Mid Year Review and Outlook

In February, we published The Edge’s inaugural State of the Nation report, outlining our thoughts on the economy, stock market and key sectors. This was followed by weekly State of The Nation updates, where we track major economic and stock market trends.   

This week, we review what has happened in the first half of 2014, and what lies ahead. 

Many of our analysis and predictions have come to pass, and some are continuing to unfold. Malaysia’s high levels of large household debt have affected consumer spending, lending and the property sector. Corporate earnings growth has slowed and the Malaysian stock market has underperformed its regional and global peers. 

However, our prediction that the stock market will weaken as liquidity is withdrawn due to the tapering of Quantitative Easing (QE) in the US, has turned out wrong. Or rather, the effect is being delayed by new events.

Stock markets in emerging markets have continued to rise (although very modestly for Malaysia) due to newly introduced monetary easing measures in Europe and Japan, which have added new liquidity and helped offset the effects of the QE tapering exercise in the US. 

The FBM KLCI is up a modest 1.2% this year to 1,890. 

Will the uptrend continue? What lies ahead? We take a closer look at the economic and corporate prognosis including the impact on interest rates, currency, property, stock market and global liquidity.

For the full report, read The Edge this week.