Sunday, 21 June 2015

Global and Malaysian Stock Market Outlook By Mr Ooi Kok Hwa

I attended an interesting talk today on the Global and Malaysian Stock Market Outlook by Mr Ooi Kok Hwa. He is the Managing Partner of MRR Consult, which deals in Business Appraisals, Investments & Financial Training. He is also a Chartered Financial Analyst (CFA) and Licensed Investment Advisor.

Mr Ooi, who used to have a column in The Star, was one of the keynote speakers at the InvestFair seminar held at the MidValley Exhibition Centre this weekend.

Mr Ooi gave convincing reasons for his outlook, based on in-depth data and the conclusions he made were very interesting. For the global economy, the following points were put forward:
  • Economic growth is well underway in the US and Europe
  • Risk of inflation is rising.
  • US will need to raise interest rates soon.
  • Bond markets are already affected due to this expectation.
  • China's economic growth is moderating.
  • The authorities will let their currency to float lower due to slower growth.
  • China stock markets are too high and will consolidate.
  • Oil prices will stagnate for the next few years.
  • Gold too may not perform well.
  • However other commodities like copper & CPO may have begun turning around.

For Malaysia, he made the following observations:
  • Ratings agencies are considering downgrading ratings for Malaysia.
  • If ratings go down, bonds and high dividend stocks may be affected.
  • Yields may reach 5%..
  • These issues are not too big but there will be some effects.
  • 1MDB too, while admittedly a risk, is not a huge risk.
  • However, what has been revealed is just the tip and there will be a lot more to come.
  • RM expected to weaken further but will eventually enhance exports and save Malaysia.
  • Oil prices are going to affect the country's revenue.
  • Nevertheless, it is somewhat balanced by takings from GST.
  • GST is going to affect consumer sentiment and GDP growth in the short term.
  • He predicted a difficult period of around 6 - 12 months.
  • People may start to feel the pinch after Raya.
  • Individual defaults may increase slightly and bank stocks may be affected.
  • Difficulties in the current environment may start to show in the Q2 results this year.
  • Therefore July and August could potentially be difficult months.
  • Property prices may possibly go south early next year.
  • He appears to be willing to buy properties next year in anticipation of a price fall.
  • Export sector is doing very well and will anchor the country.
  • Next support levels for FBM KLCI is 1680, 1,600 and IF breached, finally 1,300.
  • However in the long run, the situation is not so negative.
  • The export sector will support Malaysia in the recovery.

What I gather from his talk is that he is expecting short term pain in the next 6 - 12 months but does not expect a serious recession and that the country will recover nicely led by exports. 1MDB meanwhile will be a major issue for the same period but will be a thing of the past after that.

Please note that it is not easy to provide an outlook and sometimes the forecaster misses the mark but the data supporting his analysis is sound. It is important for investors to also get data, information and opinion from other credible sources to formulate sound investment strategies.

Mr Ooi conducts courses for the investing public and you can email mktg.my@shareinvestor.com for more information.

Razali is a financial writer and investment advisor. Email razali@laburniaga.com to ask about his services. He also runs a Malay writing and translation business. Visit www.translate2malay.com for more information. He has written three 4 books about stock and unit trust investments in Malay and has a Malay investment blog called Risalah Labur Niaga.

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