BURSA Malaysia’s performance in April 2022 will very much hinge on tourist arrival figures and that of new COVID-19 cases after Malaysia re-opens its international borders on Friday (April 1).
Also in focus will be the potential announcement of the winners of the digital banking licenses (delayed from end-March) and details of the new minimum wage of RM1,500/month effective May 1, according to CGS-CIMB Research.
“Investors will also be watching the special Dewan Rakyat sitting on the tabling of the Federal Constitution (Amendments) 2022 Bill on Anti-Party Hopping and limiting the tenure of the Prime Minister, supposedly to be held on April 11,” suggested head of research Ivy Ng Lee Fang in a strategy note.
“They may also keep a watchful eye on the impact of the Russia-Ukraine war on commodity prices; Malaysian corporate earnings; and consumer price index (CPI).”
Elsewhere, the research house expects investors to be tracking progress of the intake of new foreign workers following the latest signing of memorandum of understanding (MOU) on the recruitment and protection of Indonesian domestic workers in Malaysia on April 1.
“(Politically), investors will be monitoring news flows on a potential early 15th General Election (GE15) in 2022,” noted CGS-CIMB Research.
Globally, the upcoming European Central Bank (ECB) monetary policy decisions on April 12 and the US Advance Reading of its 1Q 2022 gross domestic product (GDP) on April 28 are likely to be closely tracked while the 28th OPEC and non-OPEC ministerial meeting on May 5 will also likely to attract interest.
“We expect the FBM KLCI to remain range-bound as the market continues to weigh the positives coming from high commodity prices, higher tourist arrivals from borders re-opening and the potential return of foreign workers which will alleviate the current shortages against a potential squeeze in profit margins of corporates due to rising costs for electricity, fuel, raw materials and labour as well as rate hikes,” projected CGS-CIMB Research.
“The FBM KLCI is currently trading at 15.4 times FY2022 price-to-earnings ratio (PE) with dividend yields of 3.6% for 2022F. We reiterate our 2022F year-end FBM KLCI target of 1,622 pts and our top three picks (Hong Leong Bank Bhd, Malaysia Airports Holdings Bhd and Petronas Chemicals Group Bhd).”
Looking back, foreign investors posted a 19% month-on-month (mom) rise in net buying of Malaysian equities to RM3.3 bil in March 2022 – the highest net bought since Jan 2018. This brought the 1Q 2022 net buying by foreign investors to RM6.5 bil vs 1Q 2021 net sell of RM1.7 bil.
“We note that 65% of the net buying occurred after Russia invaded Ukraine on Feb 24 as Malaysian commodity plays benefitted from higher commodity prices,” observed CGS-CIMB Research. – April 4, 2022
