KUALA LUMPUR, Dec 17 — MIDF Research has set the target for the FTSE Bursa Malaysia KLCI (FBM KLCI) at 1,680 points in 2020 amid a challenging outlook for the capital market on the back of global economic uncertainty and rising geopolitical risk.
Head of research Mohd Redza Abdul Rahman said the research firm expected a corporate earnings recovery in general by about 5.0 per cent in 2020 compared with 1.0 per cent this year, which would support market sentiment
The banking, oil and gas and plantation sectors were expected to drive performance on Bursa Malaysia, he said.
However, he added the market would remain wary of geopolitical and economic issues such Brexit, the US-China trade war, China debt issue, and growing protectionism which would continue to have a negative impact on the global economic growth.
The benchmark FBM KLCI closed at 1,569.4 points, recording a 7.1 per cent loss for 2019, year-to-date as at Dec 13, 2019, making it one of the laggard markets among its peers this year, weighed by finance/banks and industrial production sectors, while construction, energy and technology stocks had outperformed, he said.
He said this during a media briefing on the 2020 Market Outlook — Navigating Through Adversity.
“Despite seeing the FBM KLCI in the doldrums for the most part of 2019, moving in and out of the 1,600-point level, activities on the exchange remained active with average daily volume of 2.5 billion shares year-to date as at December 6 this year from 2.6 billion shares over the same period last year.
“This is a relatively good performance, considering the 20.9 per cent decline in average daily traded value to RM1.9 billion from RM2.4 billion over the same period, mostly due to the decline in share prices in general,” he said.
On the foreign investors fund flows, he said for the first 11 months of this year, foreign funds had taken out RM9.9 billion worth of local equities versus RM10.76 billion last year, which made up 92 per cent of last year’s foreign net outflow of RM11.69 billion.
Nevertheless, he said the percentage of foreign investor’s participation based on the total value traded in the market averaged at 30 per cent for the first 11 months period of 2019 compared to 27.1 per cent in the preceding year.
He also noted that the foreign ownership on the local exchange remained resilient, hovering at 23 per cent since May this year compared with 2017, when the market saw net inflow for the year whereby foreign shareholding level was at 22.9 per cent.
Mohd Redza said as a trading nation, Malaysia was not immune to their spillover effect as this would influence investor sentiment and their changes would induce higher volatility not only on the share price movements but also trading volume, which included the flow of foreign shareholder’s funds in the market. — Bernama
