KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Analysts are optimistic about the outlook for Malaysian equities, pointing to a strengthening ringgit and attractive forward valuations as key factors that could drive further upside in the market, despite a recent increase in share prices. This follows a positive earnings season for the second quarter of 2024 (2Q2024), with many companies exceeding forecasts.
Key Insights:
Positive Market Outlook and Earnings Growth:
- Analysts expect the benchmark FTSE Bursa Malaysia KLCI (KLCI) index to close above 1,700 points by the end of 2024. PublicInvest Research has revised its year-end target for the KLCI to 1,750 points, up from 1,680, based on 2024 earnings forecasts. The revision follows strong earnings performance, with 80% of companies meeting or exceeding expectations in 2Q2024.
- The research house anticipates the earnings of Bursa Malaysia-listed companies to grow by 12.7% in 2024, up from a 11.6% forecast in the first quarter, and by 8.8% in 2025, compared to 8.2% previously.
Impact of Stronger Ringgit and Global Monetary Policy:
- While the stronger ringgit has already influenced stock prices, further upside is possible, particularly if the US Federal Reserve adopts a more dovish stance on monetary policy. Greater-than-expected monetary loosening in the US could attract additional capital inflows, providing further support for the ringgit and Malaysian equities.
- RHB Research maintains a KLCI target of 1,720 points, highlighting that domestic liquidity will continue to support the market. A potential recovery in the ringgit could also attract foreign portfolio funds back into the market, spurred by a possible rate cut cycle and a weakening US Dollar Index (DXY).
Sectoral Preferences and Investment Strategies:
- Both PublicInvest and RHB Research remain "overweight" on key sectors, including construction, technology, healthcare, and rubber gloves, indicating strong growth prospects in these areas.
- Additionally, RHB Research is "overweight" on property, basic materials, oil and gas, and utilities, while PublicInvest shows a preference for the consumer and gaming sectors. Analysts suggest a "buy on weakness" strategy, taking advantage of potential near- to medium-term strength due to steady economic prospects and the favorable valuation of the local bourse.
In conclusion, the combination of a robust earnings outlook, a stronger ringgit, and favorable liquidity conditions is expected to support further growth in Malaysian equities. Analysts remain bullish on a range of sectors, reflecting confidence in the market's resilience and its potential for upside in the months ahead.
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