MIDF Amanah Maintains FBM KLCI Baseline Target At 1,750 Points In 2024

KUALA LUMPUR, Aug 5 (Bernama) -- MIDF Amanah Investment Bank Bhd maintained its FBM KLCI baseline target for 2024 at 1,750 points, citing positive monetary and fundamental prospects.

In a research note today, the investment bank recommended a stock selection strategy for the second half of 2024 based on low-to-mid volatility, anticipating potential increased market volatility.

It noted that securities or assets with high volatility experience rapid price fluctuations and are inherently riskier.

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"Securities with low volatility tend to have stable prices, indicating reduced risk. High-volatility stocks have outperformed year-to-date and last year. We foresee a rotation into low-volatility laggards such as finance stocks," it said.

Globally, the bank expects the world’s equity markets to remain generally sanguine, primarily due to anticipated monetary easing with the onset of US Fed interest rate cuts and resilient macro/earnings growth.

It noted that a stronger ringgit against the US Dollar would attract foreign funds, boosting the local equity market.

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"On the flip side, we advise investors to tread cautiously, mindful of the lingering risk of a US recession indicated by several potent empirical indicators and the unsettling situations in Ukraine and Palestine," it added.

MIDF Amanah also commented on the ongoing Russia-Ukraine war, which is not expected to spread to other countries in the region. 

The Israel-Hamas conflict, however, may potentially spread to southern Lebanon, as occurred in 2006.

The bank expects larger Middle Eastern countries to refrain from direct involvement in armed conflict.

"Both conflicts have so far engendered limited impact on Malaysia’s economic and corporate earnings performance, thus exerting limited bearing on the equity market. 

"However, while not foreseen, any major escalation that significantly broadens the theatre of war would substantially magnify the potential economic fallout onto the wider world,” the bank said.

Meanwhile, fears of a US recession resurfaced last week as the Dow Jones, NASDAQ and S&P 500 fell by 2.1 per cent, 3.4 per cent and 2.1 per cent week-on-week, respectively.

The market shift was attributed to a softer-than-expected increase in US non-farm payroll (NFP) in July 2024.

On Friday, the US Bureau of Labour Statistics announced that the NFP rose by 114,000 in July, compared to the 179,000 increase recorded in June.

"While the NFP was below market expectations, it was still above 100,000, which empirically denotes that the labour market is still somewhat in a healthy state. A look at previous recessions, most notably in 2001 and 2008, shows early symptoms of the NFP.

"In both cases, the NFP intermittently fell below 100,000 and into negative territory several months prior," MIDF Amanah stated, adding that the US may avoid recession as long as NFP remains above 100,000.

-- BERNAMA