Fund Flow Still too to conclude a sustained return of foreign funds

Fund Flow Still too to conclude a sustained return of foreign funds
Business & Markets 2014
Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 04 March 2014 09:56

KUALA LUMPUR (March 4): It is still too early to conclude a sustained return of foreign fund flows into Malaysian equities, despite the net foreign buying last week, according to Maybank IB Research head Wong Chew Hann.

In a fund flow report Tuesday, the research house said that over the near-term, Wong said she expects external-driven volatility to persist with the US’ QE Taper and China’s macro-economic numbers and policies to dictate near-term momentum of foreign fund flows into this region.

Wong also cautioned on the meteoric rise in the share prices of some small-caps with the FBMSC having risen 3.9%year-to-date (+5.3% in February alone) after a sharp 36.7% gain in 2013.

She said its 12M trailing PER valuation discount to the benchmark KLCI had narrowed to just 12% while a larger discount is warranted for its smaller liquidity.

“We maintain our year-end KLCI target of 1,940 which is pegged to 15.8x 2015 PER.

“In terms of sector weights, we remain Overweight on construction, oil & gas, power and gloves. We also remain selective on stocks, with no change in our top picks,” she said.