Malaysia's Energy Sector a Defensive Bet Amid Energy Price Risks — Market Talk

Malaysia's energy sector appears a defensive play if Middle East tensions persist and trigger a risk-off market mode, RHB IB's Max Koh and John Liew say in a note. Tenaga Nasional and other power producers have faced a limited impact from rising energy prices, as higher fuel costs are largely passed on to consumers through the monthly adjustment mechanism, the analysts say. The sector is also relatively insulated from higher gas prices, with unsubsidized gas--the fuel most closely linked to Brent crude oil--accounting for about 9% of Malaysia's power generation fuel costs, they add. RHB maintains the sector's overweight rating. Its top picks are Tenaga Nasional, YTL Power, Solarvest and Samaiden. (yingxian.wong@wsj.com)