Plantation-related stocks expected to remain in limelight this year, says Rakuten Trade

PETALING JAYA: Plantation-related stocks are expected to continue to receive investor interest this year, thanks to the rise in crude palm oil (CPO) prices and the vaccine-driven recovery creating pent-up demand for commodities, according to Rakuten Trade’s head of research, Kenny Yee.

He said it continues to be bullish on plantation stocks despite the return of the palm oil export duty this month.

“As for the CPO price, we reckon it may stay above the RM3,000 per metric ton level with RM4,000 being a main hurdle in the coming months,” he said in a press statement.

In regard to the impact of the biodiesel mandate this year, Yee notes that biodiesel remains a not-too-attractive proposition given its price point and the expected export levies being a source of revenue for the industry, at the current crude prices.

He opined that the implementation of the Malaysian biodiesel mandate will remain a challenge in 2021 despite its advantages as a more sustainable fuel for the future.

On the matter of tech sector recovery stock plays, the head of research agreed that those will remain in favour but cautioned that it will depend on the valuation of individual stocks.

For the sector, the research house’s top picks are Visdynamics Holdings Bhd, JCY International Bhd, Elsoft Research Bhd, Inari Amertron Bhd, and MI Technovation Bhd.

In the year ahead, Yee believes that the smaller caps will take the lead despite the challenges of the previous year, following the completion of rejigging of portfolios and supported by the persistent inflow of funds from retail investors who will continue to be key market participants.

For small-cap counters, Rakuten Research recommends Supercomnet Technologies Bhd, AppAsia Bhd, RCE Capital Bhd, TCS Group Holdings Bhd, and Dnonce 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,” Yee said.

As for the lifting of the regulated short-selling ban in 2021 by the Securities Commission, he opined that although the move is intended to enhance the vibrancy of the equity market, its immediate impact will be a cap on gains, especially for blue chips.