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Optimistic outlook for the equity market given the rise in corporate earnings

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Publish date: Thu, 11 Apr 2024, 01:41 PM

KUALA LUMPUR: With corporate results having turned the corner for the most part and better pricing reflecting this, good things are expected for the equity market going forward.

This is the outcome of the US economy being robust and China's macroeconomic fundamentals progressively getting better, according to a note from RHB Research.

Moreover, it said there is the prospect of easing interest rates from peaking inflationary pressures, better domestic political stability, and a gradual roll-out of economic and fiscal reform initiatives. 

"The ringgit has also bottomed, raising the prospect for a pick-up in foreign flows.  

"Key risks include geopolitical eruptions and stubborn inflation, leading to fewer and later US rate cuts.  

"Investment themes include accumulating on weakness, geographical growth drivers, and trading opportunities in the small-midcap space," it added. 

The investment bank also highlighted that domestic economic reform initiatives are headed in the right direction and will be an important catalyst to attract and develop new sources of foreign direct investments (FDIs).  

It was noted that the Johor-Singapore Special Economic Zone (JS-SEZ) holds great long-term promise. 

It also suggests focusing on beneficiaries of the key growth hubs in Johor, Penang, and Sarawak, with ample trading opportunities, including laggards, as the market adapts to the positive paradigm. 

Additionally, RHB Research said it expects progress on the country's economic reform, although fiscal reform remains painfully slow due to divergent opinions within the unity coalition. 

The investment bank emphasised that the importance of various economic and fiscal reforms is unquestionable.  

However, what remains uncertain is the availability of political will to make difficult decisions that will inevitably be unpopular and heavily politicised, especially within the narrow window of opportunity before the 16th General Election (GE16). 

On that note, RHB Research kept "overweight" calls on the property, construction, technology, healthcare, transport, oil and gas (O&G), utilities, and rubber products sectors. 

It stated that there is no change to its year-end FBM KLCI target of 1,600 points, while maintaining its projection for the ringgit versus the US dollar at 4.63 by the end of 2024. 

 

https://www.nst.com.my/business/corporate/2024/04/1036767/optimistic-outlook-equity-market-given-rise-corporate-earnings

Discussions
Be the first to like this. Showing 6 of 6 comments

calvintaneng

Overweight calls should be based on real concrete earnings

Palm oil should be having its best years now that Cpo has rebounded above Rm4200 to Rm4300 MT

TSH RESOURCES COST OF CPO PRODUCTION RM2000 - RM2200 & KM LOONG COST RM2200 WHILE OTHERS ARE HAVING SIMILAR OR EVEN LOWER COST DUE TO FERTILIZER PRICE DROPPING BY UP TO 50%

SO 100% GROSS PROFIT MAKES PALM OIL INDUSTRY STANDS OUT AS A CLASS WITH THE BEST REAL EARNINGS SHOULD BE UPGRADED AS OVERWEIGHT

1 month ago

icecool

equity market depends on the market makers, if they want it to go up they will push it up

1 month ago

Income

You all don’t know meh who is the real market maker? Ah yaaaa so many years still don’t know mehhhh.

1 month ago

Riaz1954

I am afraid business growth does not always translate into share price growth for a simple reason, share price is determined by supply and demand. I agree normally share price will reflect business peformance, but sadly in Malaysia there are many founded owners from legacy …and these guys play havoc with share price quite often dumping shares in open market armed with inside information making stock market an uneven playing field. Case in point is Genting for example, one of many, this share is plagued with party related transactions, selling interests to listed entities from their private investments, write off of assets, promotion and dumping, private placements with heavy discount, bailing out private held investments etc etc…all,examples of poor governance

1 month ago

stockraider

It is time to put a little more on equity loh!

1 month ago

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