Financial market to see light at tunnel’s end
KUALA LUMPUR: The correction in the financial market is going to last for at least a few months post-14th-General Election (GE14), but as the government’s policy becomes clearer, Malaysia will be able to see the light at the end of the tunnel.
Last Wednesday, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) lost 56.56 points to close at 1,719.28, the worst level recorded since 2008.
The ringgit depreciated by 1.6 per cent against the US dollar, dragged also by other external factors such as the rising US Treasure yields.
Hermana Capital Bhd chief executive officer Datuk Dr Nazri Khan told Bernama this was “basically normal”.
He explained: “The same thing happened in 2008 when Barisan Nasional lost the two-thirds majority during the election.
“The KLCI index declined about 9.8 per cent a few weeks after the 12th General Election. However, it jumped back to 16 per cent six months later, and we expect the same opportunity this time.”
Come September, Nazri said, there would be a gradual rebound in the market, as investors’ confidence return once the new Cabinet lists down its policy.
“There is no clarity in policy from the Pakatan Harapan government. But, I think as the policy becomes clearer, slowly the foreign funds will be come back,” he said, describing the correction as sharp and dramatic.
“I assume the FBM KLCI will close at 1,950 by the end of this year and will touch 2,000 by end-2019,” said Nazri, who is also the company’s chief investment officer.
On Friday, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 15.76 points to close at 1,756.38, as investors started to display trading confidence after the government unveiled its economic measures.
In a note, Maybank Investment Bank Bhd’s research arm (Maybank IB Research) said the month of May saw heavy net selling by foreign investors of Malaysia equities to the tune of RM5.6 billion, which reversed out the cumulative foreign net buy of RM3.5 billion during the first four months of this year.
Meanwhile, Sunway University Business School’s Economics Professor, Professor Yeah Kim Leng, said foreign inflow was expected to gradually recover in the second half of 2018 as currently, the combination of both external and internal factors had led to the acceleration of foreign outflow to the highest level in four years. — Bernama