Monday, May 25, 2020
Post Virus Rally
Local players have managed to surprise and scare themselves at the same time when we kept recording massive volumes for a few days. The super charging train was stopped dead in the tracks when the profit taking set it. Even so, judging from the depth and breadth of players, the profit taking was well absorbed.
True, most of the activity entered on smaller caps, but it did switched to larger caps as well. The rotational play will continue way into Raya period when we come back from holidays.
If small caps are too risky for you, have a look into the High Speed Rail play. It was reported in the May 18024 edition of The Edge, that the HSR will be revived soon. The key partner should be Japan.
The timing could be key here as there was a DEADLINE set in September 2018, that by the end of May 2020, a proper announcement will be made. The cost which started at RM100bn, has since been whittled down to RM40bn-RM72bn. The scaled down project will involve stops at Bandar Malaysia, Sepang-Putrajaya, Seremban, Melaka, Muar, Batu Pahat, Iskandar Puter and Jurong East.
MRCB and Gamuda had received and accepted a 50-50 jv from My HSR Corp as project delivery partner from Bandar Malaysia-Melaka stations. SP YTL-TH Properties was supposed to do the southern 200km link. There should be 60 civi works packages, which should result in 5,000 sub contract packages.
However there are indications that Putrajaya wants to do away with the PDP structure, hence the players may change or the terms altered.
Owing to the pandemic, there isn't a better to to start the project immediately. It makes economic and and will jumpstart sufficient activity to provide a much needed lifeline for the small firms.
Senior Minister for International Trade & Industry Azmin Ali, has said that the government will announce a 6-month short term recovery plan by the end of May 2020. After which, a medium-term revitalisation plan under Budget 2021 will be tabled in November 2020.
Maybe its a slow week for news, but TheEdge had another article in the May 25-31 edition, saying that the HSR may cost RM68bn.
At the end of the day, the top beneficiaries will be Ekovest and IW City.
You will notice from both charts of IW City and Ekovest that they were readying to surge a few days back but were caught up in the massive profit taking after 3 straight days of huge volume activity. From the above analysis, it is highly likely that both will resume its uptrend. Initial target levels of 80 sen and 70 sen for IW City and Ekovest look like attainable.
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