The performance of Bursa Malaysia is likely to be bullish next year, says a licensed investment advisor, Ooi Kok Hwa.
He expects the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) to cross 2,000 points then, led by banking stocks as well as positive performance by the second and third liners.
Therefore, Ooi said, 2014 would be a good year to invest in stocks with the focus on second and third liners as well as banking counters, amid the possibility of an interest rates hike.
"Fundamentally, the global economy is recovering from a deflationary environment and entering into one that is inflationary.
Therefore banking stocks would lead the market rally on any interest rates hike," he told Bernama today.
He also said that the local bourse is likely to see retail investors return on improved sentiment as the economy in The United States, Europe, China and Japan are showing signs of recovery," he added.
Ooi, who is also the managing partner of MRR Consulting, said the declining unemployment rate, increasing industrial production and stronger euro, were signs that the eurozone crisis was coming to an end and starting to recover.
He noted that the FBM KLCI is unlikely to touch 1,900 points towards the final quarter of this year as stocks are traded at a price earnings ratio (PE) of 16 times.
"Investors remain cautious as the market is digesting the potential negative impact from the scale down of the United States' quantitative easing (QE3).
"The current market worries are the US debt ceiling and the shutdown in government, early termination or scale down on QE3 and slower economic growth in China and India," he said.
Ooi said industry stocks would follow the bullish trend amid the possible interest rates hike next year, as their profit margins would increase due to higher selling prices, but costs remaining low.
Regarding the 2008 and 2011 financial crises, he said: "The global economy is recovering from two financial crises and I think, to have another is unlikely.
"The previous downside risks have been reflected in stock prices, the bond market, currencies and funds moving out. Therefore, room for a further decline is limited." - Bernama, October 5, 2013.