Friday 29 Mar 2024
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PETALING JAYA (Nov 18): The FBM KLCI is projected to trade at about 1,630 points at the end of this year, driven by banking and plantation shares and as fund managers window dress their portfolios, according to Rakuten Trade Sdn Bhd head of research Kenny Yee.

Speaking to reporters here today on the Malaysian stock market outlook, Yee said Malaysia blue chip stocks are under-owned by foreign funds and that banks' share prices are expected to pick up, given their current "low base".

"Blue chips are under-owned by foreign funds currently and are ripe for the picking in the event of a turnaround," he said. Yee said today Rakuten expects foreign fund inflow into the Malaysian stock market in the first quarter of next year.

"We also expect some sort of window dressing to occur over the next one-and-a-half months. We foresee the index improving to 1,750 in 2020 based on a 16-time market P/E," said Yee.

At Bursa Malaysia today, the KLCI rose 0.59 point to 1,595.34 at 3:46pm.

Interest rates play a role in attracting foreign funds into the country and raising enthusiasm in the stock market. Thus, Yee hopes Bank Negara Malaysia will retain the overnight policy rate (OPR) at 3%

"Attractive interest rates differential between Malaysia and regional peers should encourage inflow of foreign funds thus [the] spillover effect on equities," said Yee.

On the ringgit, he sees the currency trading between 4.1000 and 4.1500 against the US dollar in the near term before retesting the 4.0000-level in 2020.

At the time of writing today, the ringgit was traded at 4.1532 against the US dollar.

With attractive ringgit and reasonable market valuations, Yee said both factors should limit downside risks in ringgit-denominated assets.

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