The FTSE Bursa Malaysia (FBM KLCI) is expected to end the year 2021 at 1,770 following being driven largely by confidence in the global economic recovery after the world bounced back from the COVID-19 crisis as well as a better outlook on earnings.
In a research note by AmInvestment Bank yesterday, the investment bank said it believed investment policies focused on recovery starting at the end of 2020, would continue to grow until entering 2021.
“Investors will continue to formulate a recovery agenda, which is basically on strong names in the banking, energy, oil and gas, consumer, real estate investment trusts (REITs) and transport sectors, as well as reducing their holdings in related sectors dealing with pandemics and selected high-priced technology stocks, ”he was quoted as saying by Bernama.
Although the FBM KLCI may rise higher as investors play an important role in making profits especially on index-linked banking stocks, the FBM KLCI has the potential to be dragged down due to weakness in pandemic-related stock prices, particularly glove stocks.
Meanwhile, AmInvestment Bank said the base of banking stocks should increase in line with the economic recovery.
"Although clarity is still lacking on the extent to which damage to businesses due to the pandemic is irreversible, we feel relieved that banks have begun to make initial provisions in the form of" management overlays ", in addition to allocations based on changes to macroeconomic factors," he said.
AmInvestment Bank added that other key sectors ready to benefit from the recovery were the energy sector amid rising demand for electricity, mainly from the commercial and industrial segments, ports following higher increases in global trade recovery, airports after reopening borders and the consumer sector due to the provision of cash and the recovery in the job market to sustain consumption.
