KUALA LUMPUR (Oct 11): Despite seeing a heavy selldown in the local market yesterday, with the FBM KLCI underperforming the rest of the region as it slumped 2.20% to close at 1,735.18 points, MIDF Amanah Investment Bank Bhd Research is retaining its FBM KLCI year-end 2018 target at 1,800 points, which equates to PER18 of 16.6 times.

Likewise, MIDF Research head of equity strategy Syed Muhammed Kifni Syed Kamaruddin in a note today also reiterated his FBM KLCI year-end 2019 target at 1,900 points, which equates to PER19 of 16.7 times, that is a slight discount to its multi-year (2010 to 2017) mean of 16.8 times.

He noted that among the Bursa Malaysia sub-indices, the KL Construction Index was the hardest hit yesterday as it tumbled 6.88% to close at 162.91 points, while overnight, the Dow Jones Industrial Average (DJIA) slumped 3.15% to close at 25,598.74 points.

"It is likely that the Wall Street is only at the beginning of a cyclic pullback hence we may see further downside in prices. The impending pullback was not unexpected," said Muhammed Kifni.

Nevertheless, as alluded in his fourth quarter of 2018 (4Q18) Outlook dated Oct 1, 2018, Muhammed Kifni believes that corporate earnings for this year to register positive on-year growth underpinned by sustained output expansion would lent support to the market further, albeit at a slight moderated pace pursuant to recent downward revisions at both corporate and macro levels, driven by healthy domestic consumption and external trade performance.

"We are hopeful that the 11th Malaysia Plan Mid-term Review and Budget 2019, to be presented on Oct 18 and Nov 2 respectively, shall offer fresh orientation and contain interesting new or altered measures that could help to buoy up market sentiment and thus equity valuation," he said.

Furthermore, Muhammed Kifni said another possible upside impetus for the local bourse in the final quarter may emanate from the prospect of a technical rebound in the recently battered emerging market equities.