Friday.
However, he noted that the 2021 budget is scheduled to be announced on November 6 this year.
“We expect the market to limit itself to a range, with downside risks in October in view of internal and external uncertainties,” he added.
CGS-CIMB reiterated its KLCI target of 1,520 points and its top three picks, which are Public Bank Bhd (target price [TP]: RM18.90), Tenaga Nasional Bhd (TP: RM13.20) and Malaysia Pacific Industries Bhd (TP: RM19.80).
By October, the local research house expects investors to be:
1. Tracking the flow of news on political events after opposition leader Datuk Seri Anwar Ibrahim’s claim on September 24 that he has a “strong and formidable majority” to form a new federal government.
2. Observe how the end of the loan moratorium on September 30 affects the current trend observed in the market, and also the targeted loan moratorium and the 2.0 Salary Subsidy Program that began on October 1.
3. Follow-up on reports of new cases of Covid-19 in Malaysia, which have been increasing, and worldwide.
4. Watch out for government announcements on: i) the medium to long-term recovery plan (October-November); ii) the launch of the Digital Economy Master Plan; and iii) details of the report of the Special Working Group on the problems of the Federal Authority for Land Development (Felda).
5. It will also focus on the outcome of the Brexit trade deal negotiations scheduled for October 15, the ballot box and the debate ahead of the 2020 US presidential elections on November 3 and China’s fifth plenary session to approve its plan. economic 2021-2025.
CGS-CIMB noted that the KLCI fell for the second month in a row by 1.3% monthly in September due to concerns about political uncertainties, the end of the loan moratorium on September 30, and the daily increase in new Covid cases. -19 after the Sabah state elections.
He also noted that retail participation in commerce fell on a monthly basis for the first time since March.
“Retailers were key net buyers of RM 1.4 billion in shares in September, overshadowing the RM 530 million net purchase by local institutions, and were key in absorbing net sales of Malaysia shares by foreign investors by value. of RM1.97 billion in September.
“In 9M20 (the first nine cumulative months of 2020), retailers were the largest net buyers of Malaysia’s shares with net purchases of RM11.6 billion, surpassing net purchases by local institutions of RM10.7 billion. These helped absorb foreign investors’ net sales of RM22.3 billion, ”said CGS-CIMB.
He added that foreign sales hit a record this year.
“Foreign investors sold Malaysian shares worth 1.97 billion yuan in September (+ 32% MoM; + 253% YoY) possibly due to concerns about political instability. This brought the 9M20 net outflow to RM22.1 billion, 101% more than the RM11 billion outflow recorded in 2019 and exceeded the record annual foreign outflow recorded in 2015 of RM19.7 billion.
“As a result, the cumulative net outflow of foreign funds from the Malaysian stock market (since 2010) expanded to a record RM31 billion,” noted CGS-CIMB.
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