UOBAM expects better outlook for Malaysia’s stock market in 2h 2019

UOB Asset Management (M) Bhd chief investment officer Francis Eng (left) and CEO Lim Suet Ling.

KUALA LUMPUR: Malaysia’s equity market is set to perform better in the second half of the year with the FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to hover near the1,700-point level, said UOB Asset Management (Malaysia) Bhd (UOBAM Malaysia).  

Chief investment officer Francis Eng said the benchmark index had improved 3.8 per cent since April 16, riding on clearer policies as compared with the last 12 months, increase foreign inflows, as well as the potential benefits of trade diversion and resilient economic condition, among others.   

“What’s important is to look at the prospects of the Malaysian market. A market does not go down or up forever, so the idea is trying to capitalise on this cycle.

“We think it is a good opportunity to start looking at the Malaysian market as we are underperforming,” he told a press conference here today after the launch of UOBAM’s mixed-asset fund, the United Malaysia Fund.

Eng said the market was also getting a boost from strong foreign direct investments, the revival of government’s mega projects and proposed acquisition of toll highways, to name a few.

He added that positive surprises from several government-linked companies, including a better performance by Telekom Malaysia Bhd and the proposed merger between Axiata Group Bhd and Norwegian Telenor ASA’s Asian operations, had further supported the benchmark index’s performance.

  “A large portion of the FBM KLCI components is GLCs, so if we get the GLCs to perform, it would provide a lift for the overall index,” he explained.

Eng noted that market volatility, arising from the US-China trade war, would remain, however, lower foreign ownerships in the Bursa Malaysia currently would help limit the downside risk, should investors decide to exit the market.

“It means, the market with very high foreign holdings is more at risk if foreign investors decided to exit,” he explained.

At noon-break today, the FBM KLCI fell 5.66 points to 1,685.34 from Tuesday’s closing of 1,691.0.

At the opening, the index retreated 1.75 points to 1,689.25.

As for the economic outlook, UOBAM targeted Malaysia’s gross domestic product to grow 4.6 per cent, while the ringgit would hover between 4.10 and 4.20-level in the second half of 2019.

Eng said the ringgit was currently undervalued, pressured by corruption headlines, among others.

Meanwhile, the United Malaysia Fund with an initial minimum investment of RM1,000 is targeting retail investors who seek to capitalise on Malaysia’s strong economic fundamentals amid rising concerns of a global economic slowdown.

Chief executive officer Lim Suet Ling Eng said the open-ended fund aimed to provide investors with income and capital appreciation by investing in a diversified portfolio of equities, equity-related securities, fixed income securities, money market instruments and placement of deposits with financial institutions.- Bernama