This article first appeared in The Edge Financial Daily on November 19, 2019

PETALING JAYA: The FBM KLCI will trend higher but is not expected to hit any fresh peak, said Rakuten Trade Sdn Bhd head of research Kenny Yee, who forecasts the benchmark index to climb to 1,750 points at the end of next year.

He anticipates the index to end the year at 1,630 points, about 25.64 points or 1.59% from yesterday’s closing of 1,604.36 points.

“We also expect some sort of window dressing to occur over the next one-and-a-half months,” he said.

Speaking to reporters yesterday on the Malaysian stock market outlook, Yee said the market condition is “still gloomy” and there is an absence of fresh catalysts, amid the uncertainty coming from the US-China trade war. The recent dire situation in Hong Kong did not help as well.

Commenting on corporate earnings, he expects some improvements in the third quarter (3Q) earnings result which will in turn lend some support to the market. Still, corporate earnings growth is expected to decline 3.3% this year among the companies that are under Rakuten coverage, he added.

However, Rakuten expects 5.8% growth in corporate earnings in 2020.

Yee said blue chips in Malaysia are under-owned by foreign funds and that banks’ share prices are expected to pick up, given their current “low bases”.

“Blue chips are under-owned by foreign funds currently and are ripe for the picking in the event of a turnaround,” he said, adding Rakuten expects foreign fund inflow into the Malaysian stock market in 1Q of 2020.