KUALA LUMPUR: Goldman Sachs Research had raised Malaysia to Overweight due to its improving top-down policy and defensive character.
The four reasons why it decided to Overweight Malaysia were a favourable macro backgroup, market composition, clear development policies and earnings growth of 15%.
The report, issued on Tuesday, June 7 said with the favourable macro backdrop, it expected the economy to grow cose to 6% this year and next.
'The inflation/policy mix is less challenging than it is for many other regional counterparts, and Malaysia is the only regional economy that is a net beneficiary of rising oil prices,' it said.
As for the market composition, it pointed out that 21% was domestic cyclicals and 32% defensives and its beta to the regional index is 0.6: these are attractive characteristics going into an uncertain summer trading environment.
'The government has clear and specific policies to spur Malaysia's development into a high income nation by 2020 through its Economic Transformation Programme (ETP) and Government Transformation Programme (GTP). We believe investors are not fully aware of these efforts and that this 'investible gap' constitutes an attractive investment opportunity,' it said.
Goldman Sachs Research expected earnings growth to be 15% this year, above the consensus forecast of 11%. As for 2012, its projections were in line with consensus at 12%.
'Valuations are fair relative to peers and history (12 months forward price-to-earnings is 14.4 times, trailing price-to-book is 2.1 times), and we believe investor positioning is light,' it said.
The four reasons why it decided to Overweight Malaysia were a favourable macro backgroup, market composition, clear development policies and earnings growth of 15%.
The report, issued on Tuesday, June 7 said with the favourable macro backdrop, it expected the economy to grow cose to 6% this year and next.
'The inflation/policy mix is less challenging than it is for many other regional counterparts, and Malaysia is the only regional economy that is a net beneficiary of rising oil prices,' it said.
As for the market composition, it pointed out that 21% was domestic cyclicals and 32% defensives and its beta to the regional index is 0.6: these are attractive characteristics going into an uncertain summer trading environment.
'The government has clear and specific policies to spur Malaysia's development into a high income nation by 2020 through its Economic Transformation Programme (ETP) and Government Transformation Programme (GTP). We believe investors are not fully aware of these efforts and that this 'investible gap' constitutes an attractive investment opportunity,' it said.
Goldman Sachs Research expected earnings growth to be 15% this year, above the consensus forecast of 11%. As for 2012, its projections were in line with consensus at 12%.
'Valuations are fair relative to peers and history (12 months forward price-to-earnings is 14.4 times, trailing price-to-book is 2.1 times), and we believe investor positioning is light,' it said.
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