Market likely to see reversal of fund flows in Q3, says Rakuten
KUALA LUMPUR: The equity market is expected to see a reversal of fund flows as early as the third quarter of this year, said an analyst.
Rakuten Trade research head Kenny Yee said this would be underpinned by the weaker ringgit, revival of mega projects and an improvement in crude palm oil prices.
He said the weaker ringgit would made the local equity market more appealing to foreign investors, while the revival of infrastructure projects such as the East Coast Rail Link (ECRL) and Bandar Malaysia would attract more interest in the construction sector.
“To kick-start all these mega projects is very important because with that, the spillover effects to other sub-segments are very high,” he told a briefing yesterday.
He said the additional commitment from China to increase palm oil imports was also expected to improve palm oil prices and boost market sentiment.
Yee said no major outflow would be expected in the equity market this year.
“The remaining foreign funds in Malaysia are very minimal, so I don’t expect any major outflow soon.”
He added that with the positive indicators on the economy, there was no desperate requirement for Bank Negara Malaysia to cut the Overnight Policy Rate in the immediate term.
On the government’s initiative to ease the terms and conditions for housing loans, he said such a move was good to address the oversupply in the property sector.
“Easing loans application for properties is okay because at the end of the day, (properties) still have this preservation of value.
“It should also be a good move to tackle the current oversupply within the property sector,” he added.