Jefferies starts coverage on Malaysian equities with "bullish" view

Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Wednesday, 08 May 2013 16:46
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KUALA LUMPUR (May 8): US-based Jefferies LLC is initiating coverage
on Malaysian equities with a “bullish” view. This is in anticipation that the
FBM KLCI will play catch-up with other Asian bourses after Malaysia's
just-concluded general election.
In a note, Jefferies chief global equity strategist Sean Darby
recommends that investors switch their investments to Malaysia from
Indonesia. This is because Malaysia’s equities market has lagged its
regional peers over the past year.
Darby said “investors are likely to be relieved that political risks have
faded” when Barisan Nasional returned to power from the nail-biting
election.
"Due to the homogeneous nature of the stock market, the bourse is considered a low-beta Asian play. Despite a robust
current account, the equity market has lagged its regional peers over the past year.
"We are initiating with a modestly bullish view," he said.
In contrast to many developing economies, he said Malaysia's liquidity conditions are modest while private credit growth and
money supply are running at a relatively shy pace.
“There is little spare ammunition to offer from the country’s fiscal position, with public debt just shy of 50% to GDP. The
country is still running a current account balance and portfolio flows have been firm,” said Darby.
However, he pointed out that Malaysia’s economy has been losing the equivalent to a third of the current account surplus,
although “there are no inflation fears”.