Citigroup: Buy MAS, Genting on yuan move

JAKARTA: Citigroup has picked Malaysia Airlines (MAS), Genting Malaysia, KL Kepong and Genting Plantations Malaysia stocks to benefit from China’s move to allow flexibility for the yuan.

Asia Strategist Markus Rosgen finds that a weaker US dollar or stronger Asian currencies tends to be associated with Asian stock market outperformance.

He noted that during the Renmibi managed float regime in 2005-2008, Bursa delivered strong returns with KLCI enjoying a 19 per cent increase.

This will likely raise China’s domestic consumption (rebalancing from exports), increase China’s demand for commodities, increase China’s investment abroad (as foreign assets become cheaper), increase China’s tourism spending, as travel costs fall, and benefit players with Chinese assets.

Beneficiaries may include natural resource players (via stronger commodity demand & M&A targets), tourism names (China tourists), property plays (particularly with exposure to China or sensitive to China buyer demand),

Other benefits include China’s direct investment and acquisitions, and exchanges that may benefit from more cross-China listings. - Reuters