Malaysia is rated as a quality stock market by foreign investors

KUALA LUMPUR: The projected drop in interest rates in the United States (US) is prompting foreign investors to return to the Southeast Asian region and see Malaysia as a quality stock market destination in terms of business transparency, high profit projections and market liquidity that reaches RM2 trillion.

Berjaya Mutual Bhd’s Chief Investment Officer, Datuk Dr Nazri Khan, said with encouraging economic achievements and the re-entry of foreign investors, the benchmark index of the local stock market, the FBM KLCI, is expected to remain above the 1,600-point level until the end of the year. 2024.

“We expect the Bursa Malaysia index to trade at a level of 1,610 to 1,680 points based on a price-to-earnings ratio of 15.1 times to 15.5 times.

“Average trading is also seen to increase from around RM2 billion in 2023 to RM3 billion in 2024 and this is expected to provide market stability to Bursa Malaysia,” he said.

Nazri Khan said, based on his observations, there are several factors that can support the rise of Bursa Malaysia, especially in the third and fourth quarter of this year.

He said, the factors are such as the re-entry of foreign investors into Malaysian investment equity which is currently still at a moderate level.

He said Malaysia’s economic growth was quite encouraging, with a projected increase of 4.2 percent in the first quarter of 2024.

In the meantime, he said, the local stock market capitalization has now reached RM2 trillion and this can further increase the confidence of domestic and foreign investors regarding the quality of public companies listed on Bursa Malaysia.

“The encouraging issuance of IPOs (initial public offerings) in 2024 with more than 13 new public listing companies closed above the offer price also gives a high confidence to the entire market in Malaysia.

“The sectors in Bursa Malaysia, especially the financial, real estate, construction and industrial sectors are still at an attractive level. This is expected to give investors an alternative purchase compared to other markets,” he said.

Meanwhile, Nazri Khan said, the sustained inflow of foreign funds and continued investment by local investors contributed to the surge of Bursa Malaysia so that it was able to break through the resistance level of 1,600 points recently before falling back below the relevant level following profit taking activities.

He said, the positive performance of the local market also provides a high level of competition in terms of the quality of regional companies.

He said, with the attraction of the corporate profit rate which is expected to give a double-digit projection, Bursa Malaysia can continue to jump to the expected level.