The FBM KLCI would possibly touch 1,670 by year-end premised on a very reasonable 13.5x CY2022 PER as the foreign funds would provide the much-required liquidity in the market, Rakuten Trade Sdn Bhd said in a note
It said that the prevailing weak ringgit may also be an incentive for foreign funds to look at Malaysia as well adding that both the Banking and Plantation sectors will surprise on the upside this year in terms of earnings.
“As for the MYR, in line with the high crude oil prices coupled with more inflows of foreign funds we reckon the MYR to strengthen by year-end to around the 4.15-4.20/US$1 level,” it said.
In sectors that it was overweight, in the Oil & Gas, Plantation, REIT, and Utilities.
In the oil & gas sector, it is expecting oil prices to continue staying elevated with the ongoing conflict between Russia and Ukraine coupled with subsequent sanctions on Russia that have created significant market disruptions.
It said that palm oil prices are likely to stay elevated beyond 1H CY22 and into CY23 adding that the international oils and fats supply was already tight, and the Russia-Ukraine conflict has compounded the supply bottleneck further
On REIT, it said that earnings to normalize to pre-Covid levels with the re-opening of the economy. And adds that malls would remain limited from here on hence business operations and earnings is expected to normalize closer to pre-Covid levels.
