Standard Chartered Bank fixed income, currencies and commodities investment strategy head Manpreet Singh Gill said external factors such as the Brexit vision delivered by British Prime Minister Theresa May recently, had provided a clearer direction to industry players.
“Coupled with better global crude oil prices which is expected to rise further to about US$60-65 per barrel this year, the global equity market will be less gloomy this year,” he told a press conference in Kuala Lumpur on Thursday.
However, Manpreet pointed out that India and Indonesia would remain the preferred equity markets for investors.
“They can expect greater earnings in India as the credit access is now better after Prime Minister Narendra Modi demonetised the 500 and 1,000 rupee notes last year.
“The equity market for Indonesia has benefitted from improved palm oil prices with energy contributing a bigger sectorial composition to the market,” he said.
As for Malaysia, he pointed out that the local equity market was mainly dominated by defensive sectors, namely telecommunication and utilities, which appeared more attractive to investors looking for higher yields.
“It is an important factor for investors to choose one market over the other, and that’s why Malaysia is seen as a more defensive market.
“It depends on the investors who are looking for a market which is less interesting in terms of yield, but more interesting in growth like what India and Indonesia has to offer or vice-versa,” he said.
Asked on the impact of a possible general election being held in Malaysia this year, Manpreet did not expect a huge impact on the local equity market.
“Unlike the United States Presidential election, which will impact earnings, interest rates and inflation, we will still see stability in Malaysia’s equity market,” he said.
Manpreet expected the ringgit to reach 4.4 versus the US dollar mainly lifted by improved commodity prices.
“Unless the US Federal Reserve raises interest rates twice this year, as expected, we do not see any impact on the dollar-ringgit trade,” he added. - Bernama
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