Morgan Stanley sees market continuing to outperform but fade after GE14

MIDF Research said in retrospect, foreigners offloaded -RM19.5bil and -RM6.9bil in 2015 and 2014 respectively.

KUALA LUMPUR: Morgan Stanley expects MSCI Malaysia to continued to outperform in the near term but expect this to fade after the General Election 14 (GE14).

It said on Wednesday that despite 490bps of outperformance year to date (vs. Asia ex-Japan or AxJ), it does not think it is too late to benefit from potential pre-election stock market performance as well as tailwinds from a higher oil price. 

“Historically, MSCI Malaysia has outperformed AxJ by 410bps running into elections,” it said.

Morgan Stanley said recent press report suggested elections will be held before July 14, 2018 while August is the constitutional deadline. 

“Furthermore, banks are starting to see improving credit demand from corporates supported by robust (5%+) GDP growth. 

“Higher oil prices presents some inflation risk, but rates were preemptively raised in January and higher oil prices also provide a bigger benefit to government revenue collection. 

“The budget is set at US$52/bbl; every US$1/bbl move in oil prices has a RM300mil impact on revenues, according to the Ministry of Finance. Our analysts are positive on Maybank, IHH, Axiata and AirAsia; they less constructive on Tenaga,” said Morgan Stanley.