Upcoming company earnings may set tone for M'sian market

PETALING JAYA: The incoming barrage of financial results may set the underlying tone on Bursa Malaysia over the next few weeks, as eager investors searching for fresh leads may support mild gains for the index in the near term. Heavyweights including the likes of Malayan Banking Bhd, CIMB Group Holdings Bhd, plantation giant Sime Darby Bhd and the Genting Group are set to reveal their quarterly results soon. Analysts and fund managers generally expect an unexciting quarter with no big negatives and an upside bias. Kenanga Investment Bank head of research Chan Ken Yew anticipates no negative surprises this result season, with more event-driven developments driving stock prices in the near term.

He is bullish on a few sectors, namely construction, oil and gas, fast-moving consumers goods and also companies involved in the Economic Transformation Programme.

Jupiter Securities Sdn Bhd head Pong Teng Siew said although he expected a generally good results season, the performance of some large capitalised companies might excel while some might not.

“It is still a mixed bag of marbles, plantation stocks are expected to be good, buoyed by optimal weather and the traditional peak harvest season, while companies in the oil and gas sector are boosted by the domestically-driven projects and global high oil prices,” he said.

Banking and financial stocks are not high on his favoured list due to squeezing margins and stiff competition among local banks.

Meanwhile, a foreign research house analyst said the property and construction sector might also benefit from the spill-over effects of the My Rapid Transit project and other key projects.

“The results are expected to be within expectations, numbers would tend to be unassuming as there were no unsuspecting black swans that happened during the last quarter,” said the analyst.

He said 50% of the FBM KLCI component stocks would be within expectation, while 25% to 35% of that would exceed expectations.

“Fast-moving consumer goods counters would largely be in line with consensus, while oil and gas service providers might spring a surprise with the sharp rebound in the charter of supply vessels,” he said.

However, even if assuming improved corporate earnings, analysts believe that with markets being forward looking, investors tend to focus on the trend of economic and corporate earnings growth this year, rather than that of the fourth quarter last year.

Last week, Bank Negara announced that economic activities between October and December grew by 5.2% compared with 5.8% in the third quarter, underpinned by domestic demand.

Although domestic growth is present, fearful sentiment in major overseas stock markets has weighed on local investors.

The eurozone is still marred in its own financial doldrums with Greece struggling to implement its planned austerity measures, threatening the stability of the 17-country single currency zone.

Some might find consolation in the United States as upbeat data continued to rally up stocks.

The Dow Jones industrial average is inching closer to the psychologically important 13,000 mark, a key mark that was touched just before the financial crisis plunged global stock prices.