KUALA LUMPUR: MIDF Research has set FTSE Bursa Malaysia KLCI’s (FBM KLCI) 2017 year-end target at 1,830 points, as the firm believes that the market is still on an upward trajectory.
It explained that this higher target comes on the back of foreign investors being net buyers for 18-straight weeks from Feb 10 to June 9, which the house described as "the longest streak since 1H13".
During this period, it went on to say, the FBM KLCI rose above its nearly two-year trading band and "thenceforth moved on to chart an upward trajectory where it almost hit the 1,800 mark on June 16, and crested at 1,796.75 points".
In its three-page strategy report published today, titled Climbing the Wall of Worry, it said that earnings recovery will resuscitate price momentum.
The firm did assert that geopolitical factors could influence investors' behaviour, but countered that the recent pullback was temporary.
"At the beginning of 2Q17, the FBM KLCI took a breather as it retreated to the 1,730 level amid geopolitical risks, i.e. the US Navy heading towards North Korea due to concerns over its weapons programme. As soon as the geopolitical noises faded, the FBM KLCI bounced back to levels near 1,800.
"Likewise, we deem the current pullback to be temporary, as the market fundamental underpinning is still positive.
“Above all, the market earnings recovery since mid-2016 to date has been rather incessant and is likely continuing," the note said.
Continued recovery in corporate earnings, coupled with revisions in forward earnings and the improving macro environment are factors it considered when announcing that the market is expected to regain upward thrust in the final trimester of the year.