KUCHING: The announcements made under the 11th Malaysia Plan (11MP) failed to excite the local capital market as analysts outline the lack of new projects to spur sectors.
The Malaysian government on Thursday unveiled its final five-year blueprint to achieve a developed nation status by 2020. The theme for the 11th Malaysia Plan (11MP) is “anchoring growth on people”.
MIDF Amanah Investment Bank Bhd (MIDF Research) said the lack of positive surprises resulted in disappointment for investors.
“It seemed that the market was hoping for some positive surprises in the 11MP announcement. This was arguably attested by the abrupt recovery of the FBM KLCI back to above the psychological 1,800 points level late last week, followed by another sharp upward move earlier this week,” it said yesterday in a note.
“However, under this circumstance, no positive news only equated to a disappointment. Hence, the lack of good surprises in 11MP announcement may have led to the selling pressure post-announcement on Thursday which saw the equity market benchmark again at below the 1,800 points level.”
To note on Thursday’s close, the benchmark FBM KLCI fell 15.07 points to 1,795.04. Losers thumped gainers by 628 to 259, with 284 counters unchanged, 628 untraded and 14 others suspended.
Bernama in its closing report then said investors remained on the sidelines despite the 11th Malaysia Plan announcement, adopting a wait-and-see approach.
Nevertheless, MIDF Research did not expect the market undertone going forward to continue being dictated by the aforementioned letdown.
“Instead, we believe market attention would quickly shift towards the slew of 1QCY15 results announcements over the next two weeks.
“In addition, other externally-driven factors such US dollar-ringgit movements, crude oil prices, performance of major economies, and the resultant liquidity flow may also regain centre stage.”
The firm highlighted that the government’s broad commitments toward a more people-centric, balanced, inclusive, and sustainable growth were of long-term strategic importance to the nation’s well-being.
“Tying it to the financial market, the 11MP, if properly executed, would help to improve Malaysia’s risk/return profile as mirrored by the strength of its sovereign rating, and receipts of global investment.
“On this score, it must also be noted that equity pricing is essentially the questions of not only earnings but also that of valuation. And equity valuation, by definition, involves considerations with regard to the measure of risks and its attendant required return.
TA Securities Holdings Bhd echoed this point, stating that as the 11MP blue-print is well crafted, encompassing the mission and the necessary strategies needed to achieve the Vision 2020, we are confident about its ability to deliver the intended results provided there is no slackening when comes to effective implementation, diligent monitoring and timely rectification.
“However, considering a combination of internal and external factors that have prevented us from achieving the objectives set forth in 10MP are still present, such as economic uncertainty in key trading nations on the back of fewer policy options, weaker commodity prices, projects delays, etc., we are cautiously optimistic on 11MP.
“As far as the equity market is concerned, we are Neutral on the impact of 11MP as it did not spring any surprises. Key project highlights like the KL-Singapore High Speed Railway, Southern Double-Tracking, MRT 2, LRT 3, etc. are within market expectations.
“Bearing in mind that this is a long-term blue print that would entail details at later stages and the highlighted projects could be subjected to delays, based on past experience, we reckon there will be less excitement in the market.
“We do not expect any excitement in the market as the 11MP is within expectations and most of the news are already priced in.”