equity markets


Capital outflow pace slows despite US-China tensions

KUALA LUMPUR: US-China trade war concerns continued to weigh on the Malaysian equities market, in tandem with the global equities market movements, but the trend has shown some positivity with the pace of outflows slowing down. Bank Islam Malaysia Bhd chief economist, Dr Mohd Afzanizam Abdul Rashid said flows in the equity markets have been […]

KL shares end morning session firmer

KUALA LUMPUR, July 13 — Bursa Malaysia ended the morning session firmer in tandem with regional peers, bolstered by gains in index-linked counters and small capitalisation stocks. At 12.30pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI)…

New guideline of allowing REITs to engage in property development a sector catalyst


Real estate investment trust sector Maintain neutral: We maintain “neutral” rating on the real estate investment trust (REIT) sector given the general oversupply situation but this should be offset by the appeal of REITs given the current uncertain equity markets. We leave our assumption of 10-year Malaysian government securities (MGS) yield remaining unchanged at 4.1%, and roll forward our valuation to 2019. To note, our valuation model is based on the targeted yield of two-year historical average yield spread between dividend yield and 10-year MGS yield. Currently the MGS yield standsRead More

Standard Chartered bullish on Malaysian equities

KUALA LUMPUR: Standard Chartered, whose investment strategy is to stay bullish and diversified, is positive on Malaysian equities as it favours global equities.

Its head investment strategist Manpreet Gill said it is unusual for Malaysian equities not to do well, given that global equities typically outperform in the late stages of an economic cycle.

This period of late stage of the economic cycle is usually characterised by a gradual heating up of inflationary pressures, increase in policy rates and strong equity performance.

Within equities, the US remains its most preferred region, supported by strong earnings growth, though it expects most equity markets to perform well.

Asian markets mostly up as trade woes give way to earnings hopes

HONG KONG, July 10 — Asian markets mostly rose today following another strong lead from New York, as optimism about the US economy and the beginning of the earnings season provide a distraction from trade tensions. After weeks of losses across the…

Slipping dollar lifts emerging stocks and FX, yuan shines

LONDON, July 9 — A subdued dollar and Chinese plans to ease access to its equity markets for foreign investors helped emerging stock markets rally to a two-week high today while currencies chalked up solid gains. MSCI’s emerging market index…

External headwinds create uncertainties in the market

KUALA LUMPUR: Prevailing external factors will continue to plague regional equity markets including Malaysia, creating uncertainties and causing fund managers to stay on the sidelines.

Rakuten Trade Sdn Bhd Head of Research Kenny Yee (pix) said foreign outflows exceeded RM10 billion during the May-June period, with the post-general election market experiencing net foreign selling of nearly RM7 billion to-date.

By comparison, the country recorded net foreign inflow of RM10.25 billion into equities in 2017.

“For this week alone, net selling has touched RM310.7 million (till Thursday) and we reckon these funds may continue to divest in the immediate term,” he told Bernama.

Yee said the ongoing trade spat between the United States and China was likely to be the main factor contributing to the trend.

At Friday's closing, Bursa Malaysia's key index ended sharply lower at 1,663.86 from Thursday's 1,690.95, a fall of 26.79 points.

However, Yee expressed optimism that the 'kitchen-sinking' in the country was merely a short-term pain.

He said Malaysia was deemed the region's safe haven, with the market supported by the “big four” government-linked investment companies (GLICs), namely the Employees Provident Fund, Permodalan Nasional Bhd, the Retirement Fund Inc and Lembaga Tabung Haji.

“The total fund size managed by the four GLICs exceeds RM1.2 trillion, not to mention those from sovereign wealth fund Khazanah Nasional Bhd and its subsidiary, ValueCAP Sdn Bhd,” he added.

He also believed that foreign funds were likely to take advantage of the weak ringgit, which had depreciated to about RM4.04 against the greenback from the year's highest level of RM3.86.

“Index-linked blue chips such as Telekom Malaysia, Maybank, KLK and Genting are now ripe for the picking as they are trading at attractive levels,” Yee said, adding that investors could re-look at small-cap stocks like Econpile, GFM, Kelington and Mi Equipment when the market liquidity was restored.

However, he cautioned that the US remained the epicentre of global equity markets, making a stir on issues pertaining to trade tensions or its interest rate increases.

Yee also refuted speculation that the arrest of former Prime Minister Datuk Seri Najib Abdul Razak would affect foreign investors' confidence in the local stock market.

Last Wednesday, Najib hit the headlines in local and foreign newspapers as the country's first ex-prime minister to be charged in court, with three counts of criminal breach of trust (CBT) and one count of abuse of power in connection with SRC International Sdn Bhd funds totalling RM42 million.

Meanwhile, Hermana Capital Bhd Chief Executive Officer and Chief Investment Officer Datuk Dr Nazri Khan Adam Khan said global equity sentiment continued to be affected by worries on trade tensions between the world's two largest economies and the possibility of a second round of tariff imposition.

“Anytime now, they will be going for the second round of tariff imposition worth US$50 billion (RM202 billion),” he said.

The US began imposing new tariffs on US$34 billion (RM137 billion) of Chinese imports on Friday and Beijing retaliated with its own set of tariffs rate on US goods, equalling that of Washington.

RHB Banking Group Chief Economist and Head of Research, Dr Arup Raha, said domestic buyers were seen mopping up stocks sold by foreign funds but with little appetite to be overly aggressive.

“Investors will likely stay risk-off with the tightening in monetary conditions globally; hence, emerging market (EM) outflows are not expected to reverse in the near-term,” he said.

However, he said, sentiment could be lifted by a de-escalation in the US-China trade conflict, a better explanation on the government's fiscal options in 2019, decisions on big-ticket infra projects and further clarity on leadership roles at government-linked companies/GLICs as well as government agencies.

Commenting on the ringgit's performance, Arup said all Asian currencies fell against the greenback over the week despite the broad US Dollar Index being slightly lower over the same period. However, the ringgit actually fared better than most of its peers.

“The ringgit fell 0.19% week-on-week (w-o-w), only behind the Taiwan dollar and the Philippine peso, excluding the Hong Kong dollar which is pegged to the greenback,” he noted.

The biggest themes this week were the US-China trade war rhetoric and Chinese yuan movements (-0.64% w-o-w against the dollar), while the overarching driver of tighter US monetary policy continued to exert influence over emerging-market assets, he said.

“Despite Malaysia's reliance on trade and its economic ties with China, investors are still sticking with the strong and resilient growth story in Malaysia.

“We also do not see the market pressuring Bank Negara Malaysia to hike rates at this juncture, unlike its neighbour Indonesia,” Arup said.

He noted crude oil prices, which were a traditional ringgit driver in the past, appeared to have little impact on the currency this week.

“We forecast the ringgit's performance to be comparable with the rest of the region over the second half of this year, eyeing the 4.10 level (versus the greenback) for end-2018,” he said.

Arup said despite weakness in Malaysia's external fundamentals, Malaysia's full-year growth should remain robust while deep domestic liquidity should support the broader market even if foreign investors pared down their holdings.

He added the fiscal budget, likely to be tabled in November, would be key to watch, both to gauge the government's ability to stick with its 2.8% deficit target for 2018 and the 2019 plans.

External headwinds create uncertainties in the market, say analysts

KUALA LUMPUR, July 8 — Prevailing external factors will continue to plague regional equity markets including Malaysia, creating uncertainties and causing fund managers to stay on the sidelines. Rakuten Trade Sdn Bhd Head of Research Kenny Yee said…

Foreign funds to return in Q4, lift FBM KLCI to 1,895 points by year-end

KUALA LUMPUR, July 5 — Foreign funds are expected to make a comeback to Bursa Malaysia in the fourth quarter (Q4) and lift the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to 1,895-points and the ringgit to RM3.80 against the US dollar by…

Equities market to stabilise in next two months

PETALING JAYA: Malaysia’s equity market is expected to stabilise in the next two months as risk appetite returns on the back of bullish domestic factors, said Areca Capital Sdn Bhd chief executive officer, Danny Wong Teck Meng. He said clarity in terms of new government rules and policies would boost sentiment in the market, thus […]