KUALA LUMPUR, April 29 — Malaysia’s equities market is expected to see a reversal of fund flows and as early as the third quarter (Q3) of this year, an analyst said.
Rakuten Trade head of research Kenny Yee said this would be underpinned by the weaker ringgit, revival of mega projects and an improvement in crude palm oil (CPO) prices.
He said the weaker ringgit would made the local equities market more appealing to foreign investors, while the revival of infrastructure projects such as East Coast Rail Link (ECRL) and Bandar Malaysia would attract more interest in the construction sector.
“To kick-start all these mega projects is very important because with that, the spillover effects to other sub-segments are very high,” he told a media briefing here today.
He said the additional commitment from China to increase palm oil imports was also expected to improve palm oil prices and in turn boost market sentiment.
Yee said there would be no more major outflow expected in the equities market this year after experiencing over RM11 billion outflow last year and RM2.6 billion outflow as of to-date this year.
“The remaining foreign funds in Malaysia are very minimal, so I don’t expect any major outflow from Malaysia soon,” he said.
He added that with all the positive indicators on the economy, there was no desperate requirement for the Bank Negara Malaysia (BNM) to cut the overnight policy rate (OPR) in the immediate term.
Meanwhile, on the government’s initiative to ease the terms and conditions for housing loans, he said such a move was good to address the oversupply in the property sector.
“Easing loans application for properties is OK because at the end of the day, (properties) still have this preservation of value.
“It should also be a good move to tackle the current oversupply within the property sector,” he added.
Last week, Prime Minister Tun Dr Mahathir Mohamad and China’s Premier Li Keqiang witnessed the signing of a memorandum of understanding between the two countries that would see an additional supply of about 1.9 million tonnes of palm oil to China over a five-year period, starting from this year.
Meanwhile, Finance Minister Lim Guan Eng told reporters last week that the government and BNM are working to ease the terms and conditions for housing loans without affecting the stability of the financial system. — Bernama
