FBM KLCI may reach 1,680 points by year-end

KUALA LUMPUR: Bursa Malaysia’s FBMKLCI is forecast to reach 1,680 points by yearend on the back of expectations that the country would move into the fourth phase of the National Recovery Plan besides high Covid-19 vaccination rate.

FSMOne Malaysia general manager Wong Weiyi noted that Bursa Malaysia was one of the worst performing Asian markets under its coverage to date with a return of about 5.8 per cent in the first half of the year.

“Even though the gross domestic product (GDP) growth numbers are still not looking good for the full year, the stock market is generally forward looking. As long as we can open up, investors will come back and that will help to push the FBM KLCI index up a bit,” he told Bernama in an interview recently.

FSMOne Malaysia is a multi-asset digital investment platform under iFAST Capital Sdn Bhd, established in Malaysia since 2008.

Wong said investors were advised to focus on small-cap stocks as it had been beaten down the most.

“Technology-related stocks (should also be on the focus) because Covid-19 situation has made it clear that most companies need to be digitalised. All the companies with tech exposure such as (those in) the semiconductor related industry will see good earnings growth in the next few years,” he added.

In July, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the economic growth outlook would be lowered for this year from an earlier forecast of between 6.5 per cent to 7.0 per cent due to movement restrictions imposed to contain the pandemic.

Bank Negara Malaysia is expected to announce GDP growth for the second quarter of this year on Aug 13.

As at Aug 3, a total of 22,152,367 doses of Covid19 vaccine have been administered in the country.

However, Wong said foreign investors would likely shy away from the Malaysian equity market in the near term due to the current domestic political development, as well as high Covid-19 infections.

“These are the reasons they won’t come in and in terms of the local investors, actually, so far they are looking out of Malaysia for investment opportunities,” he added.

On the ringgit, FSMOne expects the domestic unit to be weakened further against the US dollar to 4.25 as the US, the UK and Eurozone were recovering faster than expected from Covid-19.

“All these countries will be able to taper down theirs asset purchase programme and in terms of interest rates, that are currently at a very low level, (hence) they have a better chance of normalising it. Chances that investors will be flocking in these areas to take advantage of high interest rates,” he added.

On the contrary, this would be a downward pressure for emerging market currencies such as the ringgit.

On the overnight policy rate (OPR), Wong said Bank Negara Malaysia would likely maintain it at 1.75 per cent until mid2022 to help businesses shore up their cashflow on the low interest rate environment after the new loan moratorium is over. — Bernama

Even though the gross domestic product (GDP) growth numbers are still not looking good for the full year, the stock market is generally forward looking. As long as we can open up, investors will come back and that will help to push the FBM KLCI index up a bit.

Wong Weiyi