Market Outlook
Equity Market Outlook
- The recent bond purchase programme announced by the ECB is expected to boost market sentiment.
- At the moment, we do not see any material impact on the equity market from the Greece election.
- We maintain our stock-picking strategy for the Malaysian market. We still favour high yield stocks and export-oriented sectors.
Fixed Income Outlook
- We think the budget revision announced last week is a step in the right direction which is based on more realistic assumptions. However, the target looks tight as it does not leave much room for slippages. The MGS market traded mixed last week, but yields on short maturity bonds fell as monetary policy stance remains “highly accommodative”. The 3-year benchmark fell 6bps after the budget revision was announced.
- December inflation was recorded at 2.7%, down from previous month, but this was largely expected due to lower retail fuel prices. In the short term, we have a neutral view on the policy rate, but would monitor for any downside surprise to growth numbers.
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