KUALA LUMPUR, Oct 26 — The Budget 2016 is generally neutral in respect of its impact on most sectors, but there are some positive overtones in respect of sectors like construction, micro financiers or non-bank money lenders and education, says Kenanga Research.
It said the Special Reinvestment Allowance which had extended tax incentives for capital expenditure from 2016 till 2018, would benefit manufacturers in expansion mode like gloves, plastic packaging and semi-conductor players, in general.
In a research note Monday, it said the government’s move to increase handouts to the lower income group should improve consumer sentiment.
“However, the minimum wage increase, could negatively impact plantation players and manufacturers, but not have any significant impact on our earnings forecast.
“This is because the hike in minimum wage was widely anticipated and had been incorporated into our earnings models, with most manufacturers having started to gear towards automation in their manufacturing processes,” it added.
According to the research house, the revival of ValueCap, which is expected to start injecting fresh liquidity into the market next month, and favourable seasonal pattern, to remain supportive of the local equity market.
It estimated that a two per cent fresh capital injection into the equity market could fuel a 2-4 per cent additional upside.
Kenanga maintained its “overweight” recommendation on construction sectors as the anticipated jobs flow in 2016 would keep most contractors busy for the next four-five years.
It is also positive on education-related stock like SASBADI, which could be a potential beneficiary from the increased number of schools being built and schooling assistance, which would lead to higher demand for books.
Kenanga said increasing handouts like the building of affordable houses and a civil servants salary adjustment, will also be positive to micro-financiers or non-bank money lenders as Aeon Credit and MBSB.