‘BURSA LIKELY TO DO BETTER IN 2019’
Fed’s move to halt interest rate hikes may stimulate stock market, says Affin Hwang
THE local stock market is expected to be more positive this year compared with last year, said Affin Hwang Asset Management Bhd.
Managing director Teng Chee Wai said more macroeconomic developments were expected this year, including the United States Federal Reserve’s (Fed) move to temporarily halt interest rate hikes, which would likely stimulate the Malaysian equity market.
“I think the equity market started well last month, where the surge surpassed last year’s achievement. It will be a catalyst for better performance if global economic factors stay positive throughout the year,” he said, here, recently.
Teng said strong global economic conditions had direct impact on the local bourse despite less favourable corporate earnings forecasts this year.
“The local market is expected to do better this year. It will likely not achieve the best performance but it is reasonable for now. I expect single-digit growth based on the current situation, unless corporate earnings exceed analysts’ forecasts.”
He said the Fed was unlikely to raise interest rates more than once this year. But if the Fed changed its position, it would create a cautious sentiment in the local market and might slow down the economy.
“By next year, I expect the economy to slow down, where we will see the Fed cutting interest rates.”
Teng said internal issues, including the political landscape, would not affect the market unless political tensions led to a change in government policies.
“The country’s political developments have minimum impact on the market, provided there is no policy change, as the market monitors macroeconomic developments, deficit structures and current account surpluses.
“We see increasingly positive inflow of foreign funds and it is a sign that the level of investor confidence is improving.”
Teng said Affin Hwang also expected the ringgit to strengthen in the long term against the US dollar. In the near term, he said the ringgit’s movement would depend on the greenback, with expectations that the world’s major currencies would weaken.
“Last year, the ringgit was weaker due to the strengthening of the US dollar, but the fall was in line with other regional currencies,” he said.