Thursday 28 Mar 2024
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KUALA LUMPUR (Jan 16): The FBM KLCI can see some recovery this year as investors are likely to take advantage of the market's undervalued status, says Manulife Investment Management (M) Bhd.

Its head of Total Solutions and Equity Investments Tock Chin Hui said the Malaysian market is currently undervalued in terms of price-to-equity ratio (PER) and price-to-book value (P/BV) when compared to US markets and Asian markets — with the exception of Japan.

She noted the KLCI is trading at a PER of 15.7 times at a 0.4 standard deviation of its 10-year average.

Meanwhile, its P/BV is 1.6 times, a -1.6 standard deviation of its 10-year average.

Tock said there is now a fragile economic growth, which is being driven by pockets of recovery.

"Disappointments are there, but we are seeing pockets of recovery," she said when presenting Manulife's 2020 outlook.

She noted the electrical and electronics sector has been benefiting from trade diversion as a result of the US-China trade war, and that the higher crude palm oil prices have been benefiting the plantation sector.

She added that corporate earnings growth is expected to recover, and that this recovery will be partly built upon the trade diversion and higher commodity prices.

Tock said the greater economic activity will also lead to more investments, and foreign investors are likely to capitalise on the KLCI's undervalued status.

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