Track services

KLCI to track corporate earnings and test 1,650 points next year, says Rakuten

KUALA LUMPUR (Aug 29): The FBM KLCI is expected to cross the 1,650 mark next year, supported by continued improvement in corporate earnings and stronger economic growth.

Kenny Yee, head of research at Rakuten Trade Sdn Bhd, said that with steady foreign fund inflows, Bursa Malaysia’s appeal as a low-volatility market is expected to attract more investors looking for deals at low risk.

“This year, we expect the index to rise above 1,600 or around 1,650 levels, supported by inflows of foreign funds. Over the past few months, foreign funds have been pouring in steadily. We already have net inflows reaching RM8 billion.

“I think next year corporate earnings will be better because [for now] there is still a degree of uncertainty in the market due to Cukai Makmur (the prosperity tax) that companies will have to pay.

“Still, Malaysian companies have so far managed to increase their earnings growth. Next year should be better,” he told media after the launch of Rakuten’s foreign equity trading service. Trade, which converts funds between ringgit and US dollars.

Separately, MIDF Research, in its Weekly Fund Flows report released Monday, August 29, said that to date, international funds were net buyers for 23 of the 34 weeks of 2022, with a total net inflow of 7 RM.97 billion.

He said local institutions were net sellers for 27 out of 34 weeks, with a total net outflow of RM9.76 billion.

Yee further said inflationary pressure in the market should not deter investors as Malaysia’s inflation figures are relatively weak compared to other regional peers, while leading indicators show positive growth.

Inflation in Malaysia rose to 3.4% in June, according to the Department of Statistics Malaysia.

On the ringgit, Yee commented that reduced fears of a risk of recession in the United States and rising crude oil prices are likely to extend support for the local unit.

“In the short term, the ringgit is still in a weak cycle against the US dollar. But the ringgit is strengthening against our regional peers. Once the US Federal Reserve eases its tightening, it could allow the ringgit to rebound,” he said.

He added that stocks in the technology, financial services and telecommunications sectors are the most attractive to investors.

“Our investors still like tech stocks. But personally, I prefer financial stocks, like banks. Real estate investment trusts are also doing well. Telecom-related stocks are underperforming, but once the uncertainty lifts, there will be a recovery in the telecom sector,” Yee said.

Meanwhile, in the same event, Rakuten Trade Managing Director Kazumase Mise said that the improved functionality of converting ringgits to US dollars on Rakuten’s trading platform should attract investors who are looking for more liquidity in the market. American.

“To date, nearly 25,000 US trading accounts have been activated through Rakuten Trade, with around 70,000 orders successfully matched.

“It also serves as a catalyst for new investors to test trading strategies on Bursa before diversifying into the US market. Our data shows that over 85% of our clients trade on Bursa first before moving to the US market” , said Mise.

Mise said Rakuten Trade plans to launch the same service in Hong Kong in the fourth quarter.

As of July 31, Rakuten Trade had activated over 250,000 trading accounts and traded over RM105 billion in total trade value on Bursa since the first business day.

His clients’ trust assets amounted to nearly RM3.5 billion.