Focus will most likely be on construction and, oil and gas related counters, which are reported to be among the biggest beneficiaries for the future projects. According to Affin Investment Bank, the execution of Prime Minister Datuk Seri Najib Tun Razak's reform agenda would be a key market re-rating catalyst.
"Regardless of whether there will be a snap general election in 2011, expectations are that there will be continous positive news flow and execution of the transformation programmes, thereby sustaining market sentiment.
"Any tangible results, of which expectations are generally low, will have room to surprise investors. Fundamentally, the reforms will cascade into higher domestic demand growth and this will lead to positive earnings revisions," said the investment bank.
It also said Malaysia was the fourth best performer in the region after the Thai, Indonesian and Philippines (excluding Japan) stock markets.
The benchmark FTSE Bursa Malaysia KLCI Index (FBM KLCI) ended on Dec 30, 2011 at 1,518.91, up 16.2 per cent compared with 1,272.78 recorded on Dec 31, 2009.
The local bourse ended the trading year a day earlier as Dec 31 was declared a public holiday by Prime Minister Datuk Seri Najib Tun Razak to celebrate the success of the Malaysian football squad in winning the 2010 AFF Suzuki Cup on Dec 29.
MIDF Research, in its research note, said the prospects for the local bourse is good, moving into 2011 with foreign liquidity continuing to be drawn to Malaysia.
In Oct, FTSE re-classified Malaysia as an "advanced emerging market" to take effect in June next year.
"This is expected to attract foreign funds tracking FTSE indices (estimated to be more than US$3 trillion). Malaysia will be one of only nine countries to be in the category. Only four Asian countries are in the developed bracket (Hong Kong, Japan, Singapore, Korea) out of 25," it said.
The research house said it was setting a 12-month base-case FBM KLCI target of 1,650 points for 2011.
"The index can easily overshoot the target in a liquidity driven market," it added.
As for Affin Investment Bank, it revised upwards the FBM KLCI from 1,600 points to 1,630 points level.
The FBM KLCI marked its highest point of 1,528.01 on Nov 10 and the lowest point of 1,233.86 on Feb 9.
The market registered the highest daily volume of 1.863 billion shares on January 5 while the lowest transacted was 449.51 million shares on July 5.
As at year-end, there were 29 initial public offerings (IPO) with significant highlights on Petronas Chemicals Group Bhd, a direct subsidiary of Petronas, which was reported to be the largest IPO in South-East Asia valued at US$4.04 billion at a retail offer price of RM5.05 per share.
The listing of Petronas Chemicals on the Main Market in November also somewhat increased the value of other oil and gas related counters in the local bourse like Malaysia Marine and Heavy Engineering Holdings Bhd.
Other highlights also included the listing of Islamic Development Bank's RM1 billion sukuk Medium-Term Note Programme on Bursa Malaysia in October, marking the first multilateral development bank to list its ringgit sukuk on the exchange.
Besides, in August, the Securities Commission Malaysia, Bank Negara Malaysia and Bursa Malaysia jointly introduced the electronic share payment facility for share transactions to promote further the use of e-payments in the stock market.
With e-share payment, share sales proceeds can now be paid directly into the investors' bank accounts, made available on the same day.
This was followed by the introduction of eDividend, which is a service that allows an issuer to electronically pay cash dividend entitlements directly into investors' bank accounts instead of making payment via cheques.
This is part of the stock exchange operator's strategies to promote greater efficiency of the payment system which is aligned to the national agenda of migrating to electronic payment.
As at Dec 13, a total of 962 companies were listed on the Main Market and on the ACE Market.
Todate, 17 companies changed names this year, 40 companies under the P17 category and 12 companies under the Guidance Note 3 (GN3) category.
As of Dec 29, in terms of daily trading participation, local institutions constituted the largest participation accounting for 52.78 per cent followed by local retail (25.15 per cent) and foreign (22.07 per cent).
On the local front, the Second Capital Market Masterplan, scheduled to be launched by the first-quarter of next year, will likely boost the local bourse and bond market as well as offer further protection for investors.
Among measures expected to be introduced relate to support programmes for market growth as well as providing investors with greater diversity in terms of products and services.
A key highlight will be to strengthen the investor protection regime and ensure surveillance and supervision of the market at the highest level.
Meanwhile, on the regional front, Bursa Malaysia, Singapore Stock Exchange and the Stock Exchange of Thailand are set to go live on the Asean Exchange Linkage by the second-half of next year.
The Philippines Stock Exchange is expected to follow in the first half of 2012.
The Asean Exchange Linkage, which is said to be the first step towards a unified trading market that will attract more institutional flow to the region, will not only provide ease of access but also increase market utility substantially both from trade outside and intra-Asean.
In addition to the Asean Exchange Linkage, the exchanges would also promote leading Asean public companies under the brand of "Asean Star".
The cross-border offering of collective investment scheme by mutual recognition will start in the first-half of next year for non-retail investors. Later, it will extend to retail public, first for plain products by the end of 2012 and then for complex products by 2013.
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