KUALA LUMPUR (Dec 18): Investors can expect a recovery in Malaysia’s stock market after the 14th general election (GE14), on the back of sustained earnings growth momentum forecasted next year, according to MIDF Research.

Speaking to reporters at a media briefing on Malaysia’s 2018 economic outlook today, MIDF Amanah Investment Bank Bhd Research head of equity strategy Syed Muhammed Kifni Syed Kamaruddin said while the market has been facing some selling pressure this year, it may have hit the bottom.

However, a rebound will be subdued, amid lack of participation from cautious investors prior to GE14 — a trend that was seen in the previous general election as well.

“When the sentiment improves, a recovery can be expected.

“The Monday right after GE13 (on May 5, 2013), the KLCI actually outperformed and gained back all GE13 discounts,” Muhammed Kifni said. “Other developments such as the Fed rate hike do create some noise, but price always moves in tandem with earnings.”

MIDF Research expects the benchmark FBM KLCI to end the year at the 1,750-range and hit 1,900 points at end-2018, as the underperforming market catches up with its regional peers.

The house is also projecting a corporate earnings growth average of 6.5% in 2018, following a strong 7% average growth projected for 2017.

Malaysia’s GE14 must be held before Aug 24, 2018, with the street expecting it to be held in the first half of the year.