Kenanga Investors expects KLCI to recover this year

  • Markets
  • Monday, 13 Jan 2020

Bull and bear

KUALA LUMPUR: Bursa Malaysia FBM KLCI index has high potential to recover this year backed by strong gross domestic product outlook and better corporate earnings.

Kenanga Investors Bhd’s chief investment officer Lee Sook Yee said continuous reform and divestment of non-core investment in government-linked companies (GLCs) could see further unlocking of the stocks’ value. More than half of the top 30 companies in the KLCI are GLCs.

"We have Permodalan Nasional Bhd, Retirement Fund Incorporated (KWAP), Khazanah and Employees Provident Fund (EPF) as the main holder. Over the years, the market had been volatile and GLC reform will push the share price up as liquidity of the counter increases," she told reporters after the listing of OneETF on Monday.

She also said the KLCI index alone does not reflect the overall market's performance.

"As we saw last year, even though the KLCI index was down, small and medium-sized caps as well as energy counters actually performed well. Hence, only viewing the top 30 companies does not give a full reflection of the economy," she said.

As for this year, Lee said commodities as well as Petronas-related counters, are expected to perform better than average as crude palm oil prices have rebounded and is now on slow production period, while Petronas outlook remains bright.

Earlier, Kenanga Investors, a subsidiary of Kenanga Investment Bank Bhd has listed OneETF on the Main Market of Bursa Malaysia Securities Bhd.

Kenanga Investment Bank Bhd Group Managing Director Datuk Chay Wai Leong said the listing signalled the company's first foray into exchange-traded funds (ETFs) by means of leveraged and inverse (L&I) ETFs.

"The Kenanga KLCI Daily 2X Leveraged ETF (KLCI2XL) and the Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI) are the first L&l ETFs to be benchmarked against the FTSE Bursa KLCI (KLCI) and the first ETF listing of the new decade on the local bourse," he said.

Both KLCI2XL and KLCI1XI he said, adopted a futures-based replication investment strategy in order to provide daily performance that closely corresponds to their respective tracked indexes.

Meanwhile, Bursa Malaysia Bhd’s chief executive officer Datuk Muhamad Umar Swift said while ETFs in South East Asia is still in its early stages, it has been garnering strong traction and showing tremendous growth potential.

"The introduction of L&I ETFs, particularly the inaugural KLCI-based OneETF, will further invigorate our local bourse by offering investors a wider range of innovative products catering to varying risk appetites," he said.

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