Myle Money

Saturday, April 21, 2007

The recent relaxation of investment laws by the Malaysian government has set the country's investment climate right for investors. We think the Malaysian bourse has more notches to climb!
Improving Economic Fundamentals
The Exemption of The Capital Gains Tax on Preperty Sales
Emerging Islamic Financial Theme
Other Recent Developments Set Positive Trends
A Risk to Note: Non-Performing Loans

The Bank of Japan's governor repeated his optimism over the US economy, saying it has a "high probability" of achieving a healthy slowdown despite signs of moderating business investment and high inflation rates.

China, which accounts for about 15% of global GDP, accounted for 30% of world growth in 2006
Asia expanded at around 7% last year, while Latin America, which is still recovering from the Argentine economic crisis of 2001 and 2002, grew about 4%
The U.S., which has been rising at a healthy rate of between 3% and 3.5% expansion of gross domestic product per year, is expected to slow down to around 2.4% this year, Wyss said. Europe and Japan, by contrast, "are speeding up" to around 2% growth this year

Demand in Europe, Japan and developing countries like China and India has offset weaker growth in the U.S. Downside risks to the outlook have receded.
Forecast for US GDP growth this year is 2.2%, whereas for 2008 is 2.8%
Much of the U.S. economic slowdown has been concentrated in the housing market, trading partners beyond Canada and Mexico haven't been affected much
Forecasts for China is 10% for 2007, but raised projections for India sharply higher for both this year and next.
Assumption that oil prices would fall 5.5% to an average of $60.75 a barrel this year and then rise 6.6% in 2008.

For KLSE, PE (2007) = 16.4X, whereas PE (2008) = 14.4X
Malaysian equities market is attractive with earnings growth at 13.7% and 13.2% for 2007 and 2008
For STI, PE(2007) = 17.3X, whereas PE(2008) = 15.6X
Singapore equities market remains attractive with earnings growth at 6.9% and 10.6% for 2007 and 2008.