LOCAL equities market can expect to attract more foreign funds in the next six months as there are buying opportunities, Deutsche Bank Global Equities head of strategy (Asia) Mark Jolley said.
Speaking to reporters at a Deutsche Bank 2005 economic outlook luncheon presentation in Kuala Lumpur yesterday, he added that stocks in banks would be favoured over that in telecommunications and utilities.
Malaysia has some of the best banks in the region, but they are not cheap, unfortunately, he said.
Deutsche Bank Global Markets Research (Asia-Pacific) managing director Michael Spencer added that local banks were flush with funds, were well managed, and had low levels of non-performing loans, post 1977 crisis.
According to Deutsche Bank report, the Malaysian economy was expected to slow down this year as global growth falters.
However, the low domestic inflation rate would support the country.
Jolley said Malaysia's total exports and company earnings were expected to be lower than last year, but not significantly.
Export levels and earnings correlate closely to a country's gross domestic product (GDP).
In the case of Malaysia, GDP this year is expected to fall slightly, compared with 2004, he said.
Spencer added that the overall economy was strong, but that rising interest rates, especially in the second-half of the year could impact businesses.
On the ringgit, Spencer said it was currently undervalued by about 10%, but that was not substantial enough to warrant a re-peg.
Local institutions and the Government are also generally comfortable with the current value of the ringgit and are averse to change.
Spencer said it would take something drastic to convince the Government to re-peg the ringgit, and he believed a re-peg was more likely to occur in 2006 than this year.