(From left) MIDF Research head of strategy Syed Muhammed Kifni Syed Kamaruddin, head of research Imran Yassin Md Yusof and economist Abdul Mui’zz Morhalim. (Photo by Sam Fong/The Edge)

KUALA LUMPUR (Dec 7): MIDF Research expects the FBM KLCI to grow to 1,665 points by the end of 2024, supported by a less hostile monetary environment and underpinned by resilient economic activities.

Its head of research, Imran Yassin Md Yusof, said that empirically, as long as the underlying economic performance remains favourable, the period following the end of aggressive US Federal Reserve (Fed) rate hikes could prove attractive for the equity market.

"This is principally due to the unwinding or subsiding pressure on equity required return as the upside risk diminishes with the end of the rate tightening cycle," Imran said at MIDF's 2024 market outlook presentation on Thursday, referring to the expected end of Fed rate hikes in 2024.

For context, the KLCI was down 3.1% year-to-date as of Tuesday, due to its performance in the first half of the year when it fell 7.9%. The index recovered in the second half with a gain of 5.3% (as of Tuesday).

On Thursday, the KLCI gave up 2.97 points to 1,442.85.

Imran said the clear and firm policy layout by the government on the energy transition under the National Energy Transition Roadmap (NETR) should drive the utilities (power) sector in 2024 and beyond.

"The key beneficiary is in the asset ownership space from both renewable energy (RE) capacity expansion and grid upgrade investments. The RE engineering, procurement, construction and commissioning (EPCC) sub-sector is also a big beneficiary of NETR, given [its] massive potential for orderbook expansion," he added.

Imran reiterated MIDF Research's view that the MRT3 mega rail project remains a crucial development to give the construction sector a jolt for growth. He expects the project to be rolled out by the first quarter of 2024.

"Besides MRT3 and the Penang LRT project, contractors remain upbeat on future prospects, with job flows expected from data centres, logistic warehouses and semiconductor plants," he said.

Imran also highlighted the improving outlook for the property sector amid downtrend in property overhang and inventory levels of property companies. As MIDF Research is expecting Bank Negara Malaysia to maintain the overnight policy rate (OPR) at 3% throughout 2024, Imran said that would prove to be positive for property companies, as it would support recovery in demand for property.

For 2024, MIDF Research has a positive outlook on the banking, construction, oil and gas, property, healthcare, transportation and utilities sectors, while it maintains a neutral outlook on automotive, consumer, gloves, plantation, technology and telecommunications sectors. It did not list any sectors as having a negative outlook.

Its overall top 10 stock picks for the year were Sunview Group Bhd, Samaiden Group Bhd, Mah Sing Group Bhd, Gamuda Bhd, Matrix Concepts Holdings Bhd, Sunway Construction Group Bhd, Tenaga Nasional Bhd, IJM Corp Bhd, D&O Green Technologies Bhd and Westports Holdings Bhd.

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