Affin Hwang Investment Bank vice-president/head of Retail Research Datuk Dr Nazri Khan said there were still many projects that needed to be completed next year and they would become the new catalysts for local companies especially in the banking and services sectors.
Nazri Khan said next year would also see some big initial public offerings (IPO) such as 1Malaysia Development Bhd (1MDB), Weststar and Medini Iskandar.
“The controversy surrounding 1MDB should not be a problem as IPO is a different thing. The assets placed under the IPO are good and defensive such as power assets,” he said. Touching on mergers and acquisitions (M&A), he said these activities would normally start at the global level and the spillover effects could be seen on the Malaysian economy.
“The important thing is our economy is stable and strong, as well as expectations of corporate earnings especially in banking and insurance sectors,” he said.
According to Nazri Khan, besides the tripartitie merger involving CIMB Group, RHB Capital Bhd and Malaysia Building Society Bhd, he was confident that Malayan Banking Bhd was also planning a strategy.
“Don’t forget Bank Islam – the hottest takeover target in town at present.
“The smaller banks would also be targeted after Prime Minister Datuk Seri Najib Tun Razak outlined that banks in Malaysia would be reduced to only three or four by 2020,” he said.
Nazri who is also president of the Malaysian Association of Technical Analysts (MATA) said the slump in the global oil prices and commodities would usually extend for about one to three months.
“The main factor in the decline in commodities prices was the expected hike in interest rates in the US.
I believe this is a one-off scenario.
Time will come when funds outflow will normalise, the US interest rate stabilises and funds will come back to Malaysia,” he explained.
He said the slump in oil prices was a golden opportunity for Malaysians to buy shares at cheaper prices and only their holding timeframe would be extended from one year to three years.
On the depreciation of the ringgit value against the US dollar, Nazri Khan described it as an over reaction because the country’s fundamentals were still strong and its foreign exchange reserves were at the highest level in five years.
“Only the current account surplus is reduced, more or less due to the slight drop in exports.
“This is only temporary, our competitive advantage is obviously there.
What we need to do is capitalise on these opportunities to look for value-added supply chain to compensate for the lower exports,” he said.
Meanwhile, the implementation of the Goods and Services Tax (GST) which is scheduled to start on April 1 next year is not expected to give problems to the corporate sector.
“All companies are given ample room to make adjustments.
Furthermore, other countries have implemented the GST system a long time ago,” he added. — Bernama
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