Credit Suisse stated that Q1 2017 is likely the peak for our country’s GDP. Historically Q2 is proven to be much weaker than Q1 for obvious reasons but Raya seems to be in Q2 this year and hopefully that changes everything. This makes Q3 the definite slowdown quarter that would be recorded this year.
Take a look at CS’s report in the link below to see the segments that grew or shrunk in Q1.
Starting with ringgit, the biggest problem with it is foreign bondholders dumping our Malaysian Government Securities which equals a weaker ringgit ahead. There isn’t any near term catalyst other than oil price rise that would help the ringgit at the moment. We would likely see weaker ringgit for 2017.
Election is here and it would likely be this year since the Barisan collation is at its strongest since the last election. KLCI historically shows that it perform all markets in the region 3 months before election and underperforms all countries in the region one month after election.
Malaysian GDP forecast for 2017 at 4.5% compared to 4.17% for 2016. This showed that economics of the country is still improving but that isn’t reflected in our currency.
Credit Suisse gave a very cautious target of 1670 for KLCI which is actually 22.5 points or 1.36% from today’s close…
See the rest which includes sector recommendations in the report below!
Well with the new PNB Chairman Tan Sri Wahid Omar leading the investment house, we would likely see big shifts happening since he is the master of change transforming a corporation or in a form of rescue.
Starting with their investments in Sime Darby, see how PNB would roll out its holdings shift to some of our biggest corporations in Malaysia.
These are two articles from Credit Suisse for the outlook of our equity markets in Malaysian and other Asian economies after Trump got elected as President.
In the meantime, the biggest threat for our country is still Trans-Pacific Partnership Agreement (TPPA). The net benefit of TPPA for Malaysia far exceeds the negative effects with GDP forecast to rise about 8% after 2018.
This quarter’s results is a combination of lower income from interest and non-interest segment and higher impairment provisional charges. This is what we call a double whammy blow and it doesn’t stop there. The net impaired loans ratio rose 0.11% which makes things worse.
The only positive aspect that we are getting is higher CET1 Capital Ratio which meant an increase in strength from a quarter ago.
Although we felt that the valuations are cheap for Maybank, it is still best to adopt the sit and wait strategy on it.