KUALA LUMPUR, Jan 4 — Malaysia is projected to deliver 2021 gross domestic product (GDP) growth of 6.0 per cent, ranking second-highest in Asean after the Philippines, said Credit Suisse.
Credit Suisse Asean securities research co-head and Malaysia research head Danny Goh said private consumption accounts for 58 per cent of GDP and is the single-biggest contributor.
“We believe that as long as the government implements the Budget 2021 measures, such as cash handouts and initiatives to reduce unemployment rate, private consumption should rebound, barring further lockdowns,” he said.
Meanwhile, the key risks that could derail the pace of an expected V-shaped recovery in 2021 are political instability, execution of the proposed budget for 2021, and containment of Covid-19 outbreaks.
“Currently, these risks are quite apparent,” said Goh in the virtual Credit Suisse 2021 Asean Conference Media Briefing today.
He said despite the record level of foreign outflows, the Malaysian stock market has held up relatively well in 2020, thanks to inflows from local institutional and retail investors.
“Basically we’re looking at a FBM KLCI target of 1,795-level for 2021 and this assumes a V-shape recovery and historically we will see a very high correlation between GDP performance and market performance.
“The market tends to trough when GDP numbers trough and correlate pretty well with economic recovery,” said Goh.
For 2021, he said Credit Suisse estimates a sharp net profit recovery for the market by 59 per cent, the highest in the Asia-Pacific region.
“Gaming, property, chemicals, gloves and healthcare are expected to deliver the sharpest net profit growth in 2021,” said Goh.
He said in terms of exposure for 2021, Malaysia does strike a balance between recovery and defensive plays as it is not going to be a straight-forward year.
“Among the recovery plays that is thriving on the economic recovery, we would suggest banks, gaming and construction due to the pump-priming activities, as well as property which continues to see some improvement in terms of buying appetite,” he said.
Credit Suisse estimates companies with reasonably healthy cash flows to deliver an average dividend yield of 3.2 per cent in 2021, compared with 2.45 per cent in 2020 and on par with the historical average.
In the macro sense, Credit Suisse expects Asean markets to post a solid recovery in 2021 after underperforming most other countries in Asia in 2020.
Credit Suisse forecasts the strongest performance for Singapore and Thailand, but all Asean markets are now looking cheap with positive catalysts.
Credit Suisse is one of the world’s leading financial services providers and has a strong presence in its home market Switzerland.
— Bernama
