AffinHwang Capital introduces 2017 KLCI year-end target of 1,760

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KUALA LUMPUR (Nov 3): AffinHwang Capital Research has maintained its “Positive” stance on Malaysia with a 2017 year-end FBM KLCI target of 1,760 and said it has not been a normal year in 2016 with the breadth of headwinds buffeting financial markets.

In a strategy note today, the research house said Malaysia was not alone in hoping for a more sedate 2017.

“Our assessment points to a Fed funds rate hike becoming a major focus in 2017. We build a DCF model to assess the impact of a Fed hike on the US stock market and the FBM KLCI.

“We have highlighted before that Malaysia is on a significantly better footing to weather a Fed hike given its positive savings-investment gap, fiscal consolidation trajectory, high foreign reserves, positive interest rate differential over the US and ample liquidity in the financial system,” it said.

The research house said nonetheless said Malaysia’s current account surplus narrowed in 2Q16, prompting fears of a further deterioration.

“Our analysis indicates that this should mark the trough, barring further external weakness.

“We introduce our 2017 year-end KLCI target of 1,760 with reasonable upside from current levels. Hence, we remain Positive on Malaysia,” it said.