KUALA LUMPUR: Malaysia is resilient to withstand any financial impact once the China bubble burst, said RHB Asset Management (RHB AM).
Its chief investment officer of equities Mohd Fauzi Mohd Tahir said the stock market would be the first to be hit and then the repercussions would be felt in the banking sector followed by consumption spending.
“That being said, Malaysia alongside most Asean countries have been strengthening their banking sector by both debt restructuring and building reserves. In fact our reserves are in good standing. There should not be much to be concerned of as there are already measures being taken by the regulators,” he said.
Fauzi drew on the fact that the country’s first quarter gross domestic product (GDP) growth is at 5.6 per cent, surpasses expectations.
He is also in the opinion that this trend is very much sustainable, expressing his positive view of the FBM KLCI outlook for the rest of the year which may hit 1,800 points by year-end.
“We are still very much positive of the market this year and the second half of this year,” said Fauzi.
“For the last three years from 2014 to 2016, we have close to RM$30 billion funds outflow. For the first half alone this year, we saw RM10 billion funds inflow and this is a positive development as long as the market is still delivering their results.”
However, the concern would be on all the bond buying by the European Central Bank and more interest rates increase from the US Federal Reserves.
The only thing that may concern us at the moment is the bond buying by ECB and Fed, on the whole region.
"First quarter earnings are good, corporate earnings for Q1 was way above investors expectation of six per cent and what was delivered was in excess of eight per cent and that has been the convergence of positive news has pushed the equities market in the first half of this year.
"The first half have in excess of 10 per cent, but the region as whole, though we are performing, we are not the best performing market. We are the bottom half in terms of performance.
“If you look at the performance of Bursa Malaysia, we have done quite well in isolation but relative to the region we have not. The market has touch 1,800 late last year but now is now consolidating. That said, we still see strong corporate earnings and potential upsides to the equity market for the second half,” said Fauzi.
When asked, he said that both small and large-capitalisation stocks are likely to continue to grow on strong corporate earnings for the rest of 2017.
Fauzi was one of the speakers at the RHB Market Insights Forum 2017 being held yesterday at Hilton Kuala Lumpur.
Theme "Understanding the Business of Tomorrow", the one-day forum focuses on trending topics concerning the integration of Asia, One Belt One Road initiative, Asean Economic Community, the New World Disorder and the Fourth Industrial Revolution.
RHB AM manages some collective RM54 billion of asset under management from its offices in Singapore, Hong Kong, Indonesia as well as Kuala Lumpur.