KUALA LUMPUR, July 5 — Corporates in Malaysia have shown resilience amid the Covid-19 pandemic, especially exporters and those in the telecommunication, technology and utility sectors, according to Maybank Investment Bank (Maybank IB).
Its head of regional equity research Anand Pathmakanthan said corporate reporting in the last three quarters indicated that many of them were quite immune to the lockdown pressure imposed on the country.
“This means that the downside of corporate earnings forecast is relatively limited, despite the pressure and stress in the broader economy,” he said during Maybank’s Invest Asean 2021 virtual conference on the market outlook for the second half of 2021.
Elaborating further, he said glove companies, a big driver of earnings last year, are expected to double their income this year.
Banking stocks are also seen recovering with an estimated over 20 per cent earnings growth this year.
By the fourth quarter of this year, Anand is hoping that the implementation of the National Recovery Plan would proceed smoothly and that the local political uncertainty would be sorted out.
“We should see greater focus by investors on the positives rather than the negatives and that include ample liquidity, comparative asset class attraction and a more settled global economic recovery,” he said.
On the environmental, social, and (corporate) governance (ESG) front, he said Malaysia has been receiving negative headlines and urged corporates to put forth their ESG views and position themselves accordingly.
For 2021, the investment bank’s target for the benchmark FBM KLCI is at 1,720 points, down from 1,830 points previously given the impact of the lockdown in the country.
Anand noted that in the past six to eight months, Vietnam and Singapore have shown better performance in containing the Covid-19 spread compared to their Asean peers and benefited from it.
He said the two countries have been rewarded by the markets through better corporate forecasts and higher GDP estimates of above six per cent.
“On the flip side, Malaysia, the Philippines, Indonesia and Thailand are still struggling because we still have not contained the virus, thus the downgrades to our GDP numbers,” he said. — Bernama