2012

Property – Bad news priced in but outlook remains challenging                         

Sector Update

-          Fundamentals are still wobbly as property sales are largely driven by GDP growth. Given our GDP growth forecast of 3.6% for 2012, we expect property sales to slow to 5% after a 20% growth in 2011 (annualised).

-          We prefer larger caps with sufficient liquidity such as UEM Land, Sunway and Mah Sing for trading opportunities if their share price weakens.

(source RHBInvest)

KUALA LUMPUR: With many of Malaysia's economic sectors having performed solidly over the past 12 months, the country is poised for another strong performance this year, says Oxford Business Group (OBG), a global publishing and consultancy company.

Though final figures have yet to be issued, OBG said it was expected that the Malaysian economy would have expanded by more than 5% in 2011...

At the end of November, the Organisation for Economic and Cooperative Development (OECD) forecast that this solid rate of growth would continue for at least the next five years, predicting that Malaysia's gross domestic product (GDP) would expand by 5.3% in each of the next few years and hit 5.6% by 2016.

OBG said the OECD's forecast was somewhat more optimistic than theAsian Development Bank or the World Bank, which was looking at a growth for Malaysia's GDP rising by 4.7% and 4.9% respectively, in 2012 although it was roughly in line with the International Monetary Fund's projection of 5.1%...

Along with the GDP, Malaysia's balance of payments figures were also positive in 2011, with the current account surplus standing at US$23.8bil for the nine months ended Sept 30, an 18% increase on the US$20.2bil posted in the same period last year.

However, OBG said there were some concerns that Malaysia's export trade could suffer in 2012, as major segments of the global economy could flirt with recession.

While Malaysia's exports rose by a healthy 15.8% in October, this rate of increase was lower than that of the previous month, though still above the 9.1% rise spread over the first 10 months of the year, it said...

The latest figures released in November by the Statistics Department showed inflation had remained fairly steady, with consumer prices rising by 3.4% year-on-year in October.

Inflation could ease further in 2012, dipping to between 2.5% and 2.8%, OBG said.

This would be a result of a slowing of demand, and a slight deceleration of growth, with commodity prices moderating, it said...

The report, released in mid-December, said the outlook for Malaysian lenders was stable though household debts, currently running at 76% of 2010 GDP, remained high.

OBG said another sign of the stability and appeal of the Malaysian economy came in the form of inflows of FDIs, which rose by 43% to US$8.3bil during the first nine months of the year in comparison to the same period in 2010.

Indeed, the year-end total for 2011 was likely to meet or exceed the US$10bil forecast by the government, it said...

“Though there were still positive FDI inflows in the third quarter, the US$1.6bil between July and September 2011 was some 50% less than in the previous quarter, reflecting uncertainties and growing caution among international investors. This unease could well continue into 2012,” it added. Bernama