THE unveiling of the five-year Malaysia’s Third Capital Market Masterplan (CMP3) yesterday (Sept 21) marks a strategic progression to further strengthen the Malaysian capital market which has expanded to RM3.4 tril as of end-2020 from RM2 tril at the start of 2011.
PublicInvest Research is impressed with the CMP3’s strategic initiatives which entail greater adoption of technology with the digital age taking deeper root in people’s daily lives, prioritisation of sustainability in business practices and constant protection of investors interests (particularly the vulnerable and the enhancement of funding landscape for the various stages of growth).
Nevertheless, the research house is wary that the Malaysian capital market (equities in particular) will continue to be dominated by political and COVID-19 related developments.
“While there appears to be some measure of peace on the political front (for now) and some manner of improvement in the domestic pandemic situation with number of new cases declining on a daily basis – albeit still high – the market has not kicked-off from the 120-point gain seen in early-August,” observed the research house in a review of the CMP3.
“In fact, the benchmark FBM KLCI has surrendered 70 of that 120-point gain to now hover at the 1,530-point mark.”
PublicInvest research further expects the market to continue being very much a trading-oriented one for now though it is encouraging to note that foreign investors have been net buyers in recent weeks – potentially a sign that regional investor flow is potentially picking up in momentum as the country’s growth prospects continue to strengthen.
“From a medium- to longer-term perspective, the market still appears attractive, currently trading at around 1-standard deviation below the price-earnings averages,” projected the research house.
“We continue to advocate buying on weakness in anticipation of a rebound in 4Q 2021. We maintain our FBM KLCI year-end 2021 closing at 1,590 points.”
PublicInvest Research’s stock suggestions are a mix of cyclical names to capture upsides from eventual economic re-opening and business normalcy and stocks likely to see multi-year growth stories – D&O Green Technologies Bhd, EcoWorld Development Bhd, Greatech Technology Bhd, Hibiscus Petroleum Bhd, Kawan Food Bhd, Malayan Banking Bhd, SKP Resources Bhd and Uzma Bhd.
Elsewhere, AmResearch sees the launch CMP3 as timely in anticipation of a strong and vibrant capital market going forward with the Malaysian economy gradually emerging from the COVID-19 pandemic.
The research house stressed four areas which are in line with the future economic trend:
- Addressing the business funding gap through a diverse market and intermediation ecosystem;
- Digital inclusion which is in line with the emphasis of both the government and businesses as we move towards digitalisation;
- Emphasis on shared accountability within the capital market, particularly corporate responsibility to stakeholders beyond short-term profitability; and
- Sustainability and ESG (environmental, social and governance) through higher mobilisation of capital.
“Hence, we are of the view that a successful implementation of the CMP3 over the next five years will put us on a higher pedestal among the global capital markets,” opined the research house. “Our market would continue to be competitive and attractive in the changing global trend as we become more efficient, diversified and relevant. “ – Sept 22, 2021
