Election speculation, digital economy 'major catalysts' for Malaysian markets this year

KUALA LUMPUR: The big catalysts for the Malaysian markets this year are the expectations of an election and the digital economy, Affin Hwang Investment Bank Bhd senior associate director and head of retail research Datuk Dr Mohd Nazri Khan Adam Khan said yesterday.
“2017 is going to be a very important year. The perception among investors is that there might be election this year. That we leave it to the government to decide but I think looking at what we call the Barisan-linked stocks, there are big chances that we might see an election play. This is likely to be a great catalyst for the wealth effect in Malaysia,” he said at the 19th Malaysia Strategic Outlook Conference 2017.
Nazri Khan said most investors are expecting a general election in the second half of this year and, if it happens, it will be a big catalyst, especially for stock market investment, to create a positive wealth effect for the economy in Malaysia.
“One more is digital economy, which has come at the right time. Although not towards the US but more on China. I expect a lot of Chinese giant tech companies to come here to boost Malaysia’s internet economy, especially with Jack Ma as adviser to the government,” he added.
Although details on a digital free zone are scant, Nazri Khan believes that it will attract digital entrepreneurs to Malaysia.
On whether Malaysia will survive “Trumponomics”, which includes big spending on infrastructure in the US and deregulation in the finance sector, Nazri Khan said this will have some impact on Malaysia’s trade and investment policy.
“Initially there might be a lot of uncertainties, for example, dismantling of open trade, but I’m sure it is not game over for Malaysia. I believe there might be bilateral trade negotiations between Malaysia and the US and we need to capitalise on that,” he said, adding that Islamic finance is an area that can be developed further bilaterially.
“We are awaiting more details on his policies. We see a lot of rhetorics but we don’t see much on policy details. Largely we know there will be huge infrastructure spending, deregulation. Of course, we will see a lot of tax cuts given to multinationals to bring back dollars to the US,” he added.
His year-end target for the FBM KLCI is 1,760 points while the ringgit is expected to trade at around 4.10 against the US dollar.