The market is expected to be range-bound in Feb 2022 and bargain-hunting to emerge following recent corrections, according to CGS-CIMB Research
It said that however investors are likely to stay cautious due to concerns that various measures put in place by the government to cap rising costs of living could lead to weaker profit margins for corporates.
The research house said that the market may not have fully priced in the electricity tariff surcharge of 3.7 sen per kilowatt-hour (kWh) for non-domestic users for the Feb-Jun 2022 period, the other concerns would be political risks and interest rate hikes by the US Federal Reserve as early as March.
Among the Investors, attention in February; in the economic front, investors will focus on the release of Malaysia’s 4Q21 GDP figure on 11 Feb 2022 and the upcoming Bank of England and European Central Bank (ECB) monetary policy decisions on 3 Feb are likely to be closely tracked as well.
It said that the 26th OPEC and non-OPEC ministerial meeting on 2 Mar is likely to attract interest too.
In the corporate front, the research house said that the 4Q21 results season will be the key focus for investors in Feb 2022. “Investors will be watching the potential impact of the floods, higher electricity tariffs, implementation of ceiling prices on certain goods, rising operating costs and cukai makmur (prosperity) tax on corporates earnings,” it said.
CGS-CIMB Research said that the investors will also be tracking the progress of the intake of new foreign workers which has been delayed from Jan 2022. “Also in focus will be the new Covid-19 cases, the opening of Genting SkyWorlds theme park on 8 Feb, the government’s plans to reopen international borders and response to a series of Malaysian companies that have been slapped with Withhold Release Order or findings by the US Customs and Border Protection (USCBP) in recent months,” it said.
It said that Malaysia is also due to conduct its Parliament sitting from 28 Feb to 24 Mar 2022 where some key bills (anti-hopping law, limit PM’s term) could be tabled and passed.
On the global front, the research house said that they will keep an eye on the global Covid-19 situation and how the Omicron variant will impact border reopening plans.
It said that it will focus will be global inflation, US 10-year bond yields, and geopolitical risks. Investors will also be tracking the results of the MSCI Quarterly Index Review for the MSCI Equity Indexes which will be announced on 9 Feb 2022.
On the political front, CGS-CIMB Research said that it will be tracking the Johor State Election results
