Strong earnings growth lends support to KLCI

KUALA LUMPUR: Against the backdrop of strong corporate earnings growth driven by the continued economic recovery, OSK-UOB Unit Trust Management Bhd’s CEO Ho Seng Yee expects the FTSE Bursa Malaysia KLCI (FBM KLCI) index to climb near to 1,460 points this year.

Ho forecasts corporate earnings to grow 28% to 30% this year that will in turn lift the benchmark index by 14% to 15% from last year’s closing at 1,272.8 points. The FBM KLCI closed at 1,308.4 points yesterday — the highest since March 2008, up 35.6 points or 2.8% year to date.

“We are also foreseeing foreign investors to make come back to the country,” he said. The fund manager anticipates foreign interest, which has fallen to near historical low, to emerge in one months’ time the soonest.

Also, Ho said many projects that had been earmarked under the government’s stimulus packages that had yet to start would be carried out this year. This would give another boost to the market sentiment.

To recap, the government in March last year had allocated RM15 billion fiscal spending, including infrastructure building, to stimulate the domestic economy, on top of the first stimulus package unveiled in 2008.

“We are also expecting the oil and gas stocks to increase,” Ho foresees the O&G stocks to perform this year considering the relatively strong oil prices. The crude oil prices surged to US$80 (RM269.60) per barrel early this month before it eases to US$78-level in Asia trading yesterday.

Ho was speaking to reporters at the launch of OSK-UOB Asia Consumer Fund yesterday.

Commenting on the interest rate trend, Ho believes there won’t be any hike in the next six months amidst the stability in the economy.

OSK-UOB Unit Trust Management is offering 400 million units of OSK-UOB Asia Consumer fund at an initial price of 50 sen per unit. The fund is a feeder fund and invests into the United Asia Consumer Fund, which is managed by UOB Asset Management Ltd, Singapore.

Ho said the fund would allow investors to ride onto the anticipated consumer-spending boom in Asia considering the large and young population in the region. According to him, the fund will invest in Asian consumer stocks, except for Japan.

He explained that the growth of Asian economies has for many years been underpinned by their export sectors and now added on by government measures to boost domestic demands.

“Research shows that Asia’s income levels have reached or are approaching the critical point when mass consumption takes off,” he added.

OSK-UOB Unit Trust Management Bhd currently managing funds worth over RM5.4 billion.