Go for larger caps: PublicInvest

PETALING JAYA: The FBM KLCI is expected to end the year at the 1,920 point level, according to PublicInvest Research, opining that a switch back to the larger-caps for medium-term safety is the optimal strategy for the remainder of the year.
"That (1,920 point level) doesn't leave much upside from current levels, but we believe a switch back to the larger-caps for medium-term safety is the optimal strategy for the remainder of the year, going into the next. Selective smaller- and medium-capitalised stocks will still be necessary for all portfolios, for the alpha performance," it said yesterday.
However, it pointed out that not all smaller-capitalised stocks have the same fundamental strengths, and investors will need to sift out the wheat from the chaff despite all being seemingly inexpensive, value-wise.
"Opting for the tried-and-tested fundamentally-driven laggards should stand investors in good stead as a drive to safety will be the order of the day in the months to come, we believe."
PublicInvest deems FBM KLCI laggards Sime Darby Bhd, YTL Corp Bhd, CIMB Group Holdings Bhd, Felda Global Ventures Holdings Bhd and SapuraKencana Petroleum Bhd worth looking out for.
The FBM Mid70 laggards; YTL Power International Bhd, Mudajaya Group Bhd, Kossan Rubber Industries, DRB-Hicom Bhd, Pos Malaysia Bhd and Air Asia X Bhd, and amongst the FBM Small Cap laggards; Can-One Bhd, Eversendai Corp Bhd, Cypark Resources Bhd, ECM Libra Financial Group Bhd, Symphony Life Bhd and Puncak Niaga Holdings Bhd.
PublicInvest Research said Malaysia's investment case remains sound, dividend yields are amongst the highest in the region, while valuations are relatively inexpensive vis-à-vis its Asean emerging market peers.
"Considering all factors however, it's hard to get overly-enthusiastic about market conditions over the medium term. While dollar-carry trades may continue to fuel exuberance and push markets to new all-time highs, we believe structural issues will eventually come to bear in Europe, China and Malaysia, restricting liquidity-driven exuberance," it said.