Dec 25, 2009

ECMLIBRA affirm overweight on call on property

Prime Minister Datuk  Seri Najib  Tun Razak  presented  the  perfect
Christmas gift  to  the Malaysian property market when he  revealed
yesterday  that  the  real  property  gain  tax  (RPGT)  of  5%  will  only apply  to property sold within 5 years of  the date of purchase. This will provide a much needed relief  to the property sector as it sends an  affirmative  signal  that  the  government  will  adopt  an
accommodative  stance  to  support  growth  in  the  property  sector.
With  the relaxation of  the RPGT regime, we believe buying interest
to pick up pace especially among upgraders who have  to sell  their
existing  properties  first. As  such, we  affirm  our  overweight  call  on  the property sector. Top picks are Sunway City and SP Setia.

We have upgraded  the property sector earlier  this month  from neutral  to overweight due to the convergence of sustained property demand, despite the RPGT, and recent price correction affecting property stocks which led us  to  believe  that  the  property  sector will be an outperformer going  into 2010. 

We  believe  developers  with  residential  properties  catering  to middle  to upper-middle  class  such  as Sunway City  and SP Setia  to  benefit  from strong demand and hence, rate these two as our top picks for the sector.

Among non-rated property stocks, we also like IJM Land and Mah Sing.

source : ecmlibra