We forecast a rally due to more retail purchases before GST implementation in April 2015 last year. However, out of our expectation crude oil dropped from USD 110 per barrel to today below USD 60 dampened the market.
With low oil prices that lower our taxes income and GDP due to weak export. Weak Ringgit that hampered BNM to reduce rate to stimulate economy. GST introduction in April will hurt retail sentiment for an expected 6 to 9 months.
If couple with climate changes impacts and also political issues in our local front. Personally I see extremism arises in both race and religious will further pressures total local reinvestment and new foreign investment.
As such, we will continue good stocks selection in selected industry. We will start to cut our weight at local front reinvestment policy.
We think KLCI will hovering around 1600 to 1800 with very much a flat year ahead. Unless crude oil rebound in short term back to USD 80 to 90 of US, Europe and China economy will grow back to increase our foreign demand and cover the shorts.