CGS-CIMB Research, which recently lowered its end-2022 FTSE Bursa Malaysian KLCI (FBM KLCI) target, recently believes that several factors including a vote of confidence win in the newly elected prime minister (PM) in Parliament could still move the market higher.

Apart from Datuk Seri Anwar Ibrahim (picture) overcoming any resistance in the Dewan Rakyat session that will be held on Dec 19, the research house also noted that market sentiment may improve on the expectation of a slower rate hike, as well as relaxation of China’s zero-Covid policy.

The research house lowered its end-2022 target for the FBM KLCI to 1,558 points from its previous target of 1,602 recently. However, CGS-CIMB Research is projecting the FBM KLCI to edge higher to 1,619 points by the end of next year.

Analysing KLCI’s historical data for the month of December, it noted that market performance tends to be positive with average 2.2% and 3.5% month-on-month returns over the past 10 years and 44 years, respectively.

CGS-CIMB Research said in the month of December 2022, investors’ attention will be on the economy, corporates, global and politics.

Investors will be focusing on how the new unity government under the leadership of PM Anwar’s plans to tackle the rising cost of living, shortage of foreign workers and reduce corruption.

The Dec 19 special parliamentary meeting and potential tabling of the partial budget ahead of the re-tabling of Budget 2023 will be closely watched. Investors will also focus on the US Federal Reserve meeting during Dec 13-14 Dec 2022, it added.

On the corporate side, it said that the market will be tracking views of the newly appointed cabinet ministers relating to Digital Nasional Bhd and a single wholesale network for 4G.

Also in focus will be the government’s push for targeted subsidies, austerity and open tenders for government procurement projects.

Externally, it noted that investors will keep an eye on the latest developments in the Russia-Ukraine war, global inflation, US 10-year bond yields, China’s plans to soften zero-Covid policy and global interest rates.

Lastly, it said that investors will be monitoring the outcome of polling for the Padang Serai parliamentary seat in Kedah and Tioman state seat in Pahang on Dec 7, 2022.

“Also in focus will be the special parliament sitting on Dec 19, 2022, where a motion of confidence in the PM could be tabled, it said.

CGS-CIMB Research’s new top three picks are Malaysia Airports Holdings Bhd (replacing Genting Malaysia bhd), MR DIY Group (M) Bhd, and RHB Bank Bhd.

We stay short-term positive against the 1,430 level for Dec 22 as seasonally, 

Although CGS-CIMB Research pointed out that December is generally a ‘positive’ month for the market, it remains short-term positive against the 1,430 level for the month.

“Support is seen at 1,450 followed by the critical 1,430. Any close below the critical level would eliminate any bullish potential for the months ahead,” it said. — TMR / pic by Bloomberg