KUALA LUMPUR, June 26 — MIDF Research anticipates Malaysia’s equity market will continue its positive momentum in the second half of this year (2H2024).

In its market report for 2H2024 today, MIDF Research said that the local equity market has performed relatively well thus far this year with its main benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) recording a gain of 9.3 per cent year-to-date (until June 21).

"We expect the local equity market to gain further ground driven by the inflow of foreign funds, and premised on healthy macro and corporate earnings outlook,” it said

MIDF Research said that the positive market momentum was driven by foreign funds, which arguably played a major role in driving up the local equity market this year.

"From early January to February 27, the local equity market recorded net foreign purchases of RM2.4 billion while the FBM KLCI rose 104 points.

"From April 23 to May 23, the local equity market recorded net foreign purchases of RM3.7 billion and the FBM KLCI rose 82 points to its highest daily close thus far this year at 1,629 points,” said the report.

MIDF Research said it expects to see a resumption of foreign fund inflows as early as in third quarter of this year.

It said that the positive market momentum premised on healthy fundamentals and the boost driving up the local equity market thus far this year were premised on healthy macro and corporate earnings performance.

"Malaysia’s economic growth accelerated to 4.2 per cent year-on-year (y-o-y) in 1Q2024 (4Q2023: +2.9 per cent y-o-y), surpassing expectations.

"Meanwhile, corporate earnings expanded in 1Q2024 with the aggregate normalised earnings of FBM KLCI growing both quarter-on-quarter and y-o-y at 11.3 per cent and 15.8 per cent, respectively,” MIDF Research said.

Meanwhile, it said that macro and earnings growth is expected to continue.

"We expect Malaysia’s economy to see continued expansion in domestic demand and benefit from the recovery in external trade.

"We believe the positive momentum will continue in the coming quarters; therefore, we forecast that Malaysia’s GDP growth this year will be faster at +4.7 per cent (2023: +3.6 per cent),” said MIDF Research.

It also noted that local corporate earnings remain healthy going forward against the backdrop of a broader (both domestic and external demand) rise in macroeconomic activities amidst declining price pressure and a stable interest rate environment.

"In this regard, the consensus earnings of FBM KLCI are expected to grow by +5.3 per cent this year and +7.9 per cent next year,” MIDF Research added. — Bernama