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Economic Stimulus Plan: Beyond Covid-19

Our Prime Minister will be speaking later today at 3.00 pm in regards to the upcoming economy stimulus plan. As you may have known, the 3 segments that the government are targeting will be (i) Empowering People, (ii) Propelling Businesses, and (iii) Stimulating the Economy.

Our Prime Minister will be speaking later today at 3.00 pm in regards to the upcoming economy stimulus plan. As you may have known, the 3 segments that the government are targeting will be (i) Empowering People, (ii) Propelling Businesses, and (iii) Stimulating the Economy.

 
Hence, we believe that the market participants will be focusing on item number 3. Under the Covid-19 environment, most of the external slowdown was due to supply chain disruptions in the global arena (which we can’t really dictate the pace of the recovery).

However, in the domestic scene, a few things that we could watch out, (i) construction, (ii) property and (iii) automotive. All the sectors mentioned are based on the observation of trading interest ahead of the announcement (as we understand the market is always forward-looking).
With that, the construction sector was traded actively in the past few days. These could be some signs pointing towards potential megaprojects to be announced in the near term. From what we understand, the multiplier effect of two, for RM1 investment in construction activities, it will generate RM2 in more than 120 related economic activities, this could result in pump-priming activities moving forward (i.e. rolling out of mega infrastructure at an earlier date). Some of the potential trading stocks that look attractive at this juncture based on market movement could be: ADVCON, ECONBHD, GBGAQRS and GAMUDA.

Similarly, after the Home Ownership Campaign news article last week, property sector has been heated up, we have noticed huge trading interest last week, we assume that a potential property relief measure may be seen in the short term relief plan. Some of the potential trading stocks that look attractive at this juncture based on market movement could be: SPSETIA, MAHSING, ECOWLD, UEMS.

Meanwhile, automotive stocks have been traded actively since morning, market participants could be speculating for relief measure under this segment (but in our view unlikely). Nonetheless, you may ride along with the trend; stocks to watch would be DRBHCOM, UMW, BAUTO based on the recent technical breakouts.

Watch out for a brief comment by our Research Team on the Stimulus Plan, after the announcement today

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Swift recovery

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