GST Impact: GST may spur market, auto sector

Written by Jonathan Gan at theedgemalaysia.com 

Monday, 27 January 2014 12:27

KUALA LUMPUR (27 Jan): GST might not be a piece of bad news for the local market as it could drive the stock market and power the auto sector, said Chan Ken Yew, head of research at Kenanga Investment Bank Berhad.

“If your economy is driven by a lot of private consumption, then it may be good news as there is advance buying or consumption before the GST,” said Chan at a weekend investment seminar.

Chan commented that the possibility of increased private consumption is very likely based on experiences in Singapore and Australia.

In reply to questions from the floor, Chan said GST implementation might affect the auto sector due to a potential drop in car prices after the implementation.

“GST is about 6% but so far the sales tax for cars is about 10% …car prices might actually be lower after GST implementation. Consumers probably want to wait until GST implementation to buy a car as it might be cheaper then,” he adds.

“It might be possible for the auto industry to boom after GST is implemented unless there are changes in the excise duties,” says Chan. 

Chan also highlighted that companies like Malakoff, SCH, 1MDB, and Iskandar WaterFront could go for listings this year.

In the Feng Shui and Market Outlook talk held on Saturday, Kenanga Investment Bank placed a FBMKLCI target of 1890, implying it’s 17.5 times FY14 PER and a 2020 target for the FY15.

The research house is bullish on the following sectors: construction, gaming, gloves, oil & gas, plantations, property developers and power.

For Kenanga, the bearish sectors are consumer sin stocks, education, hospital, media and Malaysian REITs

The research house also said their top 10 stock picks for 2014 are Genting (TP RM12.55), IJM (TP RM6.60), IOI (TP RM 4.95), Matrix (TP RM4.80), RHBCAP (TP RM8.75), SKPetro(TP RM5.81), SUPERMX (TP RM3.06), Tenaga (TP RM12.07), TM (TP RM5.94) and TSH (TP RM3.38)

Also present at the seminar was Feng Shui Master Kenny Hoo, who picked the best months for market gains to be February, September, July and November. The months that would see declines would be March, August and December. 

Hoo said that the lunar Year of the Horse in 2014 would be “full of opportunities” as it is the Wood Horse year.

The outlook for businesses related to wood, metal and fire would do well this year, he said.

But Hoo cautioned there might be challenges for industries involving earth and water elements.

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