Market reaction post-GE 14 ‘a lot better than expected’

PETALING JAYA: Market reaction post-election has been a lot better than anticipated, according to PublicInvest Research, adding that the knee-jerk reaction was short-lived.

“Expectations are running high that the country will actually come out stronger post-adjustments, though we will also have to acknowledge that there will likely be short-term pains (potentially slower GDP growth from reprioritising of investments, higher budget deficits from revenue loss) for the longer-term gains of structural reform and Malaysia hitting its full potential,” the research house said.

Given the lack of details at this point, it is still unable to assess the true economic impact. Nonetheless, its estimates are still for the FBM KLCI to close the year-end at 1,860 points.

“We see greater opportunities in the mid and small cap space however, with some share prices having been beaten down despite no discernible changes in fundamentals.

“Market conditions will remain encouraging, underpinned by improving global growth and earnings, and still hold the view that significant market weaknesses should be taken as opportunities to accumulate,” said PublicInvest.

The research house had the privilege of hearing from Tun Daim Zainuddin and Tan Sri Zeti Akhtar Aziz, two esteemed members of the Council of Eminent Persons, in a meet-up session with the investment fraternity yesterday. Various topics were broached, but most widely discussed was the issue of revenue shortfalls and mitigating actions.

While details are still patchy at this juncture, unsurprisingly so considering it’s barely been a week since the change in government, it would seem that the new administration has hit the ground running.

“With Prime Minister Tun Mahathir busy on the political end of things, the Council has already met up with government-linked investment companies, the various pension funds, international ratings agencies, ministries and workers unions amongst many others, despite only having been set up this recent Saturday,” said PublicInvest Research.

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