In particular, the strongest growth is forecast for the transport and logistics sector at 56.87% year-on-year, followed by construction (49.05%) and consumer products and services (41.98%).
The aggregate earnings for healthcare and plantation sectors, in contrast, are projected to decline by 52.88% and 22.26% in 2022.
MIDF Research head of research Imran Yassin Md Yusof, who is optimistic about next year’s prospects, said the market will ride on an expected macroeconomic recovery once the economy fully reopens.
However, he cautioned that several issues seen this year might spill over into 2022, causing some possible negative impact.
These included the Omicron variant of Covid-19, incessant inflationary pressures, a pullback in China’s property market and the possible 15th General Election (GE15) in Malaysia.
“In our base case scenario, whatever downside risk that is going to come, there will be a disruption to the recovery but it will not derail the recovery.
“We expect the emerging virtuous dynamics in the real economy would eventually be mirrored in the financial economy,” said Imran during a media briefing on the 2022 MIDF Market Outlook yesterday.
Meanwhile, MIDF Research head of strategy Syed Muhammed Kifni Syed Kamaruddin expected a rebound in FBM KLCI’s performance in 2022, following a sluggish performance this year.
By end-2022, he projects the barometer index of Bursa Malaysia to end at 1,700 points, supported by improved corporate earnings. This translates to a price-to-earnings ratio of 16.5 times, which equates to its 10-year historical average.
Syed Muhammed Kifni also expects FBM KLCI’s earnings per share to increase by 4.5% in 2022.
“In 2021, while corporate earnings could have been better, it was not a washout. Earnings came in comparatively okay.
“We should see a better year, according to baseline scenarios,” he said.
Moving into 2022, MIDF Research’s baseline scenarios included a sufficiently ample liquidity situation, amid the country’s monetary policy going on a moderately tightening path.
As for GE15, if it is called next year, MIDF Research does not expect a negative price action post-election.
MIDF Research has a positive outlook on eight sectors for 2022, including media, automotive, banking and consumer. Other sectors are oil and gas (O&G), plantation, technology and healthcare.
Imran said commodity-linked sectors, namely, plantation and O&G, have been laggards in 2021, despite the higher crude palm oil and crude oil prices.
However, he said there is a possibility for these sectors to play catch up next year, with potential for re-rating.
On the economy, MIDF Research forecasts a growth of 6% in 2022, as compared to a projected 3.7% this year.
Economist Abdul Mui’zz Morhalim said the stronger growth will be driven by increased consumer spending and investment activities, and growing foreign demand will continue to support the export outlook.
“All economic sectors will benefit from improving demand and growing business activities will support the job market recovery,” he said.
Abdul Mui’zz expected headline inflation to average at 2.1% in 2022 as compared to 2.3% this year.
With the economy expected to recover and inflationary pressure to return, MIDF Research also expected Bank Negara to undertake a rate hike of 25 basis points in the second half of 2022.