Prevailing headwinds from external and local factors should continue to buffet domestic equities in 2019. Trade tensions and a slowing global economy, coupled with subdued commodity prices that exacerbate Malaysia’s persistent weak fiscal profile and the corporate earnings deficitare main drags. Domestically, Malaysia remains in transition and – although structural improvements are underway – they are medium-term positives at best. Policy, execution, and political risks remain in play. An easing of US Fed tightening would dial back USD strength and could be a boon to EMs. A nimble trading strategy and astute stock picking will be key to outperformance.
Investment themes include an easing USD, identifying value stocks, defensive names, resilient yield plays
and beneficiaries of government-linked companies (GLC) reform.
Our end-2019 FBM KLCI target is 1,700 pts. We are OVERWEIGHT on banks, oil & gas, consumer, auto, gaming, basic materials and non-bank financials. |
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