KENANGA TOP PICKS 2025...

Raising the bar

- 1Q25 will contain the element of wait-and-see, as a cautious ASEAN stock market recently reflects the uncertainty on how tariffs threats will play out, compounded with higher US rate expectation. These 2 conditons resemble 2018 but this time Malaysia is better placed on fundamentals amid structural themes, and has been relatively insulated.

- Amid uncertainty, investors may gravitate towards earnings and outlook visibility. Consumer sector will enjoy the minimum wage tailwind that dovetails with tourism growth. Structurally, AI/ data centre plays offer demand visibility from global big-tech capex ramp up. We also screen for names those offering good dividend yields at a reasonable valuation (exhibit 7), as we believe also that investors will likely hunt for value after recent KLCI pullback. Banks would fall under such a description.

- Borrowing from the barbell investment strategy, we pair the above more steady plays with some higher risk-reward names. This may be sectors that could be more volatile in nature such as petrochemicals and metals, but could profit from demand growth such as China stimulus. Likewise, planters and gloves though at the moment they should display strong quarterly earnings cadence.

$NATGATE / 0270 (NATIONGATE HOLDINGS BERHAD)
$MKH / 6114 (MKH BERHAD)
$WASEONG / 5142 (WAH SEONG CORPORATION BERHAD)