LOOKING FORWARD TO A BRIGHTER 2017
• Malaysia’s GDP is expected to slightly rebound in 2017, based on the prospect of a stronger trade activity. But we are wary danger of the possibility of countries with strong purchasing power to lean more towards imports substitution.
• However, at the moment we remain optimistic with the better exports performance and hence economic growth in year 2017. Furthermore, we remain slightly bullish on the expectation that BNM’s measures on Ringgit will give a gradual support to the currency.
• Moving forward, earnings growth is expected to improve going forward in line with increasing construction activities, stabilizing crude oil prices, coupled with favourable macro growth outlook. MIDFR estimates that the forward year aggregate earnings growth of the FBMKLCI 30 constituents will further improve from an estimate of 5.4% yoy growth in 2016 to 7.5%yoy in 2017.

FBM KLCI 2017 YEAR-END TARGET AT 1,830 POINTS
• FBMKLCI valuation is mostly cheaper relative to its regional peers. And its longer-term trend path of is highly dependent on the expected earnings growth performance during the next 12 to 18 months
• Earnings growth in 2017 may yet be stronger than what’s seen so far in 2016, which increases the probability of the equity benchmark to inch up from its current sideways performance.
• Therefore, premised on the rooted behaviour whereby earnings and price are trending broadly hand-in-hand, we reiterate our 2017 FBMKLCI target at 1,830 points which equates to PER17 of 17.1x

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