28/11/ 2012 (The Sun) - The Malaysian stock market is expected to see a 10% earnings growth next year, driven by the oil and gas (O&G), banking, construction, healthcare and manufacturing sectors, said Eastspring Investments Bhd CIO of equities, Yvonne Tan Hong Yean.

"Currently, it is about low teens of between 10% to 12%. We are expecting a 10% growth rate (for 2013), but much will depend on the crude palm oil (CPO) prices which are going to be low," Tan told reporters after presenting a paper on the Malaysian equity and bond outlook 2013 here yesterday.

She expects the current economic performance and activities under the government's Economic Transformation Programme (ETP) will contribute to the growth.

The local economy grew 5.2% in the third quarter of this year from a year ago, beating economists' estimate.

Tan said Bank Negara Malaysia's GDP forecast of between 4.5% and 5.5% for 2013 is achievable as domestic consumption remains strong and the accelerated public sector spending will support the rising domestic demand.

"We expect an investment revival, led by the private sector, especially in infrastructure and O&G spending," she said. Since its launch in October 2010, a total of 158 projects with total investment of RM231.4 billion has been announced under ETP.

She added that to date, O&G companies have won RM5.8 billion worth of contracts and the market is expecting an upcoming Pan Malaysia hook-up commissioning jobs worth RM10 billion as well as a few more risk-sharing contract marginal field or enhanced oil recovery brown field projects in the near to mid term.

On the impact of the upcoming general election (GE) on the stock market's growth, Tan said: "If the GE outcome is surprising, it may impact the market. When there are uncertainties in the market, investors will stay on sidelines."

She estimates the GE to be held at the end of first quarter 2013, as the election must be called before April 28 2013.

Tan also said Asian cyclical stocks could rally on any good news and valuations look generally attractive, but not all Asian markets are cheap.

"Those driven by the domestic growth look expensive and they could rise in line with profit growth."

Historically, she said Malaysian market is always high in valuation. So, it is seen as a more defensive market.

"In a bull run, it (Malaysian market) has always lagged behind but if there is a sell in the regional markets, it will outperform due to its defensive nature," she added.