2011 Malaysia Outlook: Sunshine to Sunset

By Finance Malaysia,

Driven by better economy prospects, Malaysia successfully escape recession two years ago, particularly March 2009. Strong GDP growth and numerous government's initiatives is the main reason why local market experiencing a spectacular run-up since then. Today, our KLCI break another record high, by closing at 1551.89 points. So, what is the outlook for Malaysia in 2011?

Maybank expects KLCI will hit 1,700 mark in 2011

KLCI

The Malaysia Index will continue to perform in line with the overall economy. More IPO will be issue. More merger & acquisitions activities will be seen. KLCI will be driven by the following factors:-

• Improving sentiment
• Follow through momentum from all time high
• Hot capital inflows
• Improving liquidity
• Boost by plantation and oil & gas heavyweights, such as IOI, Sime and PetroChem

Preferred sector(s)...

• Finance sector will continue to do well in line with the economy
• 2011 will be a "Grammy Awards" show for construction sector, where government rolling out its multi-billion projects
• Another show is from oil & gas sector, organized by Petronas
• Property sector should continue chalking up sales with great demand

Sunshine to Sunset sector(s)...

Please take note that all is not so bright in 2011. Some of these sectors could face some turbulence in 2nd half of 2011. That's why I called it "Sunshine to Sunset".

• Once high-flyers in difficult times, glove sector could be facing another whirlwind quarters with excess capacity and high input costs in the second half.
• Besides glove, manufacturing sector would struggle because of electricity tariff hike imposed by TNB, speculating after Chinese New Year.
• Technology sector will be a sunset sector next year due to stronger ringgit.

Bond market

Local bond market will boom, in conjunction with the projects awarding sessions and government's ambition to make Malaysia an Islamic financial hub. Local bond market will do well in the first half, before Bank Negara Malaysia resume its interest rate hiking policy later.