KUALA LUMPUR: Bursa Malaysia is expected rise by at least 15 per cent within the next 18 months, said Hong Kong-based Aletheia Capital.
This will be boosted by the goverment’s effort to strengthen governance, repair the nation’s finances and put the economy back on track.
“Sectors we think will benefit the most are banks and autos. Banks will benefit because of growth surprises and autos because of resurgent consumption and ringgit appreciation,” Aletheia said.
Aletheia has brought forward its target for the ringgit to hit RM3.50 vis-a-vis the US dollar within three years.
In a report prepared by its stock analyst Ryan Soh, Aletheia said while the plunge in the level of support for the ruling Pakatan Harapan might grab headlines, its achievements in the past one year had been big and uneven, with many more still to come.
“There are not many countries in the world that have been able to hold their leadership to account, strengthen checks and balances,
provide greater transparency and personal freedom and, at the same time, square the circle by enhancing and improving their economic relationship with the rising world power and look good while doing so.
“Malaysia has a great future, with many blessings. Better capital markets are but one of them. Buy,” it said.
Outlining the achievements, Aletheia said the government had been able to keep its No. 1 manifesto promise of abolishing the Goods and Services Tax (GST), an unpopular consumption tax
“Secondly, justice regarding the now-defunct sovereign wealth fund 1Malaysia Development Bhd, arguably the next most important delivery, is demonstrated in former prime minister (Datuk Seri) Najib Razak’s multiple arrests and criminal charges for abuse of power, breach of trust and money laundering.
“Thirdly, non-profit organisation Institute for Democracy and Economic Affairs (IDEAS) has deemed nearly one third of the manifesto promises already met – a fine result after only a year in power.”
“Fourthly, on freedom of speech, in 2019, Malaysia rose 22 places in the World Press Freedom Index to 123rd, just ahead of Indonesia – a stunning result for those familiar with either country.
“Fifthly, on parliamentary democracy, things are improving.”
Aletheia said Malaysia was bracing for a brighter prospect with consumer confidence coming back, big projects are continuing, and more investments from China.
According to Nielsen, during the first quarter of 2019 Malaysians were the 6th most confident in the world. Malaysia also recorded the fourth highest year-on-year gain versus first quarter of 2018, among the 64 countries surveyed.
“What we think is interesting about this survey is not just the falling trend of consumers that believe they are in a recession but the number who believe how high that level still is – 69 per cent! In 2018, Malaysia’s real GDP growth was 4.7 per cent year-on-year. What happens to GDP in 2019-2020, when Malaysians start spending again?” it asked.