Slow recovery for Malaysia in 2016

KUALA LUMPUR: The Malaysian economy and equity market is on the path of recovery, although it may be at a slow pace. 

In a note on Thursday, BIMB Securities Research said it expects the ringgit to stabilise in the near term, following the recent sale of assets by 1MDB amounting to almost RM17bil. 

From the equity perspective, there is still the RM20bil revitalisation of Valuecap which should act as the rudder for the local bourse, it said. 

“We believe the recovery pace should hasten once the foreign funds emerge following the massive RM26bil that exited the local bourse over the last two years. Judging from the
sell-off on Wall Street which is down 518.5 points or almost 3% since end-2015, prospects of foreign funds turning back to Asia seems high,” it added.

Recent share price volatility could have presented some buying opportunities. BIMB likes, among others, Digi (TP: RM6.80), Suncon (TP: RM1.53), Dutch Lady (TP: RM52.00), Econpile (TP: RM1.27), and Berjaya Auto (TP: RM2.89).

In 2015, the FBM KLCI ended a dismal year on a high due to window dressing activities along with a regional uptrend in December.

But on a year-to-year basis, it fell -3.9% after a tough struggle throughout 2015. In however, performed rather credibly against its regional peers with Singapore being the region’s worst performer down by 14.3% with Thailand (-14.0%) coming in second. 

In December, foreign funds outflow remained unrelenting with another RM1.3bil, bringing the total net foreign outflow to a hefty RM19.58bil, compared to the RM6.88bil in the previous year. 

The selling was in line with the uncertainties over the prospective Fed rates coupled with the absence of any catalysts on the local front.