PETALING JAYA: Kenanga Investment Bank sees higher risk in the current investment environment compared with the situation six to 12 months ago, weighed down by Malaysia’s weakening fiscal balance sheet, impacts of prolonged lockdowns, heightened political risk, and a risk of a Budget 2022 impasse.
Its head of research, Koh Huat Soon, highlighted that dealing with the Covid-19 crisis has gone into 18 months.
“So much has been spent in the form of aid packages by the government and so much resources have been put in to help support the economy. The longer we deal with this, the less room for error that we can afford,” he said at Kenanga’s Q3 2021 Market Outlook’ virtual briefing today.
Koh pointed out that the federal government debt stood at its highest ever at RM95-100 billion, which translated into 6.3% of the country’s gross domestic product. In turn, this leads to a need for fiscal consolidation when recovery sets in next year.
He also noted that this could spell trouble for the government’s ability to pass Budget 2022 in October this year given the doubt on its financing capacity.
Against this backdrop, the head of research reiterated the revised end-2021 target of 1,575 points for Bursa’s FBM KLCI from 1,710 points made at end-June, reflecting the current market risk.
Source: The Sun Daily
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