Rakuten sees FBM KLCI to reach 1,650 level by year end

The forecast is underpinned by the continued earnings growth expected moving forward


THE benchmark for FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to exceed the 1,600- to 1,650-point level by year end, according to Rakuten Trade Sdn Bhd.

Rakuten head of research Kenny Yee said the corporate earnings has been positive thus far, with continued earnings growth expected moving forward.

“This supported by the continuous inflow from the foreign funds — all the past month we noticed that the foreign funds, whether up or down, they’ve been consistently flowing in,” Yee told reporters at the launch of Rakuten enhanced US Market Trading Service today.

As of today, the net inflow from foreign funds has reached about RM8 billion, which is a “plus point” for market growth.

Moreover, he sees that volatility for FBM KLCI is still low if compared to other markets in the region.

“I think we (Malaysia) have always been in a very fortunate position — high oil prices was still manageable and inflationary pressure for now is not as bad as the developed countries,” he said.

For next year, Yee anticipated that FBM KLCI to resume its higher upward trajectory by more than this year targets 

“Next year, I expect things to smoothen up. I think the corporate earnings will see a better performance because this year we are looking at uncertainty and of course, Cukai Makmur (prosperity tax) and yet, Malaysian corporates managed to take up their earnings growth,” he added.

Touching on ringgit, he said it will likely to weakens further against US dollar over the short term.

“I think when we talk about the local unit, it is not because of the ringgit in the beginning. It is only weakened against the greenback, but against the regions (our peers) ringgit is actually strengthening,” he noted.

He foresees that ringgit will only rebound once the Federal Reserve eased its monetary policy and interest rate hike possess.

Earlier, Rakuten launched its enhanced its Foreign Market Service that includes the benefits of foreign currency facility.

Rakuten CEO Kazumasa Mise believes that the rollout of the foreign currency facility is timely and will be integral to boosting the appeal among Malaysians to trade in markets like the New York Stock Exchange and Nasdaq.

“Since offering trading access into the US, service demand continues to steadily grow month on month.

“To date almost 25,000 US trading accounts have been activated through Rakuten, with about 70,000 orders matched successfully,” Mise said.

Meanwhile, Rakuten is on track to expand its service trading access into Hong Kong by the fourth quarter of 2022.

As of July, Rakuten had activated more than 250,000 trading accounts and more than RM105 billion in total trading value on Bursa Malaysia since business day and clients’ assets under trust was almost RM3.5 billion.