Latest news with #pre-LiberationDay
The Star
a day ago
- Business
- The Star
Investors focus on value stocks with liquidity
Kenanga Research has retained FBM KLCI year-end target at 1,655. PETALING JAYA: Investors will continue to focus on quality stocks with liquidity as the local bourse goes through recovery since the 90-day reciprocal tariff pause, says Kenanga Research. The research house said the general market recovery had gone to pre-Liberation Day levels and market valuation discount would dissipate once a favourable verdict is given on the reciprocal tariffs. The stocks in focus include YTL Power International Bhd , IJM Corp Bhd , Sime Darby Property Bhd , and CIMB Group Holdings Bhd . 'Since the tariff pause, Malaysia's large cap stocks have generally rebounded faster than the broader market. 'Valuations of the small cap segment, where we previously only concentrated on visible sectors such as renewable energy/water, is becoming more palatable,' the research house said. Malaysia's 24% tariff stacked favourably compared with those of its peer countries including Vietnam (46%), Thailand (36%) and Indonesia (32%). 'We foresee that if the outcome of the negotiations shows that Malaysia is a net beneficiary, our economic forecast for gross domestic product (GDP) of 4.3%, will largely remain intact. 'Likewise, our market earnings growth estimate of 3.5% is also consistent with a GDP growth of at least 4%, in our view,' it added. The research house projected reciprocal tariff discussions to even be prolonged beyond July 9. 'So far, Malaysia has described talks as 'progressing well', and thus could emerge more hopeful to seal an agreement as both sides accelerate talks towards a deal. 'Elsewhere, the United States and China have formalised a deal involving rare earth shipment, with the United States also looking to cancel a series of restrictive measures,' it said. The research house added that the risk of a prolonged reciprocal tariff would not be a welcome development given that the uncertainty premium would act as an overhang. Kenanga Research said a favourable tariff differentiation outcome would help the tech sector, particularly certain tech stocks such as PIE Industrial Bhd and SKP Resources Bhd who can crystalise their pipeline of potential relocating customers. It expected a manageable environment, with an anticipated ringgit tailwind that augurs well for dividend stocks or banking counters. It added that the third quarter of the year could usher in some domestic cost hurdles, but overall inflation is a manageable 2%. 'Our top market picks see CIMB join the likes of AMMB Holdings Bhd , Tenaga Nasional Bhd , Fraser & Neave Holdings Bhd , Gamuda Bhd and YTL Power, but Malayan Banking Bhd is dropped,' the research house said. It has retained FBM KLCI year-end target at 1,655 based on a 15.5 times price earnings ratio valuation. 'Geopolitics form a potential risk. We have earlier said that the Iran-Israel conflict escalation could cause us to revisit market valuations if there was a spillover into a broader regional conflict, and this has been so far averted,' Kenanga Research added.
Business Times
24-06-2025
- Business
- Business Times
Weakening economy supports prospects of US Treasuries
THE 'One Big Beautiful Bill' has drawn widespread attention to the US fiscal situation, contributing to the removal of US' last AAA credit rating. On top of that, the recent US Treasury auction was lacklustre. These factors weighed on the prices of US long-dated Treasuries in the second quarter of this year. Will long-dated US Treasuries be sold off further? I think it is unlikely, given that a lot of negative factors have already been priced in. Although fiscal conditions will affect the trend of bond yields, economic data is still the biggest determining factor. I think the inflationary pressure in the US is not as serious as some investors expect. It is worth noting that the tariffs are likely to have a one-off impact, and inflation is mainly driven by wage growth and job market conditions. As the economy slows, wages and core service prices (excluding housing) will continue to cool. In addition, China's deflationary trend continues, weighing on commodity prices. At present, US economic growth has shown signs of weakening, and GDP may fall below the long-term average. If the unemployment rate rises, the US Federal Reserve should cut interest rates again this year. The market generally expects the Fed to cut interest rates twice this year – a total of more than 50 basis points. I believe that the final number of interest rate cuts may be more than what the market expects, which will support the prices of US long-term Treasuries. US fiscal situation may not be as severe as expected While the market understandably has doubts about US President Donald Trump's 'One Big Beautiful Bill', investors should take a more comprehensive view when examining the US fiscal situation. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Even if he makes some concessions on tariff policy, the tariff will definitely not fall back to the pre-Liberation Day level of 2 to 3 per cent; rather, it would land in the range of 8 to 9 per cent – enough to bring US$250 billion to US$300 billion in fiscal revenue, which is almost equivalent to the annual expenditure of the 'One Big Beautiful Bill'. Therefore, the US fiscal problem may not be as bad as the market expects. In addition to the Treasury market, the market is also concerned about the erosion of US dollar's role as an international reserve currency. We have reservations about the performance of the US dollar, so we have been reducing our holdings of US dollar assets. But this is not because we are worried that the US dollar will lose its store-of-value function. After all, what alternatives do sovereign wealth funds and major central banks have, apart from gold or AAA-rated Treasuries like those of Australia? Moreover, the liquidity and market size of these assets are not on the same level as US Treasuries, so it is simply unrealistic for them to completely withdraw from the US Treasury bond market. In contrast, the risk of outflow from US dollar assets is more worthy of attention. In the past few years, US stocks have been heavily sought after, and investors' positions in the US market have been approaching the limit. The chaos created by the Trump administration is prompting global investors to rethink their overall asset allocation, which might mean reducing their holdings of US assets, hedging against US exchange-rate risks, or switching to other markets. All these will create downward pressure on the US dollar. Inflation-protected bonds and MBS attractive For a good part of the past two decades, major central banks have implemented quantitative easing policies, which have suppressed the volatility of the bond market and taken away obvious investment opportunities from the market. However, now that market volatility has increased again, active managers are set to benefit from more opportunities. Therefore, for active investors like us, this is actually good timing. We currently favour long-dated Treasuries and inflation-protected bonds (including Tips in the US and inflation-linked bonds in the UK). If we are wrong about the interest rate curve, the most likely reason is that inflation is higher than expected. If so, inflation-protected bonds will outperform regular bonds because interest rates may rise due to rising inflation. In addition, we are also positive about US agency mortgage-backed securities (MBS). These are backed by the US government and more secure than non-agency MBS. Market volatility is pushing up the spread of MBS. The yield of recently issued MBS ranges from 5.5 to 6 per cent, which shows investment value. Meanwhile, some local sovereign bonds in emerging markets also have high yields, and are worth investors' attention. The writer is head of global aggregate and absolute return, BNP Paribas Asset Management
Yahoo
18-06-2025
- Business
- Yahoo
Most investors see international stocks beating US peers over the next 5 years, BofA survey shows
Most investors think the US stock market will underperform global stocks over the next five years 54% of fund managers believe international stocks will be the top-performing asset, BofA's latest survey found. Investors see a global recession triggered by tariffs as the largest tail risk for markets. Investors see years of US stock outperformance coming to an end, with most respondents in a survey from Bank of America eyeing international stocks as the top performer in the coming years. Global fund managers surveyed by the bank indicated they felt more optimistic about international stocks than US equities this month. More than half of investors—54%—surveyed from June 6 to June 12 said they believe international equities would be the best-performing asset over the next five years, BofA strategists wrote on Tuesday. That compares to just 23% of investors who think US stocks will be the best-performing asset, and a combined 18% of investors who believed the best-performing asset would be either gold, government bonds, or corporate bonds. The pessimism hanging over US markets appears to stem from President Donald Trump's trade war and concerns about the effects of tariffs on the global economy. 47% of fund managers said they believe a trade war triggering a global recession was the largest "tail risk" to markets. A worldwide recession has been the largest perceived tail risk to markets for three months in a row. Other prominent tail risks investors were eying this month include the Fed hiking interest rates to combat inflation, or a credit event triggered by the "disorderly" rise in bond yields, the bank said. Still, strategists said that investor sentiment had picked up in Bank of America's June survey compared to recent months, and the mood has recovered back to pre-Liberation Day levels. A sentiment gauge that tracks investors' growth expectations, cash level, and allocation to stocks also rose to 5.4 in June, the gauge's highest level since before Trump's April 2 tariff unveiling. "Investor sentiment back to pre-Liberation Day 'Goldilocks bull' levels, but not worrying bullish," strategists wrote. 66% of surveyed investors also said they believe the global economy would avoid a recession and secure a soft landing over the next 12 months, up from 37% of investors who felt that way in BofA's April survey. Read the original article on Business Insider
Yahoo
18-06-2025
- Business
- Yahoo
Most investors see international stocks beating US peers over the next 5 years, BofA survey shows
Most investors think the US stock market will underperform global stocks over the next five years 54% of fund managers believe international stocks will be the top-performing asset, BofA's latest survey found. Investors see a global recession triggered by tariffs as the largest tail risk for markets. Investors see years of US stock outperformance coming to an end, with most respondents in a survey from Bank of America eyeing international stocks as the top performer in the coming years. Global fund managers surveyed by the bank indicated they felt more optimistic about international stocks than US equities this month. More than half of investors—54%—surveyed from June 6 to June 12 said they believe international equities would be the best-performing asset over the next five years, BofA strategists wrote on Tuesday. That compares to just 23% of investors who think US stocks will be the best-performing asset, and a combined 18% of investors who believed the best-performing asset would be either gold, government bonds, or corporate bonds. The pessimism hanging over US markets appears to stem from President Donald Trump's trade war and concerns about the effects of tariffs on the global economy. 47% of fund managers said they believe a trade war triggering a global recession was the largest "tail risk" to markets. A worldwide recession has been the largest perceived tail risk to markets for three months in a row. Other prominent tail risks investors were eying this month include the Fed hiking interest rates to combat inflation, or a credit event triggered by the "disorderly" rise in bond yields, the bank said. Still, strategists said that investor sentiment had picked up in Bank of America's June survey compared to recent months, and the mood has recovered back to pre-Liberation Day levels. A sentiment gauge that tracks investors' growth expectations, cash level, and allocation to stocks also rose to 5.4 in June, the gauge's highest level since before Trump's April 2 tariff unveiling. "Investor sentiment back to pre-Liberation Day 'Goldilocks bull' levels, but not worrying bullish," strategists wrote. 66% of surveyed investors also said they believe the global economy would avoid a recession and secure a soft landing over the next 12 months, up from 37% of investors who felt that way in BofA's April survey. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-06-2025
- Business
- Yahoo
The market's recovery to near-record high has been led by momentum stock 'freight train'
The "FOMO" trade is alive and well in markets once again. Recent IPOs, like stablecoin issuer Circle (CRCL) and AI cloud company CoreWeave (CRWV), have both seen their stocks rise more than 100% since going public. Shares of nuclear energy company turned AI play Oklo (OKLO) are up more than 70% in the past month. Quantum Computing (QUBT) shares are up more than 56% in the past month, and others in the space have also ripped higher. "The commonalities are they're speculative," Interactive Brokers chief markets strategist Steve Sosnick said in an interview. "They're momentum-driven, and they almost always have some sort of tech veneer to them." With the S&P 500 (^GSPC) back near record highs, the common pillars of the current three-year bull market have clearly returned in markets. Two of the most popular AI trades, Palantir (PLTR) and Nvidia (NVDA), are back to trading near all-time highs. "It's kind of a freight train," Sosnick said. "Remember one of the great adages, 'the trend is your friend'? Well, people seem to be doing very well by following trends." The momentum trade isn't a new phenomenon and has reappeared time and again during the S&P 500's nearly 70% run since the October 2022 lows. But it's the latest in a string of signs that market sentiment has recovered significantly from the height of April's tariff turmoil. In Bank of America's latest Global Fund Manager Survey, 66% of investors said they believe the global economy will achieve a "soft landing," in which inflation falls to the Fed's 2% target without an outright downturn in economic activity. The eight-month high among respondents believing a soft landing is in sight comes as recession probabilities have tumbled over the past month, while consumers' worst fears about a tariff-driven inflation spike have also subsided. BofA's global chief investment strategist Michael Hartnett wrote that the survey showed "investor sentiment back to pre-Liberation Day 'Goldilocks bull' levels." But as is often the case when consensus begins to swing heavily in one direction, some believe the current market leadership could be ripe for change. In a note to clients on Monday, Julian Emanuel argued for investors to seek "valor in valuation" as the summer approaches, with investors closely watching for updates on Trump's tariffs and whether or not they could disrupt economic growth. Emanuel pointed out that the "attractive valuation" factor, including stocks like Verizon (VZ) and Tyson Foods (TSN), has lagged the "expensive" factor, which includes names like Coinbase (COIN), DraftKings (DKNG), Tesla (TSLA), and Strategy (MSTR). The 10.3% underperformance from the value group marks the seventh-worst rolling one-month average for that cohort of stocks against the expensive bucket since 1990, per Emanuel's work. Emanuel added that this trend typically reverses with the valuation factor seeing a 100% positive return in five prior instances of extreme underperformance with an average return of 33.5% over the next 12 months, adding: "[The] valuation factor has value again as the 'whoosh' off the low is set to pause." Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Sign in to access your portfolio
