Equities will continue to do well on ample liquidity: Pacific Mutual
PETALING JAYA: Pacific Mutual Fund Bhd foresees the equity market continuing to be well supported on the back of ample liquidity arising from low interest environment and quantitative easing in certain countries.
“Investors should long equities now. Central banks globally and regionally remain on an easing mode and even the Fed which intends to raise interest rates is doing it very cautiously,” said Pacific Mutual Fund CEO and executive director Teh Chi-cheun in a statement yesterday.
While valuations are not cheap in Malaysia, he said they are not excessive either.
“Historically, Malaysia has traded at a much larger price-toearnings ratio premium to its peers but now Indonesia is nearly on par with it and Thailand not far behind,” he explained.
Pacific Mutual, an investment management company under the OCBC Group, favours the construction, property and plantations sectors for the Malaysian market.
Teh is of the view that there will be continued interest in dividend stocks and that more money will be invested in such stocks. However, he believes that investors will put money in other stocks including growth and cyclical stocks given that the gap in valuations cannot be too large.
Meanwhile, he pointed out that the key risk for the equity market is the outcome of the US presidential elections.
“If Trump is elected, we could see trade barriers and trade wars begin. As an open economy which has significant exports, Malaysia will be negatively impacted,” he stressed.
Pacific Mutual also announced third-quarter income distributions amounting to RM11.13 million for five of its funds.