Weekly Market Update - 15 February 2016

Weekly Market Outlook

Equity Market Outlook

• We expect market volatility as investors adjust to a new environment post the Fed rate hike in December.
• We remain constructive on Malaysia and we prefer large caps that have been sold down and high yield stocks.

Fixed Income Outlook

• The sovereign market traded well at the start of the year on reduced rate hike probability by the Federal Reserve and positive reaction to Malaysia’s budget revision. Dovish comments from the Fed, particularly the concerns of volatility in the financial market and potential downside risk on a China hard landing caused investors to believe the Fed will probably miss its targeted number of hikes for the year. Local bond investors reacted positively on the revision of assumptions in the latest budget, which is on track to meet the 3.1% target deficit.
• We have become more cautious on the sovereign market after a strong rally as we think there is limited upside in the current market. We have also turned less bearish on the ringgit as factors weighing on the ringgit have been played out and an increasingly dovish Fed will benefit emerging markets as a whole. 

Source: Lipper for Investment Management, as at 12 February 2016. Past performance is not necessarily indicative of future performance. 

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