Malaysian equity market may be slower to recover

KUALA LUMPUR: The Malaysian equity market would be slower to recover compared with Hong Kong and Singapore, which could stage rebounds towards year-end, as investor confidence returns.

CIMB Private Banking co-head Carolyn Leng also said the KL Composite Index may not recover as strongly as other markets, as it had held up quite firmly during the recent crisis.

However, she said local companies in sectors such as oil and gas, and blue chips with strong track records, showed good earnings potential going forward.

“More importantly, companies with good cash flow would be able to withstand this crisis,” she said.

From left: CIMB Private Banking co-head Carolyn Leng, CIMB Bank head of retail banking Peter England and CIMB Private Banking co-head Alan Inn on March 18.

She noted that high net investors were slowly nibbling back into equity investments in markets such as China, as confidence slowly picked up with the introduction of the stimulus package by its government.

“There are investing activities in this market, but not as significant,” she said.

She added that CIMB Private Banking aimed to manage RM10bil in assets from RM4bil currently, but declined to give a target timeline.

Meanwhile, CIMB Investment Bank economist Lee Heng Guie said the Malaysian economy was envisaged to stage a strong recovery in 2011.

“Although Malaysia’s fundamentals are much stronger compared with the previous downturn, its (economic) growth has been affected by the global crisis,” he said.

He noted that to further support demand, Bank Negara would need to cut the overnight policy rate (OPR) by another 50 basis points to 1.5% by year-end.

“But it would not be constructive to cut OPR any further,” he added.