UOBKH’s ‘conviction’ stock picks eye rotation to non-tech in China, bets on laggards in Malaysia
The brokerage advises investors to bank profits on Chinese tech giants and pivot to undervalued plays as markets consolidate
[SINGAPORE] As the third quarter comes to an end, investors might be wondering how to position from here on.
UOB Kay Hian (UOBKH) has released its latest alpha picks for October, which advocates for near-term consolidation and tactical rotation in Greater China, while concurrently increasing exposure to undervalued “market laggards” in Malaysia.
Greater China: rotation expected after strong momentum
Chinese equities demonstrated notable resilience in September, driven by US Federal Reserve easing and robust optimism surrounding advancements in semiconductors and artificial intelligence.
The Hang Seng Index posted gains of 7.1 per cent month-on-month while, MSCI China Index gained 8.2 per cent.
Alibaba was the standout performer among UOBKH’s September picks, soaring 53 per cent.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Despite maintaining a positive medium-term outlook, UOBKH expects near-term market consolidation.
The October strategy anticipates rotations into non-technology stocks, potentially catalysed by proposals for China’s 15th five-year plan due later this month.
Key changes in the Greater China alpha picks portfolio involve securing recent gains and adding new conviction calls.
SEE ALSO
Their strategy takes profits on top performers Alibaba and Xiaomi, and cuts losses on Anta.
Their new buys include: Galaxy Entertainment Group, expected to benefit from solid performance during the National Day holidays; Ping An Insurance Company, offering an attractive dividend yield of 5.5 per cent and an expected acceleration of earnings growth in Q3; and Trip.com, positioned as a key proxy for the rebound in outbound and inbound travel due to visa-free policies.
WuXi Biologics was added to their buy list, supported by a strong 2025 to 2026 growth outlook, driven by rising service demand for new modalities and ongoing global capacity expansion.
UOBKH also issued a sell call on Meituan, citing concerns over a subdued margin outlook and heightened investment pressure to capture market share.
Malaysia: targeting attractive trough valuations
UOBKH’s September alpha picks for Malaysia outperformed the FTSE Bursa Malaysia KLCI, generating a 6.6 per cent return versus the benchmark’s 2.3 per cent gain.
For October, the firm has chosen to increase exposure to market laggards where valuations have retreated significantly. The strategy involves tactically de-emphasising construction-related sectors which have recently outperformed.
Alpha IVF, Genting Malaysia, Inari Amertron, IOI Properties, VS Industry, PPB Group, RHBBank and Yinson Holdings, made the October picks. Several of these stocks were spotlighted to be trading near trough levels or with significant catalysts.
The new inclusions, namely Genting Malaysia, VS Industry and Yinson Holdings, are notable market laggards with potential near-term catalysts. These stocks replace Hume Cement and Northeast Group, which were impressive outperformers, and Zetrix AI.
