KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
RHB Research has kept a 'neutral' rating on the non-bank financial sector, urging a selective investment approach amid catalysts such as the anticipated US Federal Reserve rate cut cycle and Malaysia's civil servant salary revision. While the sector holds potential, not all players are expected to benefit equally due to varied valuation profiles.
RHB recommends prioritizing undervalued high-growth stocks or those with potential dividend upsides. Among its top picks are Bursa Malaysia Bhd (TP: RM11.25) and AEON Credit Service (M) Bhd (TP: RM8.80).
Bursa Malaysia posted a strong performance in the first half of 2024, with a net profit of RM155.5 million, benefiting from a robust initial public offering pipeline and trading liquidity. Additionally, the firm hinted at the possibility of special dividends, citing Bursa's cash surplus.
AEON Credit is favored for its digital banking platform and undemanding valuation, while Syarikat Takaful Malaysia Keluarga Bhd is preferred over Allianz Malaysia due to its lower exposure to participating contracts, allowing it to retain more investment returns.
Although underwriting margins for insurers dipped due to higher claims and acquisition costs, investment returns improved by over 30% year-on-year due to marked-to-market (MTM) gains, which are expected to further benefit from global rate cuts.
In the non-bank lender segment, AEON Credit met expectations, while RCE Capital Bhd and ELK-Desa Resources Bhd fell short due to slower disbursements and higher credit costs.
Moving forward, RHB sees high-growth potential in specific stocks and dividend upside as key drivers for the sector.
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