KUALA LUMPUR (March 20): MIDF Research has maintained ist FBM KLCI year-end 2015 target of 1,900 points and said consensus expects a rebound in earnings growth next year.
In a strategy note Friday, the research house said five major sectors, namely (i) Banking, (ii) Telecommunication, (iii) Plantation, (iv) Oil & Gas, and (v) Utility made up more than four-fifth of the total market capitalisation of FBM KLCI constituents
It said as the FBM KLCI was the recognised benchmark among many market participants, overweighting on its sectorial price outperformer may help in the quest to generate excess investment return
“Insofar as the relative valuation of the major sectors is concerned, the current year price earnings ratio (PER) multiple paints a different picture
“Overweight decision based on price earnings growth assessment,” it said.
MIDF Research said that based on the recent FOMC statement, the US economic growth and inflation were now expected to be lower than previously estimated.
Thus it said a plausible implication was that the US interest rate may not likely be raised so soon or at least a string of hikes is not forthcoming.
“This latest development could mean better days ahead for the ringgit. And by extension, the local equity market may benefit from favourable flows of foreign funds.
“We maintain our FBM KLCI baseline 2015 year-end target to 1,900 points, with the upper and lower bounds at 1,950 points and 1,850 points respectively,” it said.