“We think that foreign shareholding in Malaysian stock market should have inched up to some 22% by December from 21.6% in November, still relatively underowned compared with recent high of 27.1% in April 2007,” said the house in a recent note.
Interestingly, it noted that domestic retailers and institutions have been net sellers since March 2010.
The benchmark FBM KLCI meanwhile has so far put on about 2% year-to-date (YTD). The 30-stock FBM KLCI closed at a record high of 1,551.89 yesterday.
The research firm said among the stocks with the highest net foreign shareholding include AirAsia Bhd (50%), CIMB Group Bhd (37%), IJM Corp Bhd (36%) and Genting Bhd (35%).
Credit Suisse remained positive on the Malaysian market that will be driven by the stronger ringgit, pre-elections’ pump-priming activities, boost from the Economic Transformation Programme and cross-border investment from Singapore.
Its top picks include CIMB, Genting, Gamuda Bhd, IJM, UEM Land Holdings Bhd, AirAsia, Public Bank Bhd and Axiata Group Bhd.
The house estimates the ringgit to rise further to RM2.93 over the next 12 months. The local currency has lost about 10% from a year ago.
It noted AirAsia, Tenaga Nasional Bhd and Tan Chong Motor Holdings Bhd as the few beneficiaries of a stronger ringgit.
The pump priming efforts, meanwhile, will benefit the construction industry. Credit Suisse has an overweight call on IJM, Gamuda and Sunway Holdings Bhd.
Credit Suisse believes that interest rates will remain low, adding that there can be a 25 basis point hike in the overnight policy rate by year-end.
It forecasts Malaysian real GDP to be at 7.5% for 2010 and 5.2% for 2011. It said the country should be boosted by higher palm oil and rubber prices, which rose 47% year-on-year (y-o-y) and 57% y-o-y respectively last year. - by Isabelle Francis, theedgemalaysia.com.
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