[ad_1]
KUALA LUMPUR: Investors may rush to divest their glove stock holdings following news that trials of Pfizer’s Covid-19 vaccine have shown evidence of safe and effective inoculation against the virus.
“We have already lowered the glove sector rating to ‘neutral from’ overweight ‘on August 25, 2020 due to positive news on vaccine development.
“We are reviewing the fair values of the glove stocks under our hedge with a negative bias,” AmInvestment Bank Research said in its latest strategy report.
While investors moving toward the comeback plays will present advantages to FBM KLCI, the two index-weighted glove stocks: Top Glove and Hartalega
– will offset the gains with their combined weight of 13-14%.
The final months of 2020 will see the market continue to shift towards a recovery theme, the research house said.
“We believe that the latest development has turned the tide of humanity’s fight against the virus and the long-awaited normalcy in everyday life may be slowly but surely returning,” he said in his latest strategy report.
Pfizer and its German partner BioNTech had announced yesterday that their experimental Covid-19 PFE.N vaccine had an effective rate of more than 90% without serious safety concerns based on the results of the initial trial.
The company said it will release up to 50 million doses this year for 25 million people and produce up to 1.3 billion doses in 2021.
“We reiterate our view that the final months of 2020 will mark the continued shift of the market from a predominantly pandemic issue to one focused on recovery.
“We have been advising investors to lighten their positions in the ‘pandemic game’, that is, glove stocks, and replace them with the ‘recovery game,'” AmInvestment said.
At the sectoral level, the research house said investors will have to rethink the high valuations attributed to the global tech sector, which has benefited from the new rules amid the pandemic.
However, AmInvestment remains positive in the sector in the long term due to the continued digitization of the economy, the rollout of 5G, and the beginning of Industry Revolution 4.0.
Sectors including energy, health and seaport are expected to benefit from the post-pandemic recovery.
Banking fundamentals should also improve with the economic recovery, although there is still a lack of clarity regarding the irreversible damage inflicted on companies and the quality of banks’ assets, AmInvestment said.
The research house also improved AirAsia to a “commercial buy” with a fair value of 68 sen in an expected recovery in air travel, although it remains aware of the need to recapitalize its balance sheet.
“Our best options reflect names that are likely to benefit from the recovery of the national economy, the export sector and world trade, namely Maybank, Tenaga Nasional, Axiata Group, Dialog Group, RHB Bank, Westports, Malaysia Airports, Allianz Malaysia, MMC Corp and Kumpulan Powernet, “he said.
[ad_2]
