MSEB seen to open high next week

  • Business
  • Saturday, 27 Mar 2004

THE stock market is expected to open higher next week following Bank Negara's announcement of a stronger economic growth forecast of 6% to 6.5% for 2004 and that there will be no changes to interest rates, fund managers and economists said. 

The central bank revised upwards its gross domestic product growth projection from a previous 5.5% to 6% forecast on expectations of stronger domestic demand on rising private sector participation and higher exports due to an improvement in the global economy. Last year, the economy expanded by 5.2%. 

Pheim Unit Trusts Bhd chief executive officer Phua Lee Kerk said he believed the stock market reaction to the latest economic growth data would be neutral but investors could react positively to news of further liberalization of foreign exchange rules. 

“The economic growth (forecast) has been revised upwards but the market has been expecting it. So, I think it is market neutral. However, the new policies on foreign exchange, which includes allowing foreigners to borrow from banks to invest, may get the market excited. I think it will be positive but we'll only know on Monday when we see how the foreign funds react to the news,” he said. 

Effective April 1, non-resident stockbrokers or custodian banks can obtain up to an aggregate overnight overdraft facility of RM200mil (RM10mil previously) to facilitate settlement for purchase of shares listed on the MSEB. 

CIMB's chief economist Lee Heng Guie said the liberalization of the foreign exchange rules was a good move and would ease the pressure on inflows. “In a nutshell, it will help lower the cost of doing business,” Lee said. – AFX

For the full report from MIER click here

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