At the same time, Malaysia’s economy is set to retain its growth trajectory for the rest of the year with continuous support from strong households and intact fundamentals, despite various external variables influencing growth in 1H 2023.
"More companies are likely to write back provisions in the 2H 2023, and fundamentally, things are getting better with more active economic activities happening in the country,” he told Bernama."We saw a decent growth in 1H 2023 and blue chips were doing well during the period. "The divergence in the net change to aggregate forward earnings favouring non-heavyweight stocks was also duly reflected in their relative price performance thus far this year,” it said.
MIDF Research said the heavyweights were bogged down mainly by the price underperformance of financial services counters, which was impacted by banking turmoil in the United States and Europe as well as commodity-related industrial products and services and plantation stocks amid lower commodity product prices.
"Likewise, we can expect to see some improvement in both the valuation and earnings expectation of commodity-related stocks post-US Federal Reserve pause ,” it said. It expects the market valuation of FBM70 to improve further, supported by macro and corporate earnings growth as well as the end of the interest rate tightening cycle, thus maintaining the end-2023 target at 15,000 points.