CGS-CIMB forecasts FBM KLCI to end 2023 at 1,633

04/01/2023 11:53 AM

KUALA LUMPUR, Jan 4 (Bernama) -- CGS-CIMB Securities Sdn Bhd expects the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to finish 2023 at 1,633, up by nine per cent against 1,495 at end-2022. 

The brokerage firm predicted that this year could remain challenging as corporates adapt to the new policy and political landscape post-15th general election (GE15) and adjust to slower global growth, tighter monetary policy and ongoing geopolitical tensions with the Russia-Ukraine war leading to higher commodity prices.

“We expect this to be priced in by the first half (1H) of 2023, and the market to rebound in the second half of the year. 

“We think the downsides could be capped by expectations of stronger KLCI earnings growth of 12.8 per cent in 2023 and the KLCI’s undemanding valuations,” it said in a note today.

In 2022, the key index fell 4.6 per cent as a series of negative events hit the market, including concerns over the outbreak of the Covid-19 Omicron variant, Russia’s invasion of Ukraine, record-high commodity prices leading to inflation concerns, US Federal Reserve’s interest rate hikes, and a hung Parliament resulting from GE15 on Nov 19.

Foreign investors stayed net sellers of equities, and their net selling grew to RM1.4 billion in December compared with an outflow of RM282 million in November. 

Local institutional investors were the largest net buyer last month, as their net buying surged to RM1.7 billion. 

As for 2023, CGS-CIMB said foreign shareholdings are close to their historical lows, and domestic institutional investors could turn net buyers in the market on improved liquidity. 

The brokerage firm’s top three picks for 1H 2023 are Malaysia Airports in view of potential higher international pax as China reopens border; MR DIY, a likely beneficiary of the downtrading trend due to rising inflationary pressure; and RHB Bank due to its attractive dividend yield last year.