Regional Plantation: Volatility Is The Name Of The Game
We expect yet another volatile year for CPO prices – similar to last year – due to the recovery in CPO output which we anticipate to start coming through after 1Q17. This should result in a moderation of prices. Demand remains unexciting, given China’s predilection for soybean which remains in abundance, while India has yet to get over its currency issues. We maintain our NEUTRAL sector call. We favour selected big-cap counters like KLK, Sime Darby, Golden Agri and London Sumatra – being high-beta stocks which would fare well in a volatile environment.
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