KUALA LUMPUR, Dec 31 — Malaysia’s gross domestic product (GDP) growth is still resilient despite the recent plunge in oil prices, and the country’s current account is unlikely to fall into deficit even if Brent crude oil drops to US$50 (RM174) per barrel . Pacific Mutual Fund Bhd chief investment officer Koh Huat Soon said although a number of sources posed headwinds to the economic growth going into 2015, the company believed the economy has sufficient resilience to withstand these stresses.
“As oil accounts for 30 per cent of the government’s revenue, there are fears that the government would miss its budget deficit target of three per cent in 2015 with dire consequences on its sovereign debt rating. “While a valid concern, Pacific Mutual is of the view that policy flexibility would be exercised in order to minimise the negative impact on government revenue,” Koh said in a statement here, today.
Pacific Mutual is an investment management company under the OCBC Group. Koh said the company believed that Petronas has the capacity to raise its dividend payout and scale back capital expenditure, with priorities of such cuts affecting projects abroad rather than domestic.
“Our advice to existing investors who invested in Malaysian equities is to hold on to their investments, so long as they are invested in undervalued companies, with sound balance sheets and competent management,” Koh said. He said these stocks would work out well in the long term as they would overcome short-term business challenges, irrespective of the sectors they are in. “We would even advise them to invest more in times of price weakness and the present time offers just that rare opportunity,” added Koh. — Bernama