MCO 3.0 likely to be less painful than previous MCOs - CGS-CIMB

KUALA LUMPUR: CGS-CIMB has maintained its view that the Movement Control Order 3.0 (MCO 3.0) is likely to be less painful than past iterations.

However, the stockbroking firm is concerned that corporate earnings risks could rise if the current measures fail to flatten the COVID-19 infection curve within the next month, as the pace of the national immunisation programme for COVID-19 is likely to only pick up in June when more vaccines arrive for Phase 3.

"Concerns over increasing COVID-19 cases could dampen near-term sentiment and prompt investors to profit-take on recovery play stocks (banks, auto, real estate investment trusts, property, construction and tourism-related names) as well as names that have done well.

"Some investors could switch to defensive plays such as utilities, telco and glove makers," it said in a note today.

On May 8, the government announced that the Kuantan district in Pahang as well as several districts and sub-districts in Penang and Perak will be placed under the MCO from May 10-23.

They will be joining Kelantan, Kuala Lumpur, some districts and sub-districts in Johor, Terengganu, Selangor and Kedah, which were earlier placed under a targeted MCO.

The government also announced a ban on all inter-district and inter-state travels, as well as social functions by the public and private sectors starting from today until June 6.

It had also ordered the three-day closure of potentially high-risk premises identified by the Hotspots Identification for Dynamic Engagement (HIDE), which includes major malls in Kuala Lumpur and Selangor, effective till May 11.

-- BERNAMA