PETALING JAYA: The year 2020 is still good for stock investing despite the Covid-19 pandemic that has gripped the world, due to notable plays such as the US presidential election in November as well as the technology sector, while a second wave of coronavirus infections could also present investment opportunities.
Inter-Pacific Asset Management Sdn Bhd (IPAM) head Datuk Dr Nazri Khan was bullish on the prospects for 2020 before the pandemic happened – and he is maintaining his view
.
“The market is still going up. We can see that Bursa Malaysia is traded almost at a one-year high. We can see that Nasdaq keeps rising and is at an all-time high. I still maintain that 2020 is a good year despite Covid-19.
“We always believe that the market will climb above the wall of worry. If there’s any correction or second/third wave of Covid-19, where the market could see a 5-10% pullback (on stocks like Tesla, Google and Apple), that is our golden opportunity to reload and to remount our investments,” he told SunBiz.
Nazri has an overweight call on 2020, especially for major sectors such as artificial intelligence (AR), virtual reality (VR), Internet of Things (IOT) and 5G.
“This is a narrow bull market led by technology and healthcare-related sectors.”
He explained that markets moved higher as central banks have provided stimulus and record-low interest rates to ensure more liquidity to the market.
“Once we see the vaccine, we think all of these (stimulus) will disappear and people will look at the real themes such as AR, as well as the megatrends for 2021,” said Nazri.
For 2021, he is optimistic that the market will be good, firstly due to the US presidential election, which traditionally catalyses the stock market and kickstarts a new bull market. Secondly, a vaccine for Covid-19 will stoke investor participartion along with megatrends, such as AI, coming on more aggressively.
He said the US-China trade war still remains a risk, but believes both countries will come to terms next year.
Locally, he sees limited risks as Bursa Malaysia is doing well, but pointed out that the only risk for the equity market could be a snap election.
“Malaysia has been lagging for so many years. In fact we were the worst performing stock market last year, but this year is different. People see us as a value play and this is proven by Budget 2020 and the upcoming Budget 2021 where more attention will be given to technology play, especially technology related to digital transformation, IR 4.0 and 5G.”
Nazri said stocks such as Pentamaster Corp Bhd, MyEG Services Bhd, Dufu Technology Corp Bhd and Frontken Corp Bhd are some of the biggest beneficiaries of Budget 2020.
For Budget 2021, he expects the government to give more attention to technology sectors, and those related to digital content, digital transmission, e-commerce and 5G.
“For Malaysia, our local unit trust will focus on the tech arena. This is different from the US market. We’re going to identify what are the stocks that will be the biggest beneficiary of Budget 2021 and maybe Shared Prosperity Vision 2030 and we’ll come up with the investment strategy.
“In 2021, we will do our homework again, but we expect e-commerce, digital content players, tech, digital economy players will be our main focus for our local unit trust.”
He noted that Budget 2021 and the US election outcome are important events for IPAM to refine its strategy.
“We will reassess our strategy in December. Whatever it is, we will stick with sector leaders (example, technology, US, biotech) and market leaders (top companies in that sector). IPAM focuses on US syariah stocks and that’s our expertise, because we believe that’s where the gravity is,” said Nazri.
He said IPAM’s unit trust, Dana Safi, has posted returns of about 66% year-to-date and is the best performing syariah equities fund for Malaysia unit trust fund tracked by Fund Supermart, as well as the number one syariah equity growth fund from 49 funds tracked by Lipper Investment Management (January-June 2020).
“We see that our returns have been good, we plan to launch three unit trusts specialising in global market leaders for 2021, sch as AI, VR and IOT and IR 4.0. We hope to maintain the (double-digit) returns of the existing unit trust funds that we have.”
IPAM has one local unit trust and three US unit trusts, with the stock-picking for Malaysia focusing on Budget plays, and stock-picking for US premised on global megatrends.
“IPAM products are momentum products, we look to sector leaders and market leaders. We are flexible and we adapt to the megatrends,” said Nazri.
Nazri was bullish on the prospects for 2020 before the pandemic happened – and he is maintaining his view. – ASYRAF RASID/THESUN
