Credit Suisse top pick oh Credit Suisse top pick

TNB, Digi, Maxis, Genting, RHB Cap, AirAsia, Gamuda, IJM, Alliance on Credit Suisse list
Business & Markets 2013
Written by Ho Wah Foon of   
Thursday, 07 November 2013 13:09

KUALA LUMPUR (Nov 7): Although local institutional funds are picking up smaller cap stocks now, Credit Suisse is sticking to its big cap preference.

The current top picks of Credit Suisse are 
1) Tenaga Nasional Bhd (target price: RM10.90), 
2) Bhd (TP: RM5.95), 
3) Maxis Bhd (TP: RM8.00), 
4) Genting Bhd (TP: RM11.50), 
5) RHB Capital Bhd (TP: RM8.80).

The others are: 
6) AirAsia Bhd (TP: RM3.30), 
7) Gamuda Bhd (RM5.50), 
8) IJM Corporation Bhd (TP: RM7.28) and 
9) Alliance Alliance Financial Group Bhd (RM5.63).

In a Malaysia strategy report dated Nov 4, Credit Suisse research analyst Tan Tin Ming said due to buying of small caps by local funds, the  premium for the big caps over small caps has dissipated to just 3% (versus the long-term premium average of 21%).

“Assuming that the premium should normalise, this suggests that the Malaysian big caps should outperform the small caps going forward. What could derail this thesis?

“Government-linked investment companies (GLICs) appear to be more focused on medium and small cap stocks this year, after Prime Minister Datuk Seri Najib Razak urged EPF and other GLICs to step up their involvement particularly in high quality mid-cap stocks at Invest Malaysia in June 2013.”

Tan noted domestic institutions have supported the market so far this year.

Domestic institutions have been net buyers for five consecutive months, after the general election in May.

“With both the General Election and the UMNO party assembly out of the way, political risk is no longer a major issue, in our view,” said Tan.

In contrast, Malaysian domestic retailers have been consistent net sellers since 2010. “Net selling among the local retailers is at its largest this year,” noted Tan.

Although foreign institutions have been buyers for the large part of the year, they turned net sellers in October 2013, amounting to RM800 million, from net buying in September.

But year to date, foreign institutional net inflows have amounted to RM7.7 billion, said Tan.