THE world is gearing up for economy recovery in the face of successful COVID-19 vaccines.
The recovery theme came to prominence as 2020 came to a close with a shift from healthcare-related stocks to laggards which include travel-related, banking and plantation stocks, to name a few economic sectors.
Below are excerpts of the views of Rakuten Trade Sdn Bhd head of research Kenny Yee on the stock market direction in 2021:
Q: Rising crude palm oil (CPO) price is giving plantation-related stocks a new lease on life. Can you comment on the anticipated CPO price movement in the months ahead?
A: Like other sectors, global recovery post COVID-19 is creating pent-up demand for most commodities. We continue to be bullish on plantation stocks despite the return of the palm oil export duty come January 2021.
As for CPO prices, we reckon it may stay above the RM3,000 per tonne level with RM4,000 being a main hurdle in the coming months.
Q: Can you comment on the impact of biodiesel mandates on CPO price in 2021?
With crude prices at current levels, biodiesel remains a not too attractive proposition given its price point and the expected export levies being a source of revenue for the industry.
Implementing the Malaysian biodiesel mandate will remain a challenge in 2021 despite its advantages as a more sustainable fuel for the future.
Q: What is your stand on technology-related companies/stocks?
Technology stocks would remain in favour, but it depends on the valuation of individual stocks.
As for our top picks for technology stocks, we would recommend VIS-Dynamics Holdings Bhd, JCY International Bhd, Elsoft Research Bhd, Inari Amerton Bhd and MI Technovation Bhd.
Q: How will smaller or mid-cap stocks fare in 2021 vs blue chips as bigger isn’t always the better?
Despite the challenges of 2020, we believe smaller caps will take the lead in 2021 following the completion of re-jigging of portfolios and supported by the persistent inflow of funds from retail investors who will continue to be key market participants.
Small caps stocks which we would recommend are Supercomnet Technologies Bhd, AppAsia Bhd, RCE Capital Bhd, TCS Group Holdings Bhd and D’nonce Technology Bhd.
Blue chips and big cap stocks will still play a dominant role, but we expect to see heightened and sustained participation in small caps after a point given their value and growth potential.
Q: The Securities Commission (SC) is planning to lift the ban on regulated short selling in 2021. How will this impact the equities market and economic recovery in the short-term?
While the intention is to enhance the vibrancy of the equities market, the immediate impact of RSS would be the cap on gains especially for blue chips. – Jan 4, 2021
