8th August, 2012
KUALA LUMPUR: Citi Group analysts are confident that Malaysia will achieve the five per cent gross domestic product (GDP) forecast and next year’s growth is likely to be set at 5.3 per cent.
David Chua, Investment Strategist, Head of Research Citibank Bhd, a member of the Citi Group, said the target was a downward revision from an earlier forecast due to the expected slowdown in Malaysia’s exports to China.
He said Bursa Malaysia was still positive, with the FTSE Bursa Malaysia KLCI (FBM KLCI) target at 1,640 for the second half of the year, with the general election being the key factor as to how the market will perform.
Haren Shah, Senior Investment Strategist, Wealth Management, Citi Asia- Pacific, said Asia-Pacific markets have done well, particularly much more domestic-oriented countries.
“Economies which are more export orientated were severely affected by the slowdown in the global economy,” he told a media briefing on Citibank 2012 Mid-Year Investment outlook.
On a global scale, Haren said there were a lot of uncertainties, with politics playing a major agenda, affecting the economy and investments.
“The world’s largest economy is going to face the presidential election and the second largest economy is going through political transition,” he said.
Haren said the world’s third largest global economic bloc was going through a political paralysis as policymakers have not been able to come to a common solution to their financial and economic problems.
“As we enter the second half of 2012, investors should stay on course and respond to events as they occur even though markets will remain edgy.
“Essentially, we do not expect a global recession though we do anticipate uneven growth globally,” he said.
Haren said markets are likely to remain rangebound and volatile, punctuated with periods of fear and optimism.
In light of these uncertainties in the global perspective, Haren said investors should adopt a positive stand and remain defensive.
“Focus remains on finding value and income that come through high-grade corporate bonds, emerging market debt and high-yield bonds,” he added.
As for the Malaysian equity market, Chua said the promising sector was constructed due to the spillover from the Klang Valley Mass Rapid Transit project, oil and gas and consumer sectors which are well supported by domestic consumption.
“This is because the government has more tools to accommodate fiscal policy in case of a global economic slowdown.
“Borrowings are still relatively at a low level though they are higher than what it used to be. In order for the country to move forward, there’s a need to take in more borrowings,” Chua added.