Investors confidence of Malaysia’s financial assets to remain intact

KUCHING: Investors’ confidence of Malaysia’s financial assets have been projected by analysts to remain intact in spite of the lingering threat of trade war and inflation risks.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) expected muted yield movements in the coming months as the 14th General Election takes place and investors typically remain on the sidelines leading up to the election.

“While the threat of trade war and inflation risks lingers, the stable increase in foreign

While the threat of trade war and inflation risks lingers, the stable increase in foreign reserves amidst global volatility indicates continued confidence of investors of Malaysia’s financial assets. Kenanga Research

reserves amidst global volatility indicates continued confidence of investors of Malaysia’s financial assets,” Kenanga Research said in a ‘ Malaysia Bond Flows Update’.

Meanwhile given the lingering global risks, the research arm expected foreign portfolio inflows to focus on short term funds.

Based on its assessment of the Malaysian economy’s solid economic fundamentals, Kenanga Research expected the strength of the ringgit to remain supported for the year.

Additionally, the research arm retained its view for the US dollarringgit pair to hover between 3.80 to 4.00 in the short term before ending at a more stable footing of 3.90.

In the update, Kenanga Research also highlighted on March’s capital market, which saw smaller foreign equity fund outflows of RM62 million, compared to RM1.1 billion in February, amid rising volatility in advanced market.

“We reckon strong macro picture still draws foreign funds to Malaysia or at least limits outflow,” it said.

However, the research arm expected potential fund inflows into the capital market to be capped in the second quarter of 2018 (2Q18) due to a less attractive valuation of FBMKLCI relative to its regional peers coupled with the rising global uncertainty.