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CIMB: Budget to have 'muted impact' on stock market

KUALA LUMPUR (Oct 1): CIMB said early today (Monday) that the Budget 2013 will have little impact on the stock market on the whole as there are very few obvious winners or losers.

In a detailed research report analysing the impact of the Budget announced last Friday, it said: "Despite a Budget brimming with goodies for practically all strata of society, we foresee a muted impact on the stockmarket as there are few obvious winners or losers."

Hence, CIMB said: We retain our Neutral weighting on Malaysia, end-2012 KLCI target of 1,650 points and end-2013 target of 1,730 points based on an unchanged 5% discount to the 3-year moving average P/E."

Key winner: Telco sector
CIMB said the key winner appears to be the telecommunications sector. Youths aged 21-30 with monthly incomes of up to RM3,000 will get a one-off rebate of RM200 if they buy a 3G smartphone. Some 1.5 million youths stand to benefit.

"This move will bolster the take-up of smartphones and drive demand for small screen data, which make up 10%-12% of the cellcos' revenue."

The report added that due the absence of "sin" taxes, the tobacco and brewery sectors must be breathing sighs of relief. Indeed, stocks from these two sectors were already rising ahead of the Budget on Friday.

Losers: Property sector, sugar manufacturers
CIMB said the property sector "is the clear loser".

It commented: "While the 5% point hike in RPGT [real property gains tax] for the first five years is certainly not positive, the quantum is lower than widely feared. The impact on developers should be mild as the RPGT rate after the 2-3 year construction period is only 10%."

The other loser is the sugar manufacturers as the increase in sugar prices may affect sales.

An election budget for sure
As the general election has to be called by mid-2013 and is the last budget before election, it has to be an election budget.

"As expected, the Budget was chock-full of goodies for a wide spectrum of society — women, children, youths, civil servants, armed forces, senior citizens, students, the disabled, the low-income group, taxpayers and first-home buyers," CIMB noted.

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