KUALA LUMPUR, 5 Nov — Following the clarity provided by the 2019 Budget announcement, analysts are projecting that the FBM KLCI will be able to breach the 1,800-point mark by year-end.

Malaysian Association of Technical Analysts (MATA) President Nik Mohd Ihsan Raja Abdullah said in general, analysts would now have a clearer picture about the country’s fiscal consolidation and the FBM KLCI should be able to recover from the current level of about 1,700 points and break the 1,800 level.

"I maintain my bullish outlook on the FBM KLCI because the trend structure is still strong and issues such as the US-China trade war and the US interest rate have been factored together,” he told Bernama.

"The index is currently at 1,700. As at October 2018, it fell 4.6 per cent from the previous month. The situation is better compared to October 2008 when it fell 14.7 per cent from September 2008. Therefore, we are optimistic the market will recover,” he told Bernama.

He said several measures introduced in the budget such as the introduction of the new tax on sweetened beverages and higher duties for the gaming industry would affect listed companies.

Nik Ihsan said in essence, reducing taxes was a good move and analysts would be able to identify the impact on the relevant industries, but the impact on the consumer sector would be minimal and any additional costs would likely be absorbed.

"The impact on consumer stocks, which in the beginning were defensive and weak last week, has shifted. Investors are now focusing on the soda tax because it is unique, and we are seeing and assessing its impact for the first time. Meanwhile, the government will gain revenue from the gaming tax,” he said.

Nik Ihsan also forecast the price of Brent crude oil would recover and reach US$90 (RM375) a barrel by year-end and thereafter maintain that level in the first quarter of 2019.

"Oil prices have fallen below the support level and I hope the oil and gas sector will revert to the previous pattern.

"The increase in oil price will affect both consumers and subsidies as we (Malaysia) will get more revenue when prices are higher. When oil prices are floated at world market rates, subsidies can reduce the people’s burden, especially for those in the Bottom-40 and Middle-40 income groups,” he added. — Bernama