Rakuten Trade's Lau said the local equity market will experience an improvement in 2H23 following the US Federal Reserve and Bank Negara signalling an end to their interest rate policy hike cycles.
PETALING JAYA: Bursa Malaysia is expected to perform better in the second half of this year (2H23), driven by better corporate earnings reports anticipated during that period.
Tradeview Capital’s chief investment officer Nixon Wong expects the ongoing first quarter (1Q23) earnings season to be rather muted owing to the delayed recovery impact from China’s reopening towards the domestic market.
“However, a recovery in earnings is expected to occur in the second half of 2023, driven by improvements in the Chinese market, which will contribute to a more robust earnings season,” Wong told StarBiz.
He said the call for the Employees Provident Fund to raise its domestic asset allocation to 70% by year-end from 63% shall further drive the market.
Rakuten Trade head of equity sales Vincent Lau believes the local equity market will experience an improvement in 2H23 following the US Federal Reserve and Bank Negara signalling an end to their interest rate policy hike cycles.
“For Malaysia, the overnight policy rate is expected to hold at 3% throughout the year, as it somewhat normalised to the pre pandemic levels,” Lau noted.
On the 1Q23 earnings season, Lau expects results to be a mixed bag of numbers.
“Overall 1Q23 results so far are not too bad, but there are some disappointments,” Lau commented on companies that have released their 1Q results to date.
Trident Analytics chief research officer Peter Lim Tze Cheng said tech stocks earnings have been subdued, which is not surprising to him.
He attributed this to the downtrend on the technology sector since 2H21, but opined the down trend is coming to a close.
Commenting on the glove sector, he expressed a positive outlook due to an increase in the average selling prices of gloves.
Additionally, Lim believes the automotive industry is expected to perform exceptionally well, not only due to sales tax exemption but also because of upcoming new vehicle launches.
Lim named Bermaz Auto Bhd
and UMW Holdings Bhd as its top picks in the sector.
He believes the worst is over for the local market despite all the noise, including banking crisis, further rate hikes as well as possibility of a recession in developed markets. Year-to-date, the benchmark FBM KLCI has fallen by some 70 points or almost 5% to close at 1,425 points yesterday.
