Analysts, fund managers bullish after GE14

PETALING JAYA: Analysts and fund managers are increasingly bullish on the stunning victory by the Opposition coalition Pakatan Harapan (PH), and while they expect a knee-jerk selldown in the market today, the FBM KLCI will increasingly turn positive as more clarity emerges.

Some feel the market can end higher in less than a month, while others feel it could take longer. The consensus view, though, is that a new government which promises reforms is positive for the market.

Affin Hwang Asset Management director of equities strategy and advisory Gan Eng Peng said that it is easy to see how the script would be written; Malaysia will be touted as a reform play after a reset on 60 years of policies and on the back of a healthy economy.

MIDF Amanah Investment director of corporate investment banking Sherilyn Foong said that a PH win is generally seen as positive for corporate Malaysia, as it would see an enhanced role of the private sector being played out.

“This is positive for the country in the medium and long-term outlook. This will also lead to the country learning from its previous mistakes and repairing its shortcomings to ensure better public and corporate governance,” said Wan Kamaruzaman.

On the market, he said there would be short-term market gyrations and volatility, as Malaysians adjust to a new beginning.

“To those who have positioned themselves in this scenario, any sharp correction is an opportunity to increase Malaysian equity exposure. Nevertheless, my view is that there would not be much downside from its current level, as corporate Malaysia remains generally independent of politics with a positive earnings outlook,” he said.

He added that the election, which generally ended without any violence and a smooth transfer of power, will be looked upon very positively by global markets.

“We will now have long-term stability, which is a magnet for investors,” he said.

Meanwhile, Gan said that heightened uncertainty leads to bigger discounts with the adjusting factor being lower share prices.

“This would be the immediate reaction. We are looking at a 5% to 8% immediate downside within one to three days, where we note that pre-results, the market had already corrected by 3.5% since the April record-high was achieved. Contractors and politically-linked counters could take the brunt of the hit,” said Gan.