Reopening of economy to be theme for 1H2022 — Principal Group
22 Dec 2021
The reopening of the economy will be the theme for the first half of next year (1H2022), while growth rates are expected to normalise in the second half of 2022, Principal Islamic Asset Management Sdn Bhd chief executive officer Datuk Syed Mashafuddin Syed Badarudin said.
He said the economies are expected to resume growth, expanding the recovery into developing countries.
“In 1H2022, we expect global growth to be driven by economic reopening, the rundown of excess savings, and business restocking.
“But we expect growth rates to normalise in 2H22, with accumulated savings mostly exhausted, quantitative easing reduced, and economic reopening at the tail end,” he said in a statement.
On the supply-demand, Syed Mashafuddin said the Shariah-compliant asset management company expects mismatches will resolve as demand shifts from manufactured goods to services.
“We also expect energy prices to stabilise, as new production capacity comes online in key regions. This will reduce the pressure on consumers, interest rates, and corporations, and supporting capital markets,” he added.
With Malaysia achieving a vaccination rate of above 78 per cent, he said investors expect the economy to reopen in a more sustainable manner, providing a muchneeded boost to the sentiment and market.
“Our house view remains favourable on reopening plays, laggards, as well as sectors with structural or secular growth stories.
“Despite any near-term market uncertainties, investors should remain invested in financials, consumer discretionary, basic materials, and selective technology sectors such as 5G, Fintech, Healthtech and Greentech, to name a few,” he said.
Besides, Syed Mashafuddin said the asset management company is looking at sustainable investing supported by carbon neutral pledges, the United States rejoining the Paris Agreement, and substantial inflows into Environmental, Social, and Corporate Governance funds and exchange traded fund.