Analysts remain upbeat on Bursa Malaysia’s prospects over 2019-2020
KOTA KINABALU: Affin Hwang Investment Bank Bhd (Affin Hwang) is remaining upbeat on Bursa Malaysia’s prospects over 2019-2020E as the research firm believed that investor confidence would gradually improve driven by positive economic and fiscal reforms.
Affin Hwang recapped in a company update that the Malaysian market saw a massive selldown post-14th General Election (GE14), driven by the ‘fear trade’ as investors reacted negatively upon news of the country’s RM1 trillion debt and global trade war tensions.
The research firm has however observed that stock prices are recovering and trading volumes appear to be normalising.
“Positively, we foresee efforts in reducing ‘inefficiencies and wastages’ within the system, restructuring of the country’s debt, initiatives to boost foreign direct investments (FDIs)/business growth as positive catalysts to the ringgit and stock market,” it said.
“Our economist currently has a currency projection of RM3.80 against the US dollar for end-2018 against the current ringgit-US dollar of 4.0485.
“Looking at past market trends, strengthening of the ringgit was an important theme in attracting foreign fund flows into our markets (equities and bonds).”
The research firm thus foresees upcoming developments such as bringing down the level of inefficiencies and wastage, improvement in the public sector transparency, country’s debtrestructuring and initiatives to boost FDIs/business growth as drivers to restore investor confidence and potentially a stronger ringgit exchange rate against the US dollar.
Based on Bursa Malaysia’s market data, Affin Hwang projected a second quarter of 2018 (2Q18) net profit of RM62 million, on a 2Q18 revenue forecast of RM148.6 million which comprises 53 per cent securities trading revenue, 14 per cent derivatives and 33 per cent stable fee income.
Affin Hwang noted that key drivers in 2Q18 are the RM2.88 billion in securities market average daily trading value (ADV) and derivatives volume of 55,594 average daily trading contracts (ADC).