KUALA LUMPUR: Fundsupermart.com Malaysia (FSM) remains positive on the long-term outlook of the local equity market, which expected to continue to be driven by increasing in private consumption, amid short-term external volatility.
Its research analyst Jerry Lee said the negative factors from the domestic front has been reflected in share performance of the companies, shortly after the 14th General Election (GE14) over uncertainties of policy moving forward, an indication that it has been fully digested by the market.
“Short-term volatility in the Malaysia’s equity market is something unavoidable. At the current juncture, we see most of these headwinds are external factors.
“Over the six months to a year period, we are positive with the Malaysia market especially when the private consumption started to pick up. It will eventually translate into increasing profit and revenue for companies. And eventually we will see all these businesses will restart their private investment,” he said during a press conference at FSM’s 10th anniversary ceremony here today.
FSM Malaysia general manager Wong Weiyi said although Malaysia’s equity market was one of the top performing markets in the first quarter of 2018 amid the strong foreign fund inflow, registering more than five per cent return in ringgit term, the unexpected election results in early May 2018 spelled numerous uncertainties as the change of new government would bring questions on policies that may no longer apply moving forward.
“As of June 29, 2018, foreign funds halted its 37-day selling spree as a finish to the quarter. Given the intense selling pressure by foreign investors, Malaysia equity market delivered post-election losses of about eight per cent,” said Wong.
On FSM’s asset allocation strategy, Wong said: “Although the rare synchronised global growth that we have experienced in 2017 might not be sustainable amid rising trade and geopolitical tensions, we believe investors will still be well compensated with a slight overweight in equities.
“Therefore, we remained a five per cent overweight in equities vis-à-vis fixed income,” he said.
Wong said among all markets under FSM’s coverage, it maintained its preference for Asia ex Japan relative to their developed market peers by giving 4.5 stars “very attractive” rating due to its still strong earnings outlook and attractive valuation.