Friday 29 Mar 2024
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KUALA LUMPUR (Oct 28): AmBank Research said that Budget 2018 with its emphasis to lower the fiscal deficit to 2.8% of grodd domestic product (GDP) in 2018 from 3.0% in 2017 supported by higher revenue on the back of better-than-expected GDP growth of 5.7% for 2017, should bode well for the capital market.

In an economic update Oct 27, AmBank Group chief economist cum head of research Anthony Dass said with such a commitment in place, the implementation is expected to see some improvement in foreign appetite for bonds and equites, especially with Budget 2018 being more redistributive rather than aggressively expansionary.

However, he said the upside appetite could be fairly limited in part due to the impact of rising US interest rates and the Fed’s decision to unwind its balance sheet.

“We reiterate our 10-year Malaysian Government Securities (MGS) yields at 3.95% – 4.00% for 2017.

“We project the 10-year MGS yields would hover around 4.00- 4.05% levels in 2018.

“As for the FBM KLCI, we maintain our end-2017 target of 1,745 points and 1,900 points for end-2018 based on 17.5x 2017F and 2018F earnings at a 1x multiple premium to the 5-year historical average of about 16.5x,” he said.

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