KUALA LUMPUR — April 20, 2018: A Hong Leong Investment Bank (HLIB) Research report made available some days ago predicted that Barisan Nasional will win the 14th general elections on May 9.
Incidentally HLIB Research nevertheless qualifies that it is not its forte to predict on politics.
The prediction is anchored by the inevitable increase in three-cornered fights in GE14 following the decision by PAS to break away from the former Pakatan Rakyat opposition pact.
The Malaysian Digest news portal carried a report today on HLIB Research’s prediction which was also summarised by investor.com earlier.
HLIB Research noted that some of BN’s biggest victories were achieved when the opposition was fragmented, as was the case in 1995 and 2004.
Following this prediction, HLIB Research foresees positives for the Malaysian economy.
“We retain our positive view on Malaysian equities for 2018, driven by a confluence of pick up in domestic spending, stronger ringgit, rollout of construction jobs and the return of investor risk.
“The ringgit appreciation theme remains in motion with a 4.8% appreciation against the USD in 1Q18. We expect the USD/MYR exchange rate to average 3.9 in 2018 (2017 average: 4.3), implying a potential 9.5% appreciation YoY on average.
“Whilst construction job flows were slow in 1Q18 (listed contractors saw a 31% YoY decline in contract awards), we are unfazed as we believe that it was merely due to a timing lag in awarding new mega projects given that GE14 is just around the corner. Key mega projects that we expect to be awarded post GE14 include MRT3 (RM45bn), HSR (RM60bn), Pan Borneo Sabah (RM13bn) and ECRL (RM55bn) subcontracts.”
Post-GE14, HLIB Research also notes that foreign buying will gain further traction, higher than the current foreign shareholding of 23.6% (as at end Feb) ”once the perception of political risk dissipates.”
In another report after BN’s manifesto was unveiled, the firm forecast a 5.3% gross domestic product growth, 2.7% inflation and no further interest rate hike for the year, as well as no significant impact to economic headline projections in 2018 should they continue to rule.
“We believe that most of the incremental cost this year from the proposed manifesto measures can be somewhat offset by higher oil revenue.”