=MARKET BUZZ: Malaysian Stocks Snap 2-Day Loss; Nomura Reiterates Neutral View
KUALA LUMPUR (Sep 26) -- Malaysian stocks snap two days of losses tracking broad gains across Asia; KLCI now up 0.2% at 1797.28 while Nikkei Asia300 is up 0.6%. KLCI had opened down 0.3% after a mixed performance in the U.S. Outlook for Malaysian equities remains subdued as the benchmark now trades at 16.3x, second-most expensive market in the region, says Chetan Seth, Southeast Asia Equities Strategist at Nomura Securities; Asean now trades at 14.2x. “We see less room for further multiple expansion,” says Chetan, noting disappointing corporate results and weak earnings growth expectations. Views likely populist policies could drag on fiscal deficit and also weaken government spending and potentially growth; corporate margins at risk of being hit by higher costs of doing business. Still, significant compression in valuations unlikely as investors ascribe premium to stock market on government’s promises of reform; Malaysia also continues to offer defensiveness due to its “strong” domestic investor base. Reiterates Neutral view on Malaysia. Adds, “in Malaysia, we like high-quality banks, and stocks that are likely to benefit from strong consumer confidence and select dividend plays - Petronas Chemicals and Bursa Malaysia.”
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