This article first appeared in The Edge Financial Daily on October 6, 2017

KUALA LUMPUR: Affin Hwang Investment Bank Bhd expects the vibrant capital market environment to continue next year, with the middle markets sector maintaining its prominence in the financial markets.

This will be on the back of improving economic development, stronger domestic demand and continuing investments in the infrastructure and manufacturing sectors, said group managing director Datuk Maimoonah Hussain.

“We are also seeing sizeable listings in the local bourse next year. Some of the names in the middle markets will be coming out, such as electronics and semiconductor manufacturing,” Maimoonah told reporters on the sidelines of the Affin Hwang Capital Conference yesterday.

“I don’t think the companies in the oil and gas sector would be prominently featured though,” she added.

As for the direction of the country’s equity market benchmark, the FBM KLCI, Maimoonah cheekily said: “I am looking at my crystal ball to see where it is heading to.”

Meanwhile, Affin Hwang chief economist Alan Tan Chew Leong is of the opinion that the ringgit will improve to 4.10 against the US dollar by year end on a confluence of factors that include better economic prospects and measures introduced by Bank Negara Malaysia.

“Also, the US Federal Reserve plays a factor in the movement of the ringgit. Still, I do not see a pressure on the capital outflow from this country and hence remain positive about the ringgit,” he said.

The ringgit closed at 4.2285 yesterday, a 5.98% improvement compared with 4.4975 on Jan 4.

Separately, Eurasia Group’s global markets managing director, Callum Henderson, said the ringgit is expected to trade at 4.2390 at end-2018, with the currency succumbing to material downside pressure.

“That’s not all that bad as a falling ringgit would increase the incentive for selective foreign asset class allocation,” said Henderson, who has 17 years of experience in foreign exchange research.

At the same time, Henderson also noted that given the upside risks, he would be “more worried” if the ringgit trades at 4.00 in 2018 compared with his projection of 4.2390.

“I may be wrong but that is what forecasting is all about. The ability to defend one’s argument and have a discourse on the valuation methodology,” he said.

Going forward, Deputy International Trade and Industry Minister Datuk Chua Tee Yong is confident that there is now light at the end of the tunnel when it comes to the issue of foreign labour dependency.

“Malaysia is facing an important paradigm shift in the manufacturing environment. Automation will be the key, and that manual labour will be substituted with artificial intelligence and robots,” Chua said in his keynote address, prior to opening the conference.

Attended by some 400 participants, this year’s conference organised by Affin Hwang seeks to examine the reality of economic boom and geopolitical bust in order to achieve a more informed view of future market risks and opportunities.