That Budget 2018 with its emphasis
to lower the fiscal deficit to 2.8% of grodd domestic product (GDP) in 2018
from 3.0% in 2017 supported by higher revenue on the back of
better-than-expected GDP growth of 5.7% for 2017, should bode well for the
capital market. AmBank Research
In
an economic update Oct 27,
research Anthony
Dass said with such a commitment in place, the implementation is expected to
see some improvement in foreign appetite for bonds and equites, especially with
Budget 2018 being more redistributive rather than aggressively expansionary.
However, he said
the upside appetite could be fairly limited in part due to the impact of rising
US interest rates and the Fed’s decision to unwind its balance sheet.
“We reiterate our
10-year Malaysian Government Securities (MGS) yields at 3.95% – 4.00% for 2017.
“We project the
10-year MGS yields would hover around 4.00- 4.05% levels in 2018.
“As for the FBM
KLCI, we maintain our end-2017 target of 1,745 points and 1,900 points for
end-2018 based on 17.5x 2017F and 2018F earnings at a 1x multiple premium to
the 5-year historical average of about 16.5x,” he said.
source theedgemarket
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