Mar­ket con­tin­ues to rally ahead of elec­tion

> Strong bull year ex­pected in 2017; might ex­tend to 2018 and 2019, says in­vest­ment ad­viser

The Sun (Malaysia) - - SPEAK UP - BY LEE WENG KHUEN

KUALA LUMPUR: The lo­cal stock mar­ket is ex­pected to con­tinue its rally ahead of the 14th Gen­eral Elec­tion, which is due by 2018, ac­cord­ing to MRR Con­sult­ing man­ag­ing part­ner and in­vest­ment ad­viser Ooi Kok Hwa ( pix). “There is a cy­cle for ev­ery 10 years. We’ve come to a cy­cle that we’re head­ing to­wards the bull. Next year we ex­pect the mar­ket to be a strong bull,” he told Sun­Biz in a re­cent in­ter­view.

“If you look through the 10-year cy­cle, there were bull runs in 1995-1996 and 2006-2007, so I ex­pect this (2017-2018) will be a very strong bull, my view is that it will ex­tend to 2018-2019,” he said.

His­tor­i­cally, Ooi noted that the lo­cal stock mar­ket could jump 100 to 200 points a year be­fore the elec­tion.

“So if you see the level to­day, we (can ex­pect) the in­dex to reach 1,800 to 1,900 points in 2017 or 2018,” he said.

How­ever, some do ar­gue that the next fi­nan­cial cri­sis could be due in 2018 fol­low­ing the 2008 sub­prime cri­sis.

On this, Ooi doesn’t dis­count the pos­si­bil­ity of an­other fi­nan­cial crash, but stressed that it won’t be a fi­nan­cial cri­sis as banks are well man­aged and cap­i­talised nowa­days. Nonethe­less, the crash, he said, could be trig­gered by an as­set bub­ble again.

“I fore­see it will hap­pen in 2019 or 2020, but be­fore that, the mar­ket will go up very high first. Don’t worry about the crash, en­joy the rally first,” he noted.

“If you look at the world econ­omy, we’re in a global in­fla­tion­ary en­vi­ron­ment with oil and in­fla­tion go­ing higher, this is ac­tu­ally the right time to in­vest in eq­ui­ties,” he added.

Ooi pointed out that bank­ing stocks, which are trad­ing at cheap val­u­a­tions, look at­trac­tive.

“The price-to-earn­ings (PE) ra­tio for bank­ing stocks in gen­eral is quite cheap. Some of them even stand­ing be­low NTA (net tan­gi­ble as­sets),” he said.

Be­sides that, he said val­u­a­tions for a lot of mid- and small-cap stocks are also very low, which are even com­pa­ra­ble to the level seen in 2008.

“You look at the PE, good div­i­dend yield and some even trad­ing at be­low the book value,” he noted.

Ooi said the ex­pected bull run in the stock mar­ket could also spill over to the prop­erty sec­tor.

“Rally in prop­erty mar­ket al­ways comes one year af­ter the stock mar­ket’s rally. If my pre­dic­tion is cor­rect, next year is a bull year (for stock mar­ket), then you will see a prop­erty jump in 2018 or 2019,” he ex­plained.

Com­ment­ing on the ring­git, he said while it may weaken fur­ther fol­low­ing the de­pre­ci­a­tion of the Chi­nese yuan, the worst is ex­pected to be only 4.2 against the US dol­lar.

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