Is the 1960's classic from the platters .
Malaysia looks to be like a great pretender, with Morgan Stanley saying that despite being the only country to be under weight by foreigners in South East Asia, good things are coming our way.
Nomura says no such thing, pointing out that our stock market has gone up by six per cent against the MSCI, and even though, corporate earnings will go up by between eight to nine per cent, valuation wise, we are still the most expensive buy in South East Asia
Morgan Stanley though, has been muted and un convincing on the valuation front.
CNBC has the story. Read below :
Morgan Stanley believes that Najib will call for election this September.
Malaysian company earnings were also poised for recovery, Morgan Stanley said, estimating profit growth would improve to 8-9 percent in 2017-18 after three years of declines.
The bank also pointed to construction companies' "peak" order book levels, a 10 percent rise in palm-oil volumes with chances for price increases and a drop in banks' provisions as non-performing loans peak.
The fifth driver for Malaysia stocks was a "cheap and supported" currency, the bank said.
"We think domestic sentiment on the ringgit has stabilised, with lower political uncertainty and improving commodity prices," it said. "The conversion of export proceeds into ringgit is also supportive."
Earlier this year, the ringgit had weakened to around levels not seen since the Asian Financial Crisis in 1997, with the dollar fetching as much as 4.4980 ringgit.
In Friday trade, the dollar was fetching around 4.39 ringgit.
To be sure, the bank noted that the MSCI Malaysia may be expensive compared with its Southeast Asian peers, trading at 16.3 times the next 12-months' earnings.
But it added that it believed earnings were depressed, with the index trading at only 14.9 times its 2018 earnings per share forecast.
The bank also noted that Malaysia was the only Southeast Asian market where foreign investors were underweight compared with other emerging markets.
"Given the low positioning, upcoming catalysts, and turnaround we have seen in commodity-oriented currencies like the Brazilian real (BRL) and Russian ruble (RBL), Malaysia could see an influx of foreign equity flows, which could help re-rate the market further along with improving earnings trajectory," it said.
It set a base case MSCI Malaysia target at 645, compared with levels around 605 currently.
Not all analysts were taking a positive view on Malaysia's market. Nomura said in a note on Friday that it was staying underweight.
Nomura said the primary argument for increased interest in Malaysia stocks was that after underperforming regional peers "so significantly" for four years, the market should be attractively valued. The bank also noted that politics and governance appeared to be improving and that an early election could bring further inflows to the market.
But Nomura wasn't convinced.
"The market is not cheap," it said, adding that stocks there could be the most expensive in the region.
Nomura also said that while earnings had bottomed, they continued to underperform the region and would continue to do so in 2017 and 2018.
