2023 could remain challenging for corporates - CGS-CIMB

19/12/2022 11:06 AM

KUALA LUMPUR, Dec 19 (Bernama) -- CGS-CIMB Research (CGS-CIMB) predicts that 2023 could remain challenging as corporates adapt to the new policy and political landscape post-15th General Election (GE15).

The brokerage firm said corporates would adjust to slower global growth, with a mild recession in the United States, tighter monetary policy and ongoing geopolitical tensions with the Russia-Ukraine war triggering higher commodity prices. 

CGS-CIMB said since GE15, the government has cut down special draws for Number Forecast Operators, as well as put on hold several flood-mitigation projects worth RM7 billion that were previously awarded via direct negotiations.

Apart from that, the government had also floated the possibility of eliminating cartels in the food and essential supply sectors, and had decided to review the 5G deployment plans through Digital Nasional Bhd, and indicated plans for implementing a targeted subsidies regime. 

“Although the review of these policies could lead to short-term concerns over earnings risks, we expect them to be priced in by the first half of 2023 (1H2023), and the market to rebound in 2H2023). 

"We think downside could be capped by expectations of a stronger FBM KLCI earnings growth of 12.8 per cent in 2023 versus -2.9per cent in 2022 and the FBM KLCI’s undemanding valuations," CGS-CIMB said in a research note today. 

It noted that foreign shareholdings were close to their historical lows, and domestic institutional investors could turn net buyers in the market on improved liquidity.

The brokerage firm also outlined key events that could provide investors with greater assurance on the political stability of the Unity government next year, including the passing of the confidence vote on new Prime Minister Datuk Seri Anwar Ibrahim as well as the tabling and approval of Budget 2023, expected in January /February 2023.

Other key events for next year also included UMNO party elections, and state elections in six states.