Will GE14 volatility create trading opportunities for investors?

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Volatility from GE14 Presents Trading Opportunities

Volatility stemming from the 14th general election (GE14) is expected to create trading opportunities for investors, underpinned by Malaysia's robust economic fundamentals, projected earnings growth, and anticipated post-election domestic demand. Despite concerns surrounding GE14, business, investor, and consumer sentiments are forecast to gradually recover, paving the way for such opportunities.
Economic Fundamentals Support Market Resilience

Malaysia's economy is projected to maintain solid footing, with GDP growth anticipated at 5.2% for 2018. This growth is supported by real exports expected to increase by 5.6% and domestic demand by 5.3%. The private sector is identified as the primary driver of this domestic demand growth, fueled by continued private consumption and investment.
Earnings Growth Forecasts Remain Positive

Corporate earnings are also expected to show healthy growth, providing a fundamental basis for investment opportunities. The FBM KLCI's earnings growth is forecasted at 7.5% for 2018 and a further 7% for 2019. RHB Research has set a target of 1,850 points for the FBM KLCI by the end of 2018, indicating a positive outlook on market performance.
Sector Preferences and Investment Themes

RHB Research has identified several sectors as overweight, suggesting areas where potential returns may be higher. These include banks, utilities, oil & gas, rubber products, gaming, healthcare, construction, basic materials, and timber. This selective approach highlights specific industries expected to benefit from the prevailing economic conditions.
Foreign Fund Flows Remain Supportive

Despite potential market fluctuations, foreign investors have demonstrated continued interest in Malaysian equities. Year-to-date, cumulative net inflows into Malaysian equities have reached US$539.5 million (RM2.1 billion). While foreign funds were net neutral since February, this sustained inflow contrasts with outflows observed in other regional Asean markets, indicating a relative preference for Malaysia.

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Will GE14 volatility create trading opportunities for investors?

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