KUALA LUMPUR: The continuous upward trend in the equity market will, among other things, depend on how well US corporate earnings for the second quarter have fared, said Toh Hoon Chew, head of research at CIMB Securities Sdn Bhd.
This is expected in the second week of July.
So far, the positive performance of the US equity market, which rose by as much as 20% from its low in March, had positively affected sentiment of local retailers.
For the last three to four weeks, the local equity market has seen strong retail investments.
This positive sentiment was driven mainly by good news in the market that included strong merger and acquisition activities involving specific industries.
Toh was speaking to reporters at CIMB’s first retail investment workshop this year. The workshop was designed specifically for retail investors on investments on the KLSE and the Malaysian Derivatives Exchange.
In his presentation titled “Malaysian Equity Market,” he said the recent 0.2% to 0.3% reduction in deposit rates and cheaper entry cost for equity investments were factors driving retailers into the market.
He said government-linked funds like the RM10bil to be invested by ValueCap Sdn Bhd also provided further support, thus the KLSE benchmark composite index was expected to mark an upward trend for the rest of the year.
“We are now up 10% in the last six weeks. The trading can last 2.7 to 5.4 months, judging from past experience,” he added.
CIMB Futures executive director Noripah Kamso added: “We believe retail investors have much to offer in our markets. They make almost 30% of our equity investment today.”
The firm has identified RM66bil of liquid deposits held by retail players that can be potentially channelled into the local stock market.
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