KUALA LUMPUR: OSK Research Sdn Bhd (OSK Research) is maintaining its 2012 FBM KLCI fair value at 1,466 points.
In its research report yesterday, OSK Research said with the FBM KLCI having fallen below its previous non-recessionary bottom target of 1,378 points, there was still potential for further market retracement, although a possible deep recession could probably be averted.
The KLCI dipped below 1,378 points, OSK Research’s previous non-recessionary bottom target on September 23, to close at 1,365.94.
“The KLCI does track quite closely the quarterly gross domestic product (GDP) year-on-year trend. As such, while we may not be certain that a recession is imminent, a continued soft market seems likely to be the case for the short term,” OSK Research said.
It also said that Malaysian corporate earnings and GDP growth outlook was weakening although these did not as yet point to a recession.
OSK Research placed the KLCI potential recession minimum at 1,086 points.
The Economic Transformation Programme (ETP), OSK Research said, could help avert a recession in Malaysia with infrastructure projects all lined-up to be rolled out in 2012.
“Closer to home, the low level of foreign shareholding should save the FBM KLCI from a further massive selling, as foreign investors bring their money home to developed markets,” OSK Research said.
It said Malaysia’s foreign shareholding had never recovered to the pre-2008 levels. — Bernama