The start of the year 2021 proved to be significantly good for the stock market as investors were confident of a global economic recovery. Many of the commodity prices reached new all-time highs. But as soon as the new Covid-19 Delta variant positive cases started showing up, the market took a hit.
As a result, the MSCI emerging market index slipped by 1.6% in the first two quarters of the year. On the other hand, many of the global markets, including the United States, surged significantly.
However, it looks like the tide is turning now. A few foreign investors bought almost RM1bil worth of equities. Giving the local stock market the much-needed boost.
The local benchmark index, the FBM KLCI, recovered approximately half of its losses over the past two weeks. After it dumped as much as 5.7%. The recovery is lead by investors and fund managers. Who believe that the uncertainties of economic growth seem to be reduced. After the country’s aggressive vaccination drive.
The next in line 12th Malaysian Plan and the budget 2022 are predicted to give more clarity. And lead the way for fifth economic growth. Areca Capital Sdn Bhd executive director and chief executive officer Danny Wong Teck Meng think that the local stock market will perform well in the medium to long term.
He advised the investors to carefully select their investments as some sectors are not fully recovered after the pandemic.
Bank Islam chief economist, Mohd Afzanizam Abdul Rashid said that he expects the Malaysian economy to accelerate from the last quarter of the year. But the ongoing Covid-19 cases and the prolonged lockdown may come as a hindrance in the process.
However, some think that the Malaysian stocks may come as even more attractive after the discounts at which they are trading. And also the fact that all of the bad news which might hinder the growth is priced in already.
An investment banker also pointed out that even the country was under lockdown in the first half of the year and the local stock market performed poorly, liquidity has remained healthy. He also says relatively Malaysia has a healthier pipeline of IPOs. Credit Suisse has put Malaysia along with the Philippines under “overweight” recommendations. While conducting their Asia Pacific equity research.
Malaysia is ranked first, while the Philippines is ranked fourth on the Asia Pacific valuations scorecard by Credit Suisse. The two countries are also ranked second and third, respectively, on the fastest earnings per share (EPS) growth projected for 2020-2022.
Rakuten Trade Sdn Bhd head of equity sales, Vincent Lau, said that the investors should look for investment opportunities. After the third quarter as construction, property, and tourism sectors would do so much better as the local demand increases.
He also expects the technology sector to continue its surge as a result of the 5G rollout. Work from home is still being continued by many institutions. And a lot of companies are turning their businesses into online mediums.