Market Outlook
Equity Market Outlook
- We expect market to be range-bound for the next few months due to uncertainty over the oil price outlook and impact from GST.
- A range-bound market is generally conducive for fund outperformance as there is less concerns about market over-exuberance (in the event of a rising market) or loss of capital (in the event of a falling market).
- We maintain our stock-picking strategy for the Malaysia market.
Fixed Income Outlook
- Early the week of 23 February, U.S. Federal Reserve Chair Janet Yellen signalled in her testimony that any rate hike will only occur after the second half of 2015 and subject to inflation expectations moving towards medium-run levels. Post testimony, the local bond market rallied on the short end of the curve between 3-6bps as near term rate risk subsided and investors’ risk appetite increased.
- During the week of 23 February, Bank Negara governor Zeti Akhtar Aziz called for a fair assessment from rating agencies on the back of the country’s strong underlying fundamentals and believed the ringgit was currently undervalued. On 27 February, the cabinet rejected a proposal to inject funds into 1MDB.
- Over the 28 February weekend, People’s Bank of China announced a cut of 25bps on its benchmark rate, reflecting a slowdown in economy. The ringgit traded weaker the morning of 2 March on worries that exports may suffer due to weaker yuan.
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