KUALA LUMPUR, 30 JUNE: The research firm projects the 30-stock index’s core earnings to rebound 23.9 percent for the year as Malaysia’s economy recovers in tandem with Covid-19 vaccination progress and a declining number of pandemic cases in the country, according to Hong Leong Investment Bank Bhd’s (HLIB) end-2021 FBM KLCI target of 1,660 points. HLIB analysts Jeremy Goh, Felicia Ling, and Goh Khing-Mae wrote in a note today that the research firm forecasts moderate market recovery in July and August, followed by a more significant recovery in September and October.
“We recommend a more balanced portfolio with a preference for recovery plays,” they stated.
Meanwhile, Joshua Ng, the head of equity research for Malaysia at AmBank (M) Bhd, wrote in a note today that the research firm is optimistic that the world as a whole will enter the late stages of the Covid-19 pandemic in the second half of 2021 (2H21), as more countries achieve herd immunity against the coronavirus.
According to Ng, a synchronized global recovery is nearly a foregone conclusion, based on the reopening of economies and international borders.
On the other hand, he warned, it means that different relief and respite measures implemented during the pandemic will have to be phased down.
“As economies emerge from the epidemic, there is limited potential for further liquidity-driven price growth across asset classes, as it has become increasingly difficult to justify fiscal and monetary policies being placed into overdrive.”
Our base-case scenario is that Malaysia will achieve herd immunity against Covid-19 by the end of the year. As a result, the local market’s underperformance in 1H21 will make it an even more appealing recovery option in 2H21.
“The end of the pandemic, on the other hand, implies that the [Malaysian] political genie can no longer be contained. Investors are likely to remain on the sidelines until the dust settles following the dissolution of Parliament, which would usher in the 15th general election (GE15) “he stated
At 10:42 a.m. on Bursa Malaysia, the KLCI had dropped 6.14 points, or 0.4 percent, to 1,542.17.
So far today, the index has fluctuated between 1,541.68 and 1,551.95 points.
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