MONDAY, FEBRUARY 5 KUALA LUMPUR- Bursa Malaysia
KUALA LUMPUR: CIMB Equities Research is positive on the government’s push to reform the country in the medium- to long-term.
However, it maintains its view that the stock market could be volatile in the months ahead due to short-term domestic policy uncertainty and external risk factors.
“We maintain our KLCI target of 1,684 (15.7 times price-to-earnings),” it said on Wednesday.
At the new Government of Malaysia (GOM)’s inaugural investor conference themed “Malaysia: A New Dawn”, Prime Minister Tun Dr Mahathir Mohamad said the government may introduce new taxes and monetise its assets to repay government’s debt.
The Finance Minister also revealed that all tax incentives given out previously will also be reviewed to ensure they are still relevant in supporting high-quality economic growth, whereas additional tax measures will be announced in the upcoming Budget 2019 on Nov 2.
He also indicated that government’s direct participation through equity ownership will be reduced to improve liquidity.
Malaysia’s growth resilient against domestic and external risks.
“Participants generally viewed Malaysia’s growth outlook as resilient against domestic and external risks. Officials reiterated that Budget 2019 would be “difficult” and “require sacrifices”, with the potential introduction of new taxes.
“While urgent fiscal adjustments were deemed necessary, most speakers agreed that external financing pressures were diminished by the current account surplus, adequate foreign reserves, a lack of FX mismatch in external debt, and plentiful liquidity in onshore financial markets,” it said
CIMB Research said at the various tracks in the conference, it gathered that the ministries are working on potential reforms for the aviation, agriculture, power and property sectors.
The potential changes could lead to short-term uncertainty for some listed companies in the near-term but could be positive for the market in the medium- to long-term if the reforms yield results through higher growth for the country.
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