KUALA LUMPUR: Manulife Investment Management (M) Bhd will continue to focus on stocks related to commodities, technology, as well as electrical and electronics (E&E) this year.
Total Solutions and Equity Investments head Tock Chin Hui said this was in view of the increase in crude oil price and higher spending by Petronas in the upstream segment of the oil and gas (O&G) industry.
“The stabilisation of crude oil prices would encourage crude oil producers to raise their productions due to earning visibility,” she told a media briefing on the market outlook for 2020 here today.
She said the roll-out of 5G technology also presents great investment opportunities, as it means that Malaysia is at the start of a multi-year capital expenditure circle.
“Malaysian technology companies, which are part of the global technology supply chain, are seeing a rise in orders as a result of the 5G infrastructure rollout,” she added.
On the manufacturing sector, Tock said approved foreign direct investment in the sector has increased as more foreign multinational companies are seeing Malaysia as an attractive base for their manufacturing and research and development activities.
She added that Malaysian companies which have benefitted include those which are part of the global value chain, particularly E&E, contract manufacturers and industrial property companies.
Meanwhile, Tock said Malaysian equities are currently attractive, as the market is trading at the price-earnings ratio of 15.7 times, the average level of its 10-year historical valuation.
However, she felt that certain factors remain as key risks, including the possible flare-up of tensions in the Middle East as well as the next phase of the Sino-US trade negotiations.
Meanwhile, fixed income head Andy Luk said the fund manager is not anticipating a repeat of 2019’s market movements, given the improved growth outlook following the de-escalation of the US-China trade tension, which implies fewer propensities for further monetary and financial easing.
“However, Malaysia’s potential exclusion from the FTSE Russell World Global Bond Index (WGBI) in March 2020, as well as the reduction of Malaysia’s weightage in the GBI-EM Global Diversified Index to make the way for China’s inclusion poses outflow risks.
“Meanwhile, if the economic growth is disappointing in the second half of the year, we expect Bank Negara Malaysia to cut the benchmark rate by 25 basis-point in that period,” he added.
On the ringgit’s performance, Luk said he expected it to range between 4.00 and 4.20 against the US dollar this year. – Jan 16, 2020 Bernama
