KUALA LUMPUR: UOB Kay Hian Malaysia Research expects defensive sectors to modestly outperform the market as they did in the first half of 2012 (H1, 2012), amid a low interest rate environment and the global economic slowdown.
It said on Monday this would suggest investors would still pay premiums for defensive and high dividend yielding stocks.
"We advocate a highly defensive strategy and Overweight defensive sectors like gaming (specifically number forecasting operators (NFO)), telecommunications, plantation and consumer (tactical)," it said in its strategy report.
UOB Kay Hian Research said among these, gaming is the most attractive, trading in line with their historical mean price-to-earnings (PE) multiples, whereas capital gains upside for the consumer and telecommunications sectors are limited by their above-historical mean PE multiples.
The research house said however, there could be potential profit taking on historical yield plays with exceptionally low yields.
UOB Kay Hian Research said it does not think that yield plays can sustain net yields of below 5%, unless they offer strong earnings growth prospects post-2013. These include KLCC Properties (HOLD), whose net yield is expected to be around just 4.5-4.8% even after it REITs its property assets. This is unattractive vs 10-year government bonds yields of around 3.5%.
It also noted that UMW Holdings (Hold) could be vulnerable to profit taking as it provides a 2013 net yield of only 4.1% (4.9% even under an optimistic scenario), versus its historically net yield range of 3.7%-6.6%.
Two in five (39 per cent) Malaysian online consumers use credit cards as a common payment method for dining, shopping and entertainment activities.
At the same time, 92 per cent and 35 per cent use cash and debit cards respectively according to a new study from Nielsen. Nielsen is a leading global provider of information and insights into what consumers watch and buy.
The Nielsen Global Survey of Investment Attitudes surveyed more than 28,000 Internet respondents in 56 countries. The survey also showed almost two out of five Malaysian consumers are investing their money via various channels.
According of those investing, two-thirds (67 per cent) prefer mutual fund/unit trust, about half (49 per cent) prefer stocks, 27 per cent invest in gold, silver and other precious metals, one-fourth in structured investment products, 15 per cent in foreign currencies, 10 per cent in bonds and eight per cent in derivatives.
Malaysians are generally on the list of the top ten savers in the world according to the Survey. "Knowing consumers' attitudes towards wealth management while creating relevant opportunities to engage with consumers and manage their needs, is still a challenging task for financial planners and investment institutions, especially when four in ten consumers do not trust others when making financial decisions," said Head of Customised Research, Nielsen Malaysia, Luca Griseri in a statement today.
When measuring the perception on risk taking, 24 per cent of investing consumers said they are concerned about any volatility. One-fourth of investors consider themselves conservative investors, but can accept some minor fluctuation in their portfolio value.
Moderate investors who can accept potential for higher returns make up another 21 per cent, followed by those who aim for long-term capital appreciation (20 per cent).
Ten per cent indicate that they are higher risk takers who seek for highest possible returns. "With the global economic circumstances remaining uncertain, risk taking is another important consideration in closing the gap with personal investors," said Griseri.
"Overall, there emerges a sense that Malaysian consumers tend to err on the side of caution, which is perhaps not surprising in view of the negative economic outlook worldwide," he added.
The Nielsen survey is based on the behavior of respondents with online access only. -- Bernama