Citibank bullish on Malaysian stock mart
The Malaysian stock market is expected to improve this year, despite key concerns on European debt crisis and fragile growth prospects in the US and China, according to Citibank Bhd.
The bank's vice-president and head of investment strategist and research, Steven Yong said the FBM KLCI may track close to the 1,600 level by end of this year, partly backed by the various government's measures and policies to boost the economy.
"It's hard to put a number (on the index) right now. There's still a lot of uncertainty. But we expect that by middle of this year, the index will likely be flat, and by end of this year, it may be close to 1,600 points," he said.
Yong added that the better performance of the stock market in the second half may also be partly driven by foreign funds' support.
Foreign funds' participation in the stock market was between 26 and 28 per cent last year. However, so far this year, their participation has dropped significantly to a daily average of less than 20 per cent.
"They are in for long-term prospects. If the foreigners are confident in the government's policies, they will come in," Yong said during a media conference on the retail investment outlook for 2012.
Although the market may move upwards this year, he advised investors to remain defensive and recommended fixed-income in the form of investment grade bonds and emerging market debts.
Yong also said investors should look at the Japanese equities, selective US sectors, commodity play in Brazil and gold, among others.
"Those with an 80 per cent exposure to equities and 20 per cent exposure to fixed-income should consider having less exposure on equities, may be to about 50 per cent level," he added.
For investors keen on the local stock market, Yong said traditional sectors like oil and gas, plantation as well as sectors that are export-oriented mainly driven by the government's growth measures look interesting.
He said investors should stay away from utility stocks, as it is going to be "hard to increase profit margins".
Yong also expects the ringgit to appreciate against the US dollar based on long-term fundamental perspective.
"Fundamentally, due to the expected growth of our economy, which is five per cent compared with two per cent for the US, the ringgit will appreciate," he said.
In the shorter term, however, the weakness of the euro would benefit the US dollar and would have an impact on the performance of the local currency.
In the next three months, Yong expects the US dollar to strengthen to the RM3.20-RM3.23 level, but ease to RM3.10-RM3.12 level after six months.\
The bank's vice-president and head of investment strategist and research, Steven Yong said the FBM KLCI may track close to the 1,600 level by end of this year, partly backed by the various government's measures and policies to boost the economy.
"It's hard to put a number (on the index) right now. There's still a lot of uncertainty. But we expect that by middle of this year, the index will likely be flat, and by end of this year, it may be close to 1,600 points," he said.
Yong added that the better performance of the stock market in the second half may also be partly driven by foreign funds' support.
Foreign funds' participation in the stock market was between 26 and 28 per cent last year. However, so far this year, their participation has dropped significantly to a daily average of less than 20 per cent.
"They are in for long-term prospects. If the foreigners are confident in the government's policies, they will come in," Yong said during a media conference on the retail investment outlook for 2012.
Although the market may move upwards this year, he advised investors to remain defensive and recommended fixed-income in the form of investment grade bonds and emerging market debts.
Yong also said investors should look at the Japanese equities, selective US sectors, commodity play in Brazil and gold, among others.
"Those with an 80 per cent exposure to equities and 20 per cent exposure to fixed-income should consider having less exposure on equities, may be to about 50 per cent level," he added.
For investors keen on the local stock market, Yong said traditional sectors like oil and gas, plantation as well as sectors that are export-oriented mainly driven by the government's growth measures look interesting.
He said investors should stay away from utility stocks, as it is going to be "hard to increase profit margins".
Yong also expects the ringgit to appreciate against the US dollar based on long-term fundamental perspective.
"Fundamentally, due to the expected growth of our economy, which is five per cent compared with two per cent for the US, the ringgit will appreciate," he said.
In the shorter term, however, the weakness of the euro would benefit the US dollar and would have an impact on the performance of the local currency.
In the next three months, Yong expects the US dollar to strengthen to the RM3.20-RM3.23 level, but ease to RM3.10-RM3.12 level after six months.\
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