Market Update
- The Government announced a fuel price hike involving petrol, diesel, LPG and sugar. The fuel price hikes were on an even more gradual basis than that proposed by Pemandu at the end of May, and the market’s reaction will likely be relatively muted.
- However, the market will now be anticipating future measures, including price hikes for natural gas and electricity. This will be positive for TNB (if the fuel cost pass through mechanism is approved), but negative for energy-intensive industries like building materials and rubber glove manufacturers. We note however,
that rubber glove manufacturers normally are able to pass on the higher costs with a short time lag.
- Overall, we continue to advocate a bottom-up strategy, preferring stocks with strong underlying businesses, good management and robust balance sheet.
RHB Equity 360° - 15 July 2010 (Market, PLUS, Tanjong, Gamuda; Technical: Kencana)
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