KUALA LUMPUR: Affin Hwang Capital expects the FBM KLCI to rebound this year, despite the heavy sell down in 2018.

The firm said although the FBM KLCI was down by 1.3 per cent year-to-date, there had been a rotation into stocks that were heavily sold down last year.

“Given that investor expectations have been revised lower and valuation multiples have derated quite significantly, we think that some of these heavily sold-down stocks could rebound rather quickly, especially in the KL Construction Index, one of the poorest-performing sectors in 2018,” Affin Hwang said in a report today.

The firm has screened its coverage of 119 stocks and highlighted those with a “buy” rating

In the large capitalisation (large-cap) space exceeding RM1 billion, among stocks with over 50 per cent upside potential to their target prices (TP), Affin Hwang named Genting Bhd, Inari Amertron Bhd and Globetronics Technology Bhd as stocks that are attractive.

“For the mid-small cap names, Bumi Armada Bhd, JAKS Resources Bhd, Gabungan AQRS Bhd, Tune Protect Group and Velesto Energy Bhd fall into this criteria, which we deem as attractive given the stock-price pullback and their respective TP upside potential.

“We highlight Jaks, Velesto and AQRS as our high-conviction alpha picks three in our universe of 119 stocks under coverage that we believe will generate significant price upside for 2019.”

The firm sees value in Jaks’ Vietnam power plant and thinks that the company’s property issue should be resolved by this year.

For Velesto, it said better job opportunities will likely fuel an earnings recovery, while positive newsflow on the construction sector should see investor confidence returning to AQRS.

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