Political crisis sees research house lowering KLCI trough valuation

“Highly defensive stance as equities are expected to underperform in the near term. Nevertheless, note that in theory our current top picks are mostly export-oriented and largely unaffected by potential changes to domestic policies: IOI Corporation, MISC, Sunway Bhd, Westports and Yinson Holdings, and small/mid caps Duopharma Biotech, IJM Plantations, Hume, Scientex, and VS Industry, ” UOB Kay Hian Research said.

KUALA LUMPUR: The political crisis in the Pakatan Harapan coalition government has seen UOB Kay Hian Malaysia Research lowering its FBM KLCI trough valuation to 1,480 based on 15 times 2020F price-to-earnings PE (-one standar deviation) to mean.

In its strategy report on Monday, it said it would be reviewing its current end-20 FBM KLCI target of 1,650, which pegs the market at 16.8 times 2020F PE (mean PE+0.5SD), to adequately incorporate the impact of Covid-19 on market earnings and assess the country’s political and policy landscape.