PETALING JAYA: AmInvestment Bank Bhd has forecasted a better 2024 while maintaining its year-end target for the FTSE Bursa Malaysia KLCI (FBM KLCI) at 1,545 points amid reinvigorated expectations of infrastructural rollouts with a firm government mandate.
It said corporate earnings are expected to grow at 14 % in 2024, with highly compelling dividend yields, a low foreign shareholding of 19.6% currently, and prospects of a stronger ringgit to drive the uptrend.
“However, the growth may be tempered by the rising probability of a global recession from the aftermath of an extended 500 basis points US interest rate hike cycle,” it said in a note.
The investment bank projected 2024 FBM KLCI earnings at 14.4%, largely driven by oil and gas (20%), plantation (18%), power (17%), and financial services (14%).
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“Although Malaysia’s 2024 forecast corporate earnings growth outpaces the US’ 12% and UK’s -7.6%, the other Asean countries’ steeper trajectories are likely to draw higher foreign investor interest,” it said.
AmInvestment Bank noted that the FBM KLCI ended lower in 2023 by 3% year-on-year to 1,455 as foreigners were net equity sellers of RM2.3 billion, partly cushioned by local institutional buying of RM3 billion.
It said about 45% of the foreign net selling was from the financial sector, 24% in consumer products/services, and 13% in industrial products/services.
“However, foreigners reverted to a buying position of RM1.6 billion equities in November 2023 and continued to nibble at RM257 million in December 2023 as the ringgit gained 1.5% month-on-month RM4.59 against the US dollar.
“Expectation of year-end asset reallocation by local institutions did not materialise in November-December 2023, which instead recorded a combined net sale of RM1.6 billion,” it added.
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