KUALA LUMPUR: MIDF Amanah Investment Bank Bhd has maintained its recently revised year-end 2020 baseline target of 1,480 points for the FTSE Bursa Malaysia KLCI (FBM KLCI) even though the market is expected to stay volatile.
In its research note, MIDF said investors would need to select stocks which have solid fundamentals and defensive earnings.
Furthermore, this should pair those that give very attractive dividend yields which should moderate any downside risk, it added.
“Despite the recent flare-up in new cases of Covid-19 outside China, our baseline scenario is for the worldwide outbreak to be brought under control by the third quarter of this year.
“Hence, we reckon the equity market would be trapped in a cautious mood and even occasionally under extreme risk aversion until the third quarter of this year,” it said.
MIDF, however, said the additional worldwide monetary liquidity situation (from rate cuts by many central banks), as well as fiscal outlays (from stimulus programmes by various governments) might help to lend downside support.
As the total number of infected cases begins to dwindle, it envisaged the equity market regaining some upward momentum together with the tapering of risk aversion among investors.
Looking further into the final quarter of this year, MIDF reckoned the additional financial liquidity and outlays would help to propel the recovery of world’s equity markets with the local benchmark FBM KLCI scaling towards its 2020 baseline target. – March 31, 2020, Bernama