Weak sentiment on Bursa has much to do with foreign selling

PETALING JAYA: Weakened market sentiment surrounding the local equity market has much to do with net foreign selling in the local bourse, which contributed to the FTSE Bursa Malaysia KLCI emerging as the worst-performing Asian equity gauge this year with less than 5% growth, TA Securities Holdings Bhd head of research Kaladher Govindan said.
He explained that a tightening of monetary policy in the United States coupled with the weakened ringgit and upcoming elections weighed in, despite stocks having attractive valuations of price-to-earnings ratio of 15.1 times compared with Indonesia, Philippines and Thai stocks.
The selling is expected to taper off in the near term though with Kaladher rooting for the bourse to hit 1,800 points by year-end.
“If you look at this region developing economies like Thailand, the Phillippines and Indonesia, they are only trading at around 16.4 times on average but we are trading on an 8% discount compared to these markets. In terms of price-to-book, we are even cheaper,” Kaladher noted.
The price-to-book ratio for the aforementioned markets is 2.1 times compared to the 1.5 times of Malaysian equities.
Kaladher’s stock picks are Gamuda Bhd, Sunway Construction Group Bhd, Chin Hin Group Bhd and Ann Joo Resources Bhd.
Meanwhile TA Global Bhd, which received shareholders’ nod to dispose of its development project in Australia, does not foresee any impact in the near future from the recent freeze on unapproved luxury properties above RM1 million.
“From the statement that was made, it will not affect the projects that already have building permits. For next year, two of the projects that we want to launch already have the permits, so in the short-term I don’t think it will affect us because our projects will be moving ahead. Depending on how they (government) will execute, it is hard to say,”said TA Global CEO Tiah Joo Kim at a press conference after the company’s EGM today.
He opined that the move could even be good for the market as there is certainly oversupply in certain segments of the market.
The group via its subsidiary TA Little Bay Pty Ltd is disposing its 24.26 acres of undeveloped land comprising eight development lots and 26 house lots in Little Bay, New South Wales, Australia to Karimbala Properties Pvt Ltd for a cash consideration of A$245 million (RM794.02 million).
The property developer which has a landbank of 746 acres both abroad and domestically has two launches in the pipeline for 2018, namely a RM2.1 billion GDV mixed development project known as TA Tower 3 and 4 and a RM482 million GDV residential project known as “Dutamas”.
TA Global’s shares closed up half a sen at 35 sen with some 693,600 shares done.