As the world is planning for economic growth in the face of promising Covid-19 vaccines, the play on recovery stocks led the way for investors, with a shift in sectors in the spotlight, an improvement in plantation-related stocks, among others, and a shift away from healthcare-related stocks.
Kenny Yee, Head of Research, for Rakuten Trade Sdn Bhd shared his view on the matter.
According to the Council of Palm Oil Producing Countries, palm oil prices will continue to rise in the first half of 2021 and this has given plantation related stocks a new lease on life.
“Like other sectors, global recovery post-Covid-19 is creating pent-up demand for most commodities. We continue to be bullish on plantation stocks despite the return of the palm oil export duty come January 2021.
As for CPO prices, we reckon it may stay above the RM3,000 per tonne level with RM4,000 being a main hurdle in the coming months,” Kenny said.
He then addressed, with crude prices at current levels, biodiesel remains a not too attractive proposition given its price point and the expected export levies being a source of revenue for the industry.
“Implementing the Malaysian biodiesel mandate will remain a challenge in 2021 despite its advantages as a more sustainable fuel for the future,” he added.
Additionally, he highlighted that technology stocks would remain in favour, but it depends on the valuation of individual stocks. “As for our top picks for technology stocks, we would recommend VIS-Dynamics, JCY International Bhd, Elsoft Research, Inari, and MI Technovation Bhd,” he shared.
Kenny also stated that Rakuten believes that smaller caps will take the lead in 2021 following the completion of re-jigging of portfolios and supported by the persistent inflow of funds from retail investors who will continue to be key market participants.
“Small caps stocks which we would recommend are Supercomnet Technologies, AppAsia, RCE Cap, TCS Group, and Dnonce. Blue chips and big-cap stocks will still play a dominant role, but we expect to see heightened and sustained participation in small caps after a point given their value and growth potential,” he commented.
Furthermore, he also mentioned that the Securities Commission’s plan to lift the ban on regulated short selling (RSS) in 2021 is intended to enhance the vibrancy of the equities market, and the immediate impact of RSS would be the cap on gains, especially for blue chips.