Weekly Market Update - 18 April 2016

Market Outlook

Equity Market Outlook

• Last night the Organization of the Petroleum Exporting Countries (OPEC) meeting was a non-event. OPEC members could not agree on production freeze or production cuts. The next OPEC meeting is scheduled for June. We expect price volatility to remain until June.
• Bank Negara Malaysia (BNM) Governor Tan Sri Zeti reaffirmed that Malaysia will meet its economic expansion target of 4%-4.5% even as risks to global growth mount and greater volatility may persist in capital flows.
• We remain overweight in the construction sector which will benefit from the on-going government spending as well as the plantation sector.

Fixed Income Outlook

• The Malaysian Government Securities (MGS) curve flattened last week on foreign interest on the longer dated bonds. Central banks around the world reiterated their respective accommodative stance due to poorer growth outlook and benign inflation. The European Central Bank (ECB) stated that it was ready for further easing measures whilst the Federal Open Market Committee (FOMC) minutes released last week detailed that members agreed policy tightening should be gradual. As a consequence of the collective dovish stance by central banks, international investors continue to look for opportunities within the emerging markets in search for yields. We think the local sovereign bond market and the ringgit will remain supported in the near term. 

Source: Lipper for Investment Management, as at 15 April 2016. Past performance is not necessarily indicative of future performance. 

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