Stocks to Watch Breweries, tobacco, gaming, infrastructure, construction

Everyone eye on this coming budget.

Friday 29 September.

Business & Markets 2012
Written by Surin Murugiah of  
Saturday, 22 September 2012 15:12

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KUALA LUMPUR (Sept 22): The FBM KLCI could likely remain muted next week ahead of the tabling of Budget 2013 by finance minister and Prime Minister Datuk Seri Najib Razak on Friday, Sept 28.

The guessing game over the date of the general election as the anticipation ahead of the Budget will likely keep investors on tenterhooks, given the less than encouraging economic data from the World Trade Organisation (WTO) and tepid growth prospects in China and Japan, which could stall global growth.

Affin Investment Bank vice president and head of retail research Dr Nazri Khan said the local market was likely to trend temporarily lower (with a break below 1,620 support suggesting 1,600 level as the target) following a series of bearish reports which shows across-the-board deterioration in the global growth.

World trade will grow by a mere 2.5% this year, dragged down by Europe to less than half of the previous 20-year average, the WTO said on Friday. The estimate was a revision of the WTO's previous 2012 growth forecast of 3.7%, which it made in April. It also forecast trade would expand by 4.5% in 2013, revised down from 5.6%.

US stocks closed flat on Friday even though investors welcomed Spain's efforts to seek a bailout and cheered Apple's newest iPhone that went on sale today, driving its shares to a record high.

The FBM KLCI has so far had a tepid September, and has shed 22.41 points for the month as at Friday.

Among the stocks that could be in focus next week are the "sin counters" — namely, brewery, tobacco and gaming — as well as infrastructure players.

A pre-budget report by Citigroup said tax hikes on tobacco could be under consideration in the 2013 Budget given the recent introduction of a new price controls on cigarettes as part of an anti-smoking campaign. Taxes on alcohol could also be increased.

Meanwhile, the gaming sector also fall victim to Budget 2013. CIMB Research in a note Friday said fears of higher gaming taxes following the 2013 Budget could be valid this time round.

"The gaming sector is ripe as a source of funding having registered significant growth since gaming taxes were last revised across the board in 1998," it said.

Investors may also look at infrastructure-related counters ahead of the Budget tabling, expecting some incentives to push the private sector to be the key driver of economic growth, especially in infrastructure and CONSTRUCTION [].