FBM KLCI seen hitting 1,720 points
RESILIENT: Citibank expects telecommunications, construction, oil & gas sectors to drive market upwards
THE FTSE Bursa Malaysia KLCI (FBM KLCI) is projected to hit 1,720 points this year, with the telecommunications, construction and oil and gas sectors expected to drive the market upwards.
Citibank Bhd head of research and investment strategist David Chua said this is based on anticipation that investors will buy stocks to ca-pitalise on Malaysia's resilient economy.
He said the market is expected to react similarly when the 13th general election results are announced.
"Although a certain level of uncertainty is anticipated leading up to and immediately after the general election, normalcy is expected to prevail due to the resilience of the economy and companies' strong fundamentals," he said after a media briefing on the Citi Investment Guide for 2013 here yesterday, .
Also present was Haren Shah, Citibank's senior investment strategist for wealth management (Asia-Pacific).
Chua said investors are concerned about how the election results will affect the capital markets, but he expects listed government-linked companies to be the most affected by sentiments over the election results.
He, however, said the concern is temporary because at the end of the day, domestic funds like the Employees Provident Fund are heavily vested in the local markets.
Chua also said although people will sell their shares due to sentiments, the market is still driven by fundamentals.
"The foreign fund managers may be moving out a bit, which may cause markets to drop a little, but after that, they'll probably see value and start buying again," he said, noting that it would be the time for institutional funds to grab the opportunities to buy on the dips.
Citi analysts expect investors to turn to defensive stocks as market volatility is expected to remain in the second half of the year.
Chua said for the past one year, more foreign investors are coming in for stability of the ringgit as well as more opportunities in the manufacturing, oil and gas as well as consumer sectors.
He said the ringgit would strengthen to 3.0 level against the US dollar, interest rate would be at three per cent and inflation rate at around 1.7 per cent.
"With stability of the ringgit and higher interest rates, you will see more money coming into Malaysia," he said.
Citi analysts are confident that the country will achieve its targeted gross domestic product (GDP) forecast of five per cent this year, with next year's GDP likely to be set at six per cent.
Citibank Bhd head of research and investment strategist David Chua said this is based on anticipation that investors will buy stocks to ca-pitalise on Malaysia's resilient economy.
He said the market is expected to react similarly when the 13th general election results are announced.
"Although a certain level of uncertainty is anticipated leading up to and immediately after the general election, normalcy is expected to prevail due to the resilience of the economy and companies' strong fundamentals," he said after a media briefing on the Citi Investment Guide for 2013 here yesterday, .
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Chua said investors are concerned about how the election results will affect the capital markets, but he expects listed government-linked companies to be the most affected by sentiments over the election results.
He, however, said the concern is temporary because at the end of the day, domestic funds like the Employees Provident Fund are heavily vested in the local markets.
Chua also said although people will sell their shares due to sentiments, the market is still driven by fundamentals.
"The foreign fund managers may be moving out a bit, which may cause markets to drop a little, but after that, they'll probably see value and start buying again," he said, noting that it would be the time for institutional funds to grab the opportunities to buy on the dips.
Citi analysts expect investors to turn to defensive stocks as market volatility is expected to remain in the second half of the year.
Chua said for the past one year, more foreign investors are coming in for stability of the ringgit as well as more opportunities in the manufacturing, oil and gas as well as consumer sectors.
He said the ringgit would strengthen to 3.0 level against the US dollar, interest rate would be at three per cent and inflation rate at around 1.7 per cent.
"With stability of the ringgit and higher interest rates, you will see more money coming into Malaysia," he said.
Citi analysts are confident that the country will achieve its targeted gross domestic product (GDP) forecast of five per cent this year, with next year's GDP likely to be set at six per cent.
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