2018 Budget will be a catalyst for Investors. #Infrastructure-projects #Firm-export #Consumer-spending #Domestic-consumption #Investor-sentiment

Malaysia: The 2018 Budget, which will be unveiled on Friday, is expected to provide an impetus for Bursa Malaysia to hit the 1,830 to 1,850 level by the year-end, analysts said.

They said investor interest should return to the local stock exchange as more infrastructure projects and incentives can be expected under next year's national budget.

Online equity broker Rakuten Trade head of research Kenny Yee said there will be some interest coming back to the market. Interest will also be fuelled by the local stocks' overall attractive valuation and cheaper ringgit.

"The market is currently rather oversold and will induce more buying activities. I believe the budget will be a catalyst for investors to come in, following the anticipation of more projects to be given out," Yee told NST Business yesterday.

The budget will also focus more on affordable housing and cost of living issues, he said, maintaining Rakuten Trade's FTSE Bursa Malaysia KLCI (FBM KLCI) target of 1,850 points by the year-end.

The key index yesterday finished slightly higher, in line with the firmer regional markets which were driven by strong external factors.

After opening 1.64 points higher at 1,742.29, the FBM KLCI moved between 1,741.38 and 1,744.86 before settling 0.047 per cent higher at 1,741.47 over last Friday's close of 1,740.65.

The FBM KLCI index has added about six per cent so far this year compared with the more than 20 per cent gain by the MSCI Asia-Pacific index.

Sunway University Business School economics professor Dr Yeah Kim Leng said the budget is likely to have a positive spillover effect on Bursa in view of supportive economic growth to boost consumer spending and investor sentiment.

"Investors may feel more confident to invest in anticipation of rising stock prices due to better business performance. We are also looking at a friendly budget that will likely sustain consumers' spending and enhance investors' sentiment," he said when contacted.

Yeah said Malaysia's economy is likely to sustain next year due to higher expected growth and government revenue this year. Thus, the government can be expected to spend more.

"Of course, the government still has to spend within its fiscal deficit target of between 2.8 per cent and 2.9 per cent under the 2018 Budget to maintain investors' confidence and avoid overspending," he added.

Alliance DBS Research head of research Bernard Ching said the budget will likely be friendlier to investors and consumers in view of the upcoming general election.

Ching also said the FBM KLCI will be driven by earnings as long as there is a rebound in domestic consumption and firm export.

MIDF head of research Mohd Redza Abdul Rahman said the FBM KLCI could hit 1,830.

Reza said investors had previously taken a step back, waiting for the two big announcements – the 2018 Budget and mid-term review of the 11th Malaysia Plan.

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