Expect stock market to remain lethargic, says analyst

Bursa Malaysia has not recovered to the pre-GE14 level.

PETALING JAYA: The stock market is expected to be somewhat dull over the next few months, according to the head of research at Inter Pacific Securities Sdn Bhd, Pong Teng Siew.

This is especially so due to the earnings growth of companies being rather uninspiring.

He told FMT that he expected the market to reach a cap of 1,730 points by the middle of the year.

“When the FBM KLCI reached a peak of 1,730 recently, there was a pull back and we anticipate the market to trade rangebound with a cap of 1,730 points until the mid-year,” said Pong.

Meanwhile, Redza Abdul Rahman, head of research at MIDF told FMT that a recent article by Bloomberg that said that Malaysia was the only market in Asia to register a decline year to date could be wrongly interpreted.

“If you look at other regional markets, they fell more than the FBM KLCI in 2018, so their recovery in 2019 does not necessarily mean that the FBM KLCI was the worst performer.

“Bursa Malaysia fell 6.3% from Jan 1, 2018 to date while Shenzen fell by 8.1%, Stock Exchange of Thailand declined 8.6%, Nikkei dropped by 8.6% while Phillipines Commposite Index fell by 11.1% during the same period,” said Redza.

He also said that certain sectoral indexes had shown an uptick year to date but the stocks were not represented in the 30-stock FBM KLCI.

Redza added that the construction index was up by 21%, technology 10%, telco 13% and oil and gas index by 26%.

The FBM KLCI had been affected by the pull back by heavyweights such as Tenaga Nasional, CIMB, Hartalega, Top Glove and Petronas Gas.

Redza said the Small Cap Index had increased 14% year to date since their drastic fall last year.

Bursa Malaysia has not recovered to the pre-GE14 level and many analysts attribute this to the lack of direction of the Pakatan Harapan government’s economic policies. - FMT