25/11/2022 12:21 PM

KUALA LUMPUR, Nov 25 (Bernama) -- CGS-CIMB Securities has raised its end-2022 forecast for the FTSE Bursa Malaysia KLCI (FBM KLCI) to 1,602 points from 1,484 points on the back of easing political instability, as the market is likely to react positively to the newly-formed government. 

On Thursday, Pakatan Harapan (PH) chairman Datuk Seri Anwar Ibrahim was sworn in as Malaysia’s 10th Prime Minister, ending the political impasse post-15th General Election.

In a note, the stockbroking firm said the market staged a relief rally yesterday following news on the resolved hung parliament situation and the formation of a unity government, as well as the potential return of foreign investors on the expectation of political stability in the country. 

However, it noted that pending more details on the structure of the unity government, there could be lingering concerns over the fragility of potential alliances due to differing ideologies.

"We raise our forecast end-2022 FBM KLCI target to 1,602 points from 1,484 points based on 13.8 times forward price/earnings," it said.

Similarly, Hong Leong Investment Bank Bhd (HLIB) also increased its end-2022 FBM KLCI target to 1,530 points versus 1,470 points previously as near-term political risk subsided. 

It said the resolution to the political impasse has certainly led to positive outcome, and reckoned that differences between parties involved in the unity government, if managed properly, could result in “synergies” being reaped from each other’s strengths. 

"Realistically, as with any unity government globally, such a structure is not without challenges. One that is on the horizon is how the working relationship between PH and Barisan Nasional plays out when the various state elections are held next year," it said. 

Meanwhile, on the macro economic front, MIDF Amanah Investment Bank Bhd noted that the Malaysian economy is expected to increase by 8.0 per cent for 2022 and 4.2 per cent for 2023. 

"Strengthening domestic demand, upbeat consumer spending, lower jobless rate and stable inflationary pressure are predicted to support gross domestic product (GDP) growth next year. 

"Judging from PH’s manifesto, we believe the Anwar-led government will keep current fuel subsidy mechanism status quo, hence, headline inflation rate is forecast at 2.3 per cent for next year," said MIDF.

Nevertheless, Public Bank Investment Bhd has maintained its GDP projections within the range of 7.0 per cent to 8.0 per cent in 2022 and 3.5 per cent to 4.5 per cent in 2023, as it believed there is little in terms of government strategy that will affect the economy's outlook in the near future.

"We believe the new government will likely maintain the real GDP growth forecast range of between 4.0 per cent and 5.0 per cent in 2023, in line with Bank Negara Malaysia's official forecast, as compared to our forecast. 

"Going into 2023, despite the external uncertainties, we expect Malaysia’s economy to still rely more on internally generated growth, especially from private consumption," it added. 


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