Bud­get 2017 ‘lacks sig­nif­i­cant punch’

The Sun (Malaysia) - - SUNBIZ -

PE­TAL­ING JAYA: Bud­get 2017 is an­other re­flec­tion of the times, lack­ing sig­nif­i­cant punch that may have the off-chance of al­ter­ing the course of the econ­omy de­spite chal­leng­ing times, said PublicIn­vest Re­search.

“While it con­tin­ued to con­tain a host of mea­sures to al­le­vi­ate ris­ing liv­ing cost bur­dens for the lower-in­come strata of so­ci­ety, most of the other ex­pen­di­ture an­nounce­ments are un­der­stand­ably pru­dent ones, as the gov­ern­ment is com­mit­ted to low­er­ing the bud­get deficit to 3.0% of gross do­mes­tic prod­uct (GDP) next year,” it said in a re­search note yes­ter­day.

It also high­lighted that the bud­get only made pass­ing men­tion of gov­ern­mentlinked in­vest­ment cor­po­ra­tions be­ing asked to al­lo­cate RM3 bil­lion to li­censed fund man­agers for in­vest­ments into small and medium-cap­i­talised com­pa­nies in an ef­fort to rein­vig­o­rate cap­i­tal mar­kets.

“While there are no spe­cific push fac­tors to drive mar­ket par­tic­i­pants out in droves, nei­ther are there pull fac­tors to en­tice any­one in a big way at this junc­ture hence the mar­ket drift­ing un­ex­cit­ingly side­ways with a down­ward bias. We do see the mar­ket in­creas­ingly primed for in­vestors with a long-term hori­zon.

“The cur­rent pe­riod of rel­a­tive lull is an op­por­tune time for ac­cu­mu­la­tion of un­der­val­ued stocks for the long-term es­pe­cially if there are fresh bouts of weak­nesses,” it said.

PublicIn­vest Re­search’s year-end tar­get for FBM KLCI is 1,720 points and it sees the mar­ket likely mov­ing to­ward the 1,775 and 1,830 point range in 2017 should sen­ti­ment take a turn for the bet­ter.

In the ab­sence of earth­shak­ing mea­sure, Hong Leong In­vest­ment Bank (HLIB) Re­search opined that the mar­ket will re­fo­cus on ex­ter­nal devel­op­ments, such as the US pres­i­den­tial elec­tions, crude oil and the Fed rate hike.

It ex­pects a pick-up in Q3 GDP growth to 4.2% with BNM stay­ing pat, pro­vid­ing fur­ther com­fort to the mar­ket that eco­nomic growth has al­ready sta­bilised.

The re­search house also ex­pects the FBM KLCI to move higher to­wards yearend on im­proved do­mes­tic data amid strong ten­dency of year-end rally. The year-end tar­get is un­changed at 1,730 points.

PublicIn­vest Re­search said con­sid­er­ing all things, it reck­ons that the bud­get 3% deficit tar­get set is achiev­able though it re­mains wary over a series of pos­si­ble do­mes­tic in­ter­est rate cuts, more in­tense cap­i­tal flight and its re­sult­ing ef­fect on gov­ern­ment debt ser­vice charges, which al­ready makes up about 13% of to­tal op­er­at­ing ex­pen­di­ture.

AmRe­search be­lieves Bud­get 2017 is pru­dent and fair, with “some­thing for ev­ery­one”. Most im­por­tantly, the gov­ern­ment re­mains com­mit­ted to in­fra­struc­ture spend­ing as ev­i­denced in a 2.2% in­crease in gross de­vel­op­ment ex­pen­di­ture bud­geted to RM46 bil­lion from a year ago.

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