Take Advantage of These 2 Profitable Investment Ideas
The Chinese Equity Market
If you look at the past performance of the Chinese equity market, over the past couple of months, the Chinese equities have tumbled by more than 20% from the peak due to the escalating trade war tension between US and China as well as the continuation of the deleveraging campaign in China.
However, in late July 2018, if you all still remember, the Chinese government has announced a package of fiscal stimulus which aims to tackle the external uncertainties and to support the local economic growth. Therefore, although we do expect that the Chinese economic growth is likely to moderate this year, we don't foresee it to cause the Chinese economy to collapse.
On the valuation side, both the Chinese onshore and offshore equity markets are trading at very attractive valuation level of close to -1SD. With that, they are expected to deliver 30% of expected returns over the next couple of years.
Malaysia Small cap Sector
Back to the local front, investors might want to consider the small cap segment, as we see a higher upside potential from the local small to mid cap companies.
At this juncture, if you look at the prospect for Ringgit, we don't see any strong catalyst that could drive Ringgit higher, as the foreign investors are unlikely to pile into the Malaysia market due to the policy uncertainties. Therefore, the short-to-mid term weakness in Ringgit is likely to translate into a higher revenue and higher profitability to the local small to mid cap companies as majority of them tend to source a big portion of their revenue oversea.
The second thing, the zero-rated of GST that happened recently, although it is not expected to improve the profitability of the local businesses, it is expected to increase the liquidity and working capital which deemed to be more important to the small-mid cap companies due to their limited access into the favorable credit facilities.
On the valuation front, the Malaysia small cap segment is currently trading at a very attractive level of close to -1SD. Also, if you look at the spread between the Malaysia big cap and the small cap segment, it is currently trading at a 5-year high level, which indicates that the small cap has a higher upside potential as compared to the big cap.
To take advantage on the two investment ideas, you can click on the link below and read the full article at Fundsupermart.com.
Full article: https://www.fundsupermart.com.my/main/research/-View-3-Key-Investment-Themes-To-Focus-Now-10038
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