KUALA LUMPUR (May 18): Malaysia is better-positioned than some of its Asean peers to weather the current market, as consumer confidence is looking forward to a boost from the new Pakatan Harapan government, which is on a trail to fulfilling its campaign promises to alleviate the cost of living, according to strategists at DBS Group Ltd.

“Amidst rising interest rates and a stronger US dollar, stock markets in Indonesia and the Philippines were the worst performers in Asia ex Japan, versus the 3.2% year-to-date gain in the Kuala Lumpur Composite Index (KLCI),” DBS strategists Philip Wee and Joanne Goh, said in a note to clients today.

“Domestic sentiment is positive that fuel subsidies will be reintroduced soon,” added DBS, which has thrown a 'Malaysian equities boleh' pun that could mean a brighter outlook, to be the note’s headline today.

One week after the 14th general election which saw an uprecedented shift of power, and ousted the Barisan Nasional-led coalition, the newly-formed Pakatan Harapan government has announced the decision to reduce rate of the highly unpopular goods and services tax to 0% effective June 1, from 6% currently.

Despite painting a positive picture, DBS cautioned investors on the need to be mindful of currency fluctuations from fiscal challenges later in the year.

For now, DBS noted that the newly appointed Council of Eminent Persons, which comprised of notable figures like former finance minister Tun Daim Zainuddin and former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, has affirmed achieving a balanced budget as a major goal for the new government.

“Until more details become available, rising energy prices is considered positive for this net oil exporter amidst confidence that growth will hold up above 5% this year,” DBS added.

As for the country’s benchmark index, DBS views the KLCI to gain to 1,950 points by end-2018, from 1,854 points yesterday.