PETALING JAYA: The shaky two-week ceasefire announced on Tuesday between Iran and the United States can offer investors opportunities to explore laggard counters if sentiment continues to improve.
MBSB Research remains wary of the conflict re-escalating despite the positive market reaction on Wednesday, noting that the conditions for a permanent cessation of hostilities have yet to be met.
The research house expects possible re-escalation, albeit with less intensity, based on recent history.
“As such, we opine that the next two weeks will be one that requires full alert,” it said.
MBSB Research noted that the positive market reaction following the ceasefire announcement saw previously underperforming stocks outperform, particularly in the technology, construction, consumer, financial, and real estate investment trust (REIT) sectors.
Its top picks, all with “buy” calls, include Gamuda Bhd, Sunway Construction Group Bhd, Malayan Cement Bhd, Leong Hup International Bhd, MR DIY Group (M) Bhd, 99 Speed Mart Retail Holdings Bhd, Pavilion Reit, Axis-REIT, Mah Sing Group Bhd, Matrix Concepts Holdings Bhd, CelcomDigi Bhd, Hong Leong Bank Bhd, AMMB Holdings Bhd and Tasco Bhd.
However, it also recommends investors to tactically seek cover among defensive stocks should the situation worsen.
“While this stability and attractive dividend yields should moderate the downside risks, we are not discounting the potential for price appreciation due to undervaluation as we have observed defensive sectors also being a bit of a laggard,” it added.
In addition to market laggards, its recommended defensive stocks, all with “buy” calls, include YTL Power International Bhd, Pekat Group Bhd, Ranhill Utilities Bhd, Tenaga Nasional Bhd and QL Resources Bhd.
HLIB Research said the benchmark FBM KLCI may extend its technical rebound, supported by tentative improvements in risk sentiment.
“However, trading is likely to remain choppy and headline-driven, with sentiment hinging on developments around the Strait of Hormuz – particularly its reopening and sustained stability,” it said.
“Overall, geopolitical risks remain elevated, with Tehran accusing ceasefire violations and questioning the viability of peace talks following reported Israeli strikes on Lebanon. Any escalation or breakdown in negotiations could quickly reverse recent gains,” it added.