Weekly Market Update - 17 July 2017

Market Outlook

Equity Market Outlook

• Malaysia equity market continued to see corrections in the past week after strong rally during 1H17.
• Malaysia’s export for May grew by +32.5% yoy, which is highest in the past 7 years.
• Bank Negara held Overnight Policy Rate (OPR) at 3% as inflation rate moderated to 3.9% in May.
• We deemed recent corrections of Malaysia market are healthy as the fundamental of Malaysia economy remained robust.
• We continue to favour laggard big cap stocks such as construction, consumer and export related sectors.

Fixed Income Outlook

• Bank Negara maintained its Overnight Policy Rate (OPR) at 3.00% last week as widely expected. Its policy tone remained neutral and reiterated that inflation outlook should moderate for the remainder of the year. Thus, our view of policy rate to remain stable remains unchanged.
• During Federal Reserve Chair Yellen’s testimony to the Congress, she highlighted how economic recovery should allow further monetary policy tightening and added that policy rate “would not have to rise all that much further” which hinted that the neutral rate might be lower to the historical rates. She further explained the central bank will start reducing its balance sheet later this year.
• Last week, the local government bond market remained relatively unchanged ahead of Bank Negara’s announcements and Yellen’s testimony

Source: Lipper for Investment Management, as at 14 July 2017. Past performance is not necessarily indicative of future performance. 

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