Local market supported by plantation, O&G sectors

POLITICAL uncertainties and concerns on the impact of the global economic slowdown have prompted investors to turn cautious .

Adding to the woes of the Malaysian equities market was the recent hike in fuel prices and tariff as part of the Government's moves to reduce its burden on subsidy payments.

Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong said the Malaysian market had been supported by the strong performance of the plantation and oil and gas sectors .

“While the windfall tax took the shine off plantation companies, the net impact is negligible. The crude palm oil price would continue to support earnings these two years, and given its defensive nature, the plantation sector remains attractive,” he said.

Meanwhile, the telco market is set to see the implementation of Mobile Number Portability (MNP) in the second half this year, and the smaller operators are likely to benefit from it , Yong said.

“The de-merger of one of the country's main telecoms players into domestic and regional operations has caught investors' attention and provides them an exposure to the regional markets which have low penetration rates and high growth potential,” he added.

Bolstered by export earnings from crude oil and crude palm oil, Malaysia's stronger fiscal position would support the ringgit against the strengthening US dollar, Yong said.

“Malaysia is well-positioned to attract foreign funds looking for an exposure to the region, barring any adverse political development that may see the ruling Government weakening further,” he said.

Prudential Fund Management Services Singapore investment marketing head Robert Rountree said the local market was being traded within the mid-range of its historical trading levels and was not as attractive compared with other emerging markets.

However, he said yields, which remained attractive relative to domestic interest rates, were expected to lend support to the equities market. “In our view, building materials-related stocks should benefit from infrastructure spending while financial stocks also look attractive,” Rountree said.

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