Economic data set to excite market, says M&A Securities

Posted on 11 February 2014 - 05:38am

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PETALING JAYA (Feb 11,2014): A string of economic data to be released this week may excite the local market, which saw lacklustre trading last week.

The FBM KLCI gained 7.55 points, or 0.42%, to close at 1,816.14 yesterday, after ending at 1,808.59 last Friday.

Yesterday, the government announced the Industrial Production Index (IPI), which saw a 4.8% jump in December 2013 compared with the same month a year ago.

On Wednesday, the government will present the country's 2013 gross domestic product (GDP) report card.

"As export numbers have been very encouraging in 2013, the likely upbeat 2013 GDP may shore up trading sentiment. More importantly, the central bank's economic outlook will be waited by many as steady recovery in the US, eurozone and Japan may lend a huge support to Malaysia's export momentum and, hence, clear visibility as a result," M&A Securities said in its weekly strategy outlook yesterday.

It said this will be in reverse to the situation in 2013 where a murky outlook cut visibility to a large extent and stoked fears that Malaysia's economic acceleration will be tempered by negative developments, especially in the eurozone. "Above all, the release of the central bank's annual report in March will be eagerly awaited by many. To begin with, the government is seen more upbeat on the external condition, which is exports."

The latest International Trade and Industry Ministry expectation is that exports may grow between 3% and 4% this year against the Finance Ministry's forecast of 1.6%. This is telling as many can now dare to dream that Malaysia's 2014 GDP may vault to almost 6.0%, courtesy of a firing external environment and solid public investment, M&A Securities said.

"This may be more than enough to offset the slight weakness in private consumption that may be beaten following the rising in general goods and services prices. Note that full year 2013 export growth of 2.4% is 120 basis points higher than the Ministry of Finance's full-year projection of 1.2%. Given the off-tangent results, we can only expect sparkling 2013 GDP."

It said the FBMKLCI managed to rally at the end of the last week of 2013 thanks largely to the strong export growth in December of 14.4% which thumped consensus expectations of 6.7% growth.