Malaysia should be better positioned to benefit from a recovery in the global economy, particularly trade.
KUALA LUMPUR: Morgan Stanley has an Overweight recommendation on Malaysia, underpinned by second half catalysts including the general election, currency and infrastructure momentum.
According to Bloomber on Thursday, the increase in campaigning suggests prospect of poll in the 2H17, market historically outperforms two months before parliament dissolution.
“About 20%-30% value of the RM55bil east coast rail contract may go to local contractors,” it said.
Bloomberg quoted Morgan Stanley's report that commodities supply growth still strong, demand accelerating; lower palm oil prices, higher volumes, seasonally stronger 2H.
“Earnings growth returns seen at 3.2% and 8.7% in 2017, 2018 vs consensus 1.9%, 5.6%; order backlogs, lower bank provisions, volume growth at palm oil companies to contribute,” it said.
It also pointed out that the currency support factor with ringgit returns of 4% year-to-date; which a preferred emerging markets currency.
Bloomberg noted that in the second quarter ended June 30, Malaysia's GDP growth beats forecasts as the economy expanded 5.8%, which was the fastest since the first quarter of 2015.
Also Malaysia’s foreign reserves rise to US$100.4b as at Aug 15, the highest since mid-July 2015.
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