KUALA LUMPUR (April 2): RHB Research Institute Sdn Bhd said that notwithstanding improvements in the global economy, it continues to expect a market pullback and consolidation in the 2Q.
“In our view, apart from rising market caution ahead of the general election due to the uncertain election outcome, earnings will also have to play catch up for stocks with rich valuations before the market can scale new heights. On the external front, concerns on Mainland China’s economy and a potential risk of an oil-supply shock will also weigh down market sentiment,” it said in its 2Q 2012 Market Outlook & Strategy Report dated March 30.
Beyond the near-term pullback, the research house said it expects market sentiment to gradually improve as global economic uncertainties clear out.
“As central banks in advance countries have unveiled more quantitative easing programmes and pledged to maintain extremely loose monetary policy to support economic growth, global financial markets are still likely to be awash with liquidity. Consequently, we are maintaining our end-2012 FBM KLCI target at 1,650 based on 14.5 times 2013 EPS,” it said.
RHB Research said given its more upbeat view on the market for the 2H, we believe “buy on dips” was still the best strategy to outperform the market even though defensive stocks would provide greater stability for the portfolio, particularly in the 2Q. S
“Sector-wise, our key Overweights continue to be telecommunications, gaming, PLANTATION [], oil & gas and consumer,” it said.
“In our view, apart from rising market caution ahead of the general election due to the uncertain election outcome, earnings will also have to play catch up for stocks with rich valuations before the market can scale new heights. On the external front, concerns on Mainland China’s economy and a potential risk of an oil-supply shock will also weigh down market sentiment,” it said in its 2Q 2012 Market Outlook & Strategy Report dated March 30.
Beyond the near-term pullback, the research house said it expects market sentiment to gradually improve as global economic uncertainties clear out.
“As central banks in advance countries have unveiled more quantitative easing programmes and pledged to maintain extremely loose monetary policy to support economic growth, global financial markets are still likely to be awash with liquidity. Consequently, we are maintaining our end-2012 FBM KLCI target at 1,650 based on 14.5 times 2013 EPS,” it said.
RHB Research said given its more upbeat view on the market for the 2H, we believe “buy on dips” was still the best strategy to outperform the market even though defensive stocks would provide greater stability for the portfolio, particularly in the 2Q. S
“Sector-wise, our key Overweights continue to be telecommunications, gaming, PLANTATION [], oil & gas and consumer,” it said.
