For Internal Circulation Only

Crisis Occurs From Time To Time

Dow Jones
MSCI FE ex-Japan FBM KLCI
Industrial Average
(% Change)
Asia Financial Crisis,
-68.6% -79.3%
1997
September 11 Attacks,
-21.7%
2001

SARS, 2002 -30.4% -23.4%

Global Financial Crisis,

-39.6% -57.7% -45.3%
2008
Source: Bloomberg, in local currency.
Market performance was calculated based on respective drawdown period.
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2020: Global Covid-19 Pandemic
S&P 500 FBM KLCI
3,500 1,650
1,600
3,250
1,550
-27.7%
3,000 1,500
1,450
2,750 -19.9%
1,400
2,500 1,350
1,300
2,250
1,250
2,000 1,200
Dec-19 Jan-20 Feb-20 Mar-20 Dec-19 Jan-20 Feb-20 Mar-20
Source: Bloomberg, in local currency, data as at 24 Mar’2020
Market performance was calculated from respective year’s high to 24 Mar’2020
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However… Massive Stimulus to Mitigate Impact

Largest Ever Fiscal Stimulus + Unlimited QE

Fiscal stimulus: $2 trillion (~10% of GDP);
Unlimited bond-buying & Fed rate cut to near zero

Monetary Easing & Stimulus Measures

OPR cut by 50 bps to 2.50%;
Stimulus so far: RM61.9 billion

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Markets Eventually Recover
Dow Jones
MSCI FE ex-Japan FBM KLCI
Industrial Average
(% Change)
Asia Financial Crisis,
-68.6% +142.8% -79.3% +285.7%
1997
September 11 Attacks,
-21.7% +67.5%
2001

SARS, 2002 -30.4% +240.7% -23.4% +144.9%

Global Financial Crisis,

-39.6% +66.3% -57.7% +136.7% -45.3% +92.3%
2008
Source: Bloomberg, in local currency.
Market performance was calculated based on respective drawdown and rebound periods.
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For Internal Circulation Only
Market Valuations – Price/Earnings
PER (x) PER (x)
FBM KLCI S&P 500
35.0 28.0

26.0
30.0
24.0

25.0 22.0

20.0
20.0
Average*: 17.0x Average*: 17.5x
18.0

15.0 16.0
24 Mar’2020: 14.0 24 Mar’2020:
10.0 13.7x 15.0x
12.0

5.0 10.0
Jan-97 Sep-01 May-06 Dec-10 Aug-15 Mar-20 Jan-97 Sep-01 May-06 Dec-10 Aug-15 Mar-20

Source: Bloomberg, data as at 24 Mar’2020. *Jan’97-Mar’20 historical average

Note: Forward PER is based on latest available earnings forecasts, which may be revised subject to assumptions relating to
the developments of COVID-19 pandemic.
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Market Valuations – Price/Book
PBR (x) FBM KLCI PBR (x) S&P 500
3.5 6.0

3.0 5.0

2.5
4.0
2.0
Average*: 3.0x
3.0
1.5 Average*: 1.8x
24 Mar’20
24 Mar’20 2.0 2.7x
Oct’08
1.0 1.3x 1.3x
Feb’09
0.5 Aug’98 1.0 1.6x
0.7x

0.0 0.0
Jan-97 Sep-01 May-06 Dec-10 Aug-15 Mar-20 Jan-97 Sep-01 May-06 Dec-10 Aug-15 Mar-20

Source: Bloomberg, data as at 24 Mar’2020, *Jan’97-Mar’20 historical average

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Opportunities Abound
Selected stocks with sound business fundamentals which will come
back stronger are trading at attractive valuations.

Forward P/E Ratio (x) Historic Discount to

Market Valuations P/E Ratio* Historical
As at end-Feb As at 24 Mar’20 (x) (%)
FBM KLCI 15.2 13.7 16.1 -14.9
China 'H' Shares 7.9 7.4 8.6 -14.0
MSCI FE ex-Japan 12.7 11.4 12.5 -8.8
U.S. 17.1 15.0 16.0 -6.3

Forward P/E ratios have fallen from end-Feb

Source: Bloomberg, *2010-2019 historical average
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 Can markets go lower?

Yes:-
IF pandemic prolongs or containment is ineffective

Which further disrupts economic activities

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For Internal Circulation Only
What Should Investors Do?
Investors MUST have a long-term investment horizon

Take opportunity to build portfolio of equity funds over

time via Ringgit Cost Averaging (RCA)

Maintain a diversified portfolio which meets investment

objectives

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For Internal Circulation Only