Kuala Lumpur: CGS-CIMB Equities Research highlights potential profit risks in the real estate investment trust (REIT), manufacturing, gaming, consumer and tourism sectors during the current second quarter results season.
In a strategic note on Wednesday, the Research House said the disruption of operations due to movement restrictions to curb the Covid-19 pandemic was a major source of uncertainty in the economic outlook.
“As for ESG issues, we believe that some progress has been made in resolving the forced labor issue in the first half of 2010.
“On the political front, we will focus on Prime Minister Umno and the Prime Minister, who will vote for confidence in Congress in September (September 6-30),” the study team said.
Last week, we published a report after pitching our 2H21F economic and strategic outlook to about 220 investors. There, they shared their views on the slump in market performance in the first half and the variables notable in 2H21.
Weakness in 1H21 is associated with an increase in Covid-19 cases in the country, slower than expected vaccination rates in 2Q21, multiple blockades in 1H21, political uncertainty, forced labor, and climate change issues. He explained that it was due to the emergence of ESG concerns. And governance.
“In terms of fund flow, domestic institutional investors have gone from the largest net buyers in the first half of 20 to the largest net sellers in the first half of 21.
“Investors we met have vaccinated which companies could generate disappointing returns in the second quarter, our views on interest rates, potential political scenarios, and Covid-19 cases. 80% of the 70 population was keen to find policy options available to the government if they did not diminish after vaccination. “
As at noon on Tuesday, the government reported that 25 million people had been vaccinated. 16 million people were completely vaccinated with the first vaccination and 9 million with the second vaccination.
The number of infections increased by 19,991 to 1,299,767. Mortality rates remained above 200 on Tuesday, with the total number of deaths reaching 11,162.
Covid-19 is characterized by concerns about shrinking fiscal space and policy options when GDP growth falls below the 2021F forecast of 3.9% and 4.7%, and is a major source of uncertainty in the economic outlook. Said the research firm. To 2022F.
Investors were keen to understand where government funding would go for the country’s reconstruction plans and sources of funding.
“As expected, the unconvinced forecast for the three overnight policy rate (OPR) increases in 2022 is that clients will continue to see the delta variant wave, potential economic scars and tentative recovery prospects, limited. I suffered some resistance because I was plagued by the financial space that was being squeezed. As a development of political instability. “
However, CGS-CIMB Research believes that investors are lagging behind the curve in readjusting monetary policy, especially when inflationary pressures occur and the Federal Reserve promotes policy normalization. Said that he was accepting.
The government’s move towards gradual resumption and relaxation of restrictions on fully vaccinated individuals marks a turning point for economic recovery, except for the potential deterioration of the Covid-19 situation.
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