Written by Loong Tse Min
Thursday, 28 January 2010 23:42
KUALA LUMPUR: The Malaysian equity market should be “fundamentals bullish” this year, said Maybank Investment Bank Bhd (Maybank IB) CEO Mohammed Rashdan Mohd Yusof.
“What I mean by that is there is now clearly a earnings momentum, growth for quite a lot of our corporate sector and that in turn will reflect in a re-rating of the PEs (price-to-earnings) ratio for the broader market area,” he told reporters here on Jan 28 at a pre-event briefing for this year’s Invest Malaysia. Mohammed Rashdan said Maybank IB’s house view was for the FBM KLCI level to reach about 1,400 points by year-end. The estimate is based on earnings momentum and a re-rating of the market on a broad level at a slightly higher valuation.
On the regional market selldown led by the China government’s tightening liquidity to cool down its overheating economy, he said: “I also believe that Malaysia has shown its resilience in its fiscal and monetary policy management ... that we were different in the previous round of tightening in 2007 when everybody else was increasing interest rates and we did not.”
“We were proven right when there was a crash. Everybody else had interest rate volatility, we did not have interest rate volatility,” he added.
Underscoring corporate earnings growth momentum in Malaysia this year was “a great deal of” domestic investment as well as foreign direct investments, he said. “That is in essence why we are fundamentals bullish,” he said.
At the same event on Jan 28, Bursa Malaysia CEO Datuk Yusli Mohamed Yusof said the Malaysian market had actually had a good start for 2010 and positive sentiment could continue.
“This month of January has been much more of a positive start to 2010, compared to the same time last year.
“Investor confidence has been much better and as a result we’ve seen market capitalisation of the Malaysian capital market go up beyond RM1 trillion, although in the last few days we have seen some correction in line with global markets.
“We do expect this positive sentiment to continue this year as global economies start to recover from the crisis,” he said.
He said Bursa Malaysia remained focused on “progressing the market further, addressing liquidity issues amongst the companies, as well as enhancing the general attractiveness of our market as a listing and investment destination for high quality companies”.