KUALA LUMPUR: On-line retail brokerage agency Rakuten Commerce expects the FBM KLCI to hit 1,700 degree by the tip of subsequent 12 months.
This can be pushed by the anticipated heightened volatility on the Wall Road market in the US, which may set off funds to circulation into Asia together with Malaysia, says its head of analysis Kenny Yee.(pic)
“The regional markets volatility may be very a lot depending on the scenario on Wall Road. Though volatility could have shrunk for now, we are able to count on it to intensify as tapering is a actuality now in the US coupled with the potential rate of interest hike by the US Federal Reserves subsequent 12 months,” Yee mentioned at Rakuten Commerce’s 2022 Market Outlook digital media briefing yesterday.
He identified that the heightened volatility on the Wall Road could be the important thing driver for funds to circulation into Asia.
“Slowly, we’ll probably see liquidity in the US shrink and a variety of funds will take a look at others locations to speculate together with Asia. Malaysia would profit from the spillover results of the circulation of international funds. That’s the reason, we count on the FBM KLCI to carry out higher shifting ahead,” he added.
In response to Yee, the native bourse’s low valuations could translate into low volatility.
This can be pushed by the anticipated heightened volatility on the Wall Road market in the US, which may set off funds to circulation into Asia together with Malaysia, says its head of analysis Kenny Yee.
“Thus, international funds could deem our market as a secure haven,” Yee famous.
Moreover, the native inventory alternate is buying and selling at report low valuations which will restrict the outflow of funds.
“Primarily based on the 1,700 degree, valuation shouldn’t be excessive, it is just 14 occasions price-to-earnings ratio regardless of the daring determine,” defined Yee.
Notably, international outflows totalled RM1.5bil year-to-date, which is way decrease than the record-high of RM24bil final 12 months.
It’s value noting that there have been international inflows totalling RM3.9bil since August.
In the meantime, Yee mentioned Rakuten Commerce has trimmed its year-end goal for FBM KLCI goal to 1,585 based mostly on 13.5 occasions calendar 12 months 2021 price-to-earnings ratio from 1,630 as “we not foresee valuation premium to return anytime quickly regardless of the presence of some international funds.”
He famous that sentiment was additionally affected by the latest bulletins on the one-off Cukai Makmur or prosperity tax and the lifting of the stamp obligation cap on contract notes.
“Up to now, the company outcomes on this quarter are reasonably weak. Aside from know-how and plantation counters, the remainder are coming in weak and it could possibly be because of the motion management order through the quarter beneath assessment. We count on company earnings development to stay first rate this 12 months.
“Nonetheless, development for subsequent 12 months could also be affected amid the prevailing uncertainties,” added Yee.
On the forex entrance, Yee anticipated the ringgit to strengthen towards the buck amid the restoration in crude oil costs coupled with the anticipated homecoming of the international funds.
“All in all, we count on the ringgit to pattern round RM4.10 to RM4.15 in contrast with the US greenback by finish this 12 months,” he mentioned.
For subsequent 12 months, the native bourse is predicted to stay mundane for the primary half and sentiment is predicted to enhance within the second half of the 12 months.
He added that earnings from the main telecommunication corporations could also be affected by the prosperity tax subsequent 12 months, saying that the consensus had already downgraded earnings development for the sector subsequent 12 months to 10.4% from 20.7% beforehand.
The brokerage agency is conserving an “obese” name on the know-how sector as demand for extra refined gadgets would improve within the 5G period and gross sales of laptops have been given a lift from Funds 2022 on the again of the work-from-home pattern.
