JPMorgan underweight on Malaysian equities

By Chong Pooi Koon

JPMorgan's year-end target for FBM KLCI is 1,400 points, or a 8.3 per cent potential upside from yesterday's close of 1,292.85.

US INVESTMENT bank JPMorgan has an underweight call on Malaysian equities this year, citing limited upside potential.

JPMorgan's year-end target for the FTSE Kuala Lumpur Composite Index is 1,400 points, or a 8.3 per cent potential upside from yesterday's close of 1,292.85.

Apart from Malaysia, JP- Morgan predicts that China shares are likely to underperform even though the country's economy may continue to do well.

JPMorgan's chief equity strategist for Asian and emerging markets, Adrian Mowat, said overall, the technology sector will likely lead the economic recovery this time and investors can buy shares of these companies to ride on the theme.

It is bullish on banks in most countries, as well as Internet and media firms in China, Turkey, South Africa and Russia.

Mowat said investors may do better buying stocks in Taiwan, India and Thailand, among emerging markets. It is also bullish on the Philippines, Mexico and Turkey.

"Last year, when the world was battling the recession, you gain if you buy into a certain country ahead of the recovery. But this year, everybody's growing, the question is the pace of growth and how that growth will affect earnings," he said in a presentation to clients in Kuala Lumpur yesterday.

The stock-picking strategy this year has hence shifted from one based on macro policies to a more specific analysis of individual company's earnings ability, he said.

On the other hand, investors should avoid investing in utilities, cement companies in India and China, banks in Australia and Hong Kong, and consumer staples producers in India, Indonesia, Brazil and Mexico.

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Traderone : More and more coming out to predict that number. Will more make it more believable? Only time can tell. Lets track them in one year's time.