MARKET DEVELOPMENT
Tariff Deferment Gives Some Relief To Businesses: Alliance DBS
Tariff Deferment Gives Some Relief To Businesses: Alliance DBS
26/01/2015 (Bernama) - The deferment of the electricity and gas tariff hike will give some relief to businesses grappling with higher costs, Alliance DBS Research said today.
"In order to promote domestic consumption as well as investments, the government is doing the right thing, which is to halt the hike in the electricity and gas tariffs," its Malaysia Research Head Bernard Ching told reporters on the sidelines of Alliance Bank's Investment and Market Outlook Forum 2015 here today.
Ching was commenting on the government's announcement in the revised Budget 2015 to postpone the scheduled electricity and gas tariff hike planned for 2015.
"Although the government has reaffirmed its stance and commitment towards subsidy rationalisation and fiscal consolidation amid the reduced oil and gas prices, it has a buffer to hold on to for the time being," he said.
Ching said Alliance DBS Research estimates that by end-2015, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) in 2015 would be at around the 1,750-point level, based on 14.5 times price-earnings (PE) ratio, with earnings risk and macro headwinds in mind.
He said the FBM KLCI is currently trading at a mean PE of 16 times.
"We are estimating at that level due to earnings risk as well as macro headwinds that would continue to dampen Malaysia's equity performance.
"Over the longer term, only earnings can drive equity prices, that is where our key concern is, and the masses need to be mindful of the headwinds.
"If there is a rebound in commodity prices, that would be a key catalyst for Malaysian equities," Ching said, adding that not just oil but crude palm oil as well can be a catalyst.
Overall, Ching said, 2015 will likely be a year with pitfalls, but also with quite a number of opportunities.
"In order to promote domestic consumption as well as investments, the government is doing the right thing, which is to halt the hike in the electricity and gas tariffs," its Malaysia Research Head Bernard Ching told reporters on the sidelines of Alliance Bank's Investment and Market Outlook Forum 2015 here today.
Ching was commenting on the government's announcement in the revised Budget 2015 to postpone the scheduled electricity and gas tariff hike planned for 2015.
"Although the government has reaffirmed its stance and commitment towards subsidy rationalisation and fiscal consolidation amid the reduced oil and gas prices, it has a buffer to hold on to for the time being," he said.
Ching said Alliance DBS Research estimates that by end-2015, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) in 2015 would be at around the 1,750-point level, based on 14.5 times price-earnings (PE) ratio, with earnings risk and macro headwinds in mind.
He said the FBM KLCI is currently trading at a mean PE of 16 times.
"We are estimating at that level due to earnings risk as well as macro headwinds that would continue to dampen Malaysia's equity performance.
"Over the longer term, only earnings can drive equity prices, that is where our key concern is, and the masses need to be mindful of the headwinds.
"If there is a rebound in commodity prices, that would be a key catalyst for Malaysian equities," Ching said, adding that not just oil but crude palm oil as well can be a catalyst.
Overall, Ching said, 2015 will likely be a year with pitfalls, but also with quite a number of opportunities.