Alpha Picks
Strategy - Alpha Picks: Staying Defensive, Seizing Selective Opportunities
Analyst
Analyst
Highlights
- Our Oct 26 Alpha Picks outperformed the FBMKLCI (-1.0% vs FBMKLCI: -2.2%). Coraza (+20.8%) and Dialog (+9.8%) were standout winners while losers included CIMB (-11.3%) and SD Guthrie (-6.0%).
- For Nov 26, we expect Malaysian equities to remain range-bound, as persistent external uncertainties, subdued foreign fund flows and cautious investor positioning continue to constrain market upside.
- Nevertheless, October’s broad-based correction has created opportunities to selectively accumulate fundamentally sound value laggards at increasingly compelling valuation. Beyond defensives, we advocate selective exposure to domestic investment and structural growth themes, including infrastructure.
- Nov 26 picks include CIMB, CDB, Dialog, Gamuda, Gas Malaysia, KPJ Healthcare, Northeast, Petronas Dagangan, SD Guthrie and Solarvest.
What's New
- Market review for Oct 26. The FBMKLCI fell 2.2% in October. Within the BM Index sectors, utilities (+4.6%) was the only gainer. Conversely, building materials (-6.4%), plantation (-5.8%) and construction (-5.4%) saw the largest declines. Beyond the FBMKLCI universe, gloves (+25.6%) saw the highest gains alongside select subsectors of technology and oil and gas. Losers included software (-45.5%), gaming (-13.4%) and offshore contractors (-11.1%) (see overleaf table for details).
- Our Oct 26 portfolio outperformed, posting a smaller decline of 1.0% vs the headline index. Coraza (+20.8%) was the standout winner while Dialog (+9.8%) and Petronas Dagangan (+1.1%) also posted gains. Conversely, CIMB (-11.3%), SD Guthrie (-6.0%) and Northeast Group (-5.4%) were among the losers in Oct 26.
- October sell-off deepened as external headwinds intensified. The FBMKLCI extended its correction in October, declining 2.2% mom to 1,615, as mounting external uncertainties triggered renewed selling pressure. The benchmark exhibited a W-shaped trading pattern, twice testing the key psychological 1,600 support level during the first and third weeks of October, following by intermittent technical rebounds. Market sentiment remained fragile amid elevated US Treasury yields, global technology sell-off driven by growing concerns over the sustainability of AI-related capital expenditure, persistently high crude oil prices and lingering geopolitical tensions, collectively reinforcing a broader regional risk-off environment. Domestically, the absence of fresh market catalysts, coupled with selling pressure on heavyweight banking stocks, further dampened sentiment. While selective bargain hunting in construction and energy heavyweights provided some respite towards the end of the month, persistently weak market breadth underscored subdued risk appetite and limited conviction in a sustained market recovery.
- For Nov 26, we expect Malaysian equities to remain range-bound, as persistent external uncertainties, subdued foreign fund flows and cautious investor positioning continue to constrain market upside. With near-term risk-reward dynamics remaining unfavourable, we maintain our preference for defensive, high-quality large caps offering earnings resilience, strong balance sheets and sustainable dividend yields. Nevertheless, October’s broad-based correction has created opportunities to selectively accumulate fundamentally sound value laggards at increasingly compelling valuation. Beyond defensives, we advocate selective exposure to domestic investment and structural growth themes, including infrastructure, renewable energy, data centres (DC) and AI-related technology beneficiaries. Our strategy remains centred on earnings visibility, valuation discipline and selective accumulation rather than broad-based market exposure.
Highlights
- Our Oct 26 Alpha Picks outperformed the FBMKLCI (-1.0% vs FBMKLCI: -2.2%). Coraza (+20.8%) and Dialog (+9.8%) were standout winners while losers included CIMB (-11.3%) and SD Guthrie (-6.0%).
- For Nov 26, we expect Malaysian equities to remain range-bound, as persistent external uncertainties, subdued foreign fund flows and cautious investor positioning continue to constrain market upside.
- Nevertheless, October’s broad-based correction has created opportunities to selectively accumulate fundamentally sound value laggards at increasingly compelling valuation. Beyond defensives, we advocate selective exposure to domestic investment and structural growth themes, including infrastructure.
- Nov 26 picks include CIMB, CDB, Dialog, Gamuda, Gas Malaysia, KPJ Healthcare, Northeast, Petronas Dagangan, SD Guthrie and Solarvest.
What's New
- Market review for Oct 26. The FBMKLCI fell 2.2% in October. Within the BM Index sectors, utilities (+4.6%) was the only gainer. Conversely, building materials (-6.4%), plantation (-5.8%) and construction (-5.4%) saw the largest declines. Beyond the FBMKLCI universe, gloves (+25.6%) saw the highest gains alongside select subsectors of technology and oil and gas. Losers included software (-45.5%), gaming (-13.4%) and offshore contractors (-11.1%) (see overleaf table for details).
- Our Oct 26 portfolio outperformed, posting a smaller decline of 1.0% vs the headline index. Coraza (+20.8%) was the standout winner while Dialog (+9.8%) and Petronas Dagangan (+1.1%) also posted gains. Conversely, CIMB (-11.3%), SD Guthrie (-6.0%) and Northeast Group (-5.4%) were among the losers in Oct 26.
- October sell-off deepened as external headwinds intensified. The FBMKLCI extended its correction in October, declining 2.2% mom to 1,615, as mounting external uncertainties triggered renewed selling pressure. The benchmark exhibited a W-shaped trading pattern, twice testing the key psychological 1,600 support level during the first and third weeks of October, following by intermittent technical rebounds. Market sentiment remained fragile amid elevated US Treasury yields, global technology sell-off driven by growing concerns over the sustainability of AI-related capital expenditure, persistently high crude oil prices and lingering geopolitical tensions, collectively reinforcing a broader regional risk-off environment. Domestically, the absence of fresh market catalysts, coupled with selling pressure on heavyweight banking stocks, further dampened sentiment. While selective bargain hunting in construction and energy heavyweights provided some respite towards the end of the month, persistently weak market breadth underscored subdued risk appetite and limited conviction in a sustained market recovery.
- For Nov 26, we expect Malaysian equities to remain range-bound, as persistent external uncertainties, subdued foreign fund flows and cautious investor positioning continue to constrain market upside. With near-term risk-reward dynamics remaining unfavourable, we maintain our preference for defensive, high-quality large caps offering earnings resilience, strong balance sheets and sustainable dividend yields. Nevertheless, October’s broad-based correction has created opportunities to selectively accumulate fundamentally sound value laggards at increasingly compelling valuation. Beyond defensives, we advocate selective exposure to domestic investment and structural growth themes, including infrastructure, renewable energy, data centres (DC) and AI-related technology beneficiaries. Our strategy remains centred on earnings visibility, valuation discipline and selective accumulation rather than broad-based market exposure.
Analyst
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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