Go for long-term gains, investors told
Maybank says growth opportunities of equities remain highly attractive
KUALA LUMPUR: Investors should look beyond short-term volatility and invest in equities for the long term as the growth opportunities remain highly attractive, said Maybank Asset Management.
During the group’s inaugural Institutional Investor Series 2017 Outlook forum here, Maybank’s top fund managers as well as several overseas institutional funds advocated a selective approach to picking winning stocks, particularly given the current volatile market environment.
Maybank Asset Management Group’s acting regional chief investment officer Robin Yeoh said that volatility is set to be the ‘new normal’ due to sharp corrections which arose from unforeseen events such as Brexit and Donald Trump’s recent victory in the United States presidential election.
“Recent events such as the ringgit’s decline and the selloff in bonds have not changed our investment outlook. Going forward, markets will be bumpy due to volatility, but 2017 will be a better year for equities,” he told StarBiz.
From a Malaysian standpoint, there are still several investment themes which are set to outperform the broader market, he added.
“The upcoming major infrastructure projects such as the East Coast Railway Line mean that the construction sector should remain favourable next year. There are opportunities in the financial sector too, given that valuations have become attractive,” said Yeoh.
In his keynote presentation, Yeoh said he sees lower returns in developed markets due to expensive valuations. He also noted that Asian equities have outperformed the developed world markets on a year-to-date basis.
Over the past week, global markets saw extensive selloffs in emerging-market currencies as well as bonds.
The selloff was partly attributed to the sudden rise in the US dollar since Trump’s victory last week. His growth-driven policies could stoke high inflation, which in turn would force the US Federal Reserve to raise interest rates at a faster clip than previously expected.
Maybank Asset Management’s regional co-head of fixed income, Rachana Mehta, believes that the US Treasury yields are set to head higher due to Trump’s proposals, which could see the country raise up to US$1 trillion.
“However, we foresee a limited sell-off in US bonds, as part of the funds may be raised through repatriation of corporate taxes and partnerships with private enterprises. From a currency standpoint, we are most bullish on the Indian rupee and the Indonesian rupiah,” she said.
Meanwhile, Hong Kong-based Bosera Asset Management portfolio manager Kenny Chan foresees growth opportunities in China, as the country is in the midst of major market reforms.
“While there will be some short-term pain, we are positive on China’s prospects over the medium to long term.
“The strong growth in investments for its public-private partnership projects is a major catalyst. Additionally, the country is upgrading its manufacturing processes and there will be more investments in new industries,” he said.