KUALA LUMPUR: Malaysian equities are still a favoured bunch and deemed a safe haven when measured against their overall emerging Asian market peers, said Standard Chartered Bank Singapore’s chief investment strategist for group wealth management consumer banking Steve Brice.
“We believe that people are looking for safe havens (nowadays) and Malaysian equities do fit into that category. Should people search for yields, yes the dividend yields in Malaysia are quite attractive. Overall, Malaysia looks reasonably well-placed from an equity market perspective,” Brice said at StanChart’s second-half market outlook briefing.
“For instance, it is not that cheap from a price-earnings perspective. In the overall sense, we do believe that the stock market would (only) in the Asian perspective perform reasonably well. It is not something that we stress to our international buyers, but it is not that we are expecting Malaysia to underperform Asia,” he added.
Slides at the presentation indicated that Malaysian equities had been “upgraded to neutral”, while Brice said key sectors to consider for investment inflows were those that had a direct beneficial proxy to the ongoing Economic Transformation Programme.
He noted that the “search for yields” was not limited to local equities but extended internationally as well, elaborating that the growth gap between developed markets and emerging markets was expected to narrow.
“High dividend-yielding equities may still perform very well. We also believe that there may be a shift towards cyclical growth, especially if people become more confident, especially in the United States. While in China, there may be less credit build-up, with Europe kicking into recovery,” he said.
On the bigger overall international equity outlook, Brice said despite the strong rebound in equities, they were still cheap on a relative basis to other key asset classes.
“They are not expensive either on a historical basis, so equities are by far our favourite asset class. Equities are our key overweight while we are underweight on commodities, but we started the year overweight,” he said.