Opportune moment to rebalance portfolio during World Cup 2018

The World Cup provides an opportune time for investors to have a relook at their portfolio of stocks to assess the performance of each stock in the portfolio, MIDF Research said, while at the same time conduct screening in search of undervalued stocks to add to their portfolio. — Reuters photo

KUCHING: Football fans are not the only ones excited by the start of FIFA World Cup 2018 in Russia yesterday til July 15 as analysts said it was an opportune time for investors to rebalance their portfolios.

This comes as the analyst team at MIDF Amanah Investment Bank Bhd (MIDF Research) said there was no clear sector outperformer during World Cup.

Out of the eight sectors tracked by the firm, five outperformed during World Cup period while another three underperformed. The outperformers are construction, consumer, property, industrial products and technology, while the underperformers are trading and services, plantation and finance.

The range of performance during the World Cup is between minus 2.55 and minus 0.46 per cent, it added

“Based on our observations in the year before, during and after the World Cup, trading velocity in the Malaysian market is profoundly lower during the World Cup compared to the years before and after the World Cup,” it said in its strategy report yesterday.

“For example, the average velocity during the 2014 World Cup held from June 12 to July 13 stood at 30 per cent compared to 36 and 26 per cent in 2013 and 2015 respectively.

“This was the same case for the 2010 World Cup where the average velocity during the event was at 28 per cent, lower than 49 and 32 per cent in 2009 and 2011 respectively. Moving forward, we expect the trading velocity in Malaysia during the 2018 World Cup to be subdued not just because of this event but also due to the festive season.”

This provided an opportune time for investors to have a relook at their portfolio of stocks to assess the performance of each stock in the portfolio, MIDF Research said, while at the same time conduct screening in search of undervalued stocks to add to their portfolio.

“Markets in the emerging economies, including Malaysia, are facing headwinds from geopolitical events and outflow of foreign funds, which had affected their year-to-date performance.

“Therefore, investors could a take a look at stocks with a strong fundamentals and significant price upside, and companies with good dividend yields.”

For the FBM Kuala Lumpr Composite Index (FBM KLCI), MIDF Research anticipated positive FBM KLCI returns during the World Cup period although it underperformed the return in the previous year.

“For the FBM KLCI, average market return during World Cup period is minus 2.16 per cent. However, average market return one year before World Cup period is minus 0.69 per cent.

“Hence, the market return remains negative during World Cup period although it underperforms the previous year return by minus 1.47 per cent. In the latest data for World Cup 2014, FBMKLCI return was 0.50 per cent as compared to same period in 2013 return of 0.59 per cent.”

Looking at international indices, among the seven countries tracked by MIDF Research, only four countries had seen increases in its value traded which are the UK, France, Germany and Japan.

Meanwhile, China, Hong Kong and Malaysia underperformed during the period of the World Cup. Most markets had lower volume.

“As for volume traded, five out of seven countries had lesser volume traded in its stock market when the World Cup was held, which are France, Germany, China, Hong Kong and Malaysia,” it said.

Thus, MIDF Research maintained its FBM KLCI year-end target of 1,800 points as it did not expect World Cup event to change the fundamentals of all stocks under its coverage.

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