Key driver for equity market next year will be 13th GE

0

KUALA LUMPUR: The 13th General Election (GE) will be the key driver for the Malaysia equities market in the first half of next year.

Nomura International (Hong Kong) Ltd managing director, chief Asia equity strategist, global head of equity strategy, Micheal Kurtz said the GE was expected to overshadow other macro factors such as slower economic growth prospects in China and Europe, the Greece debt crisis and merits of the US recovery.

“The persistent delaying of the GE and a perception of political instability has created a major overhang for the Malaysian stock market.

“Judging investor’s feedback over the past six to nine months, our sense is that their exposure to Malaysia is relatively lower, when compared to more sought-after markets,” he told a media briefing here yesterday.

Kurtz said Nomura reiterated its view that the stakes were higher from a stock market perspective given the significant number of new eligible voters.

“Uncertainties surrounding the election outlook coupled with investors’ unwillingness to take risks ahead of the election, could result in extreme volatility in equity prices.

“We are maintaining our base-case assumption that the ruling government would win by a majority similar to what it holds currently,” he added.

He said any weakness in the market, would present a good buying opportunity.

“To ride through the volatility period ahead of the election, we believe investors should still be positioned adequately in the defensive sectors, and at the same time, start to take on risk selectively,” he added.

He said Nomura Equity Research had raised the local defensive telcos to overweight from neutral, based on the country’s perspective and factoring in potential election risk, while maintaining a bullish stance on the banks, construction, plantations and oil and gas sectors. — Bernama