KUALA LUMPUR (Nov 27): Malaysia's equity market is forecasted to get better in 2020, riding on a strengthening Chinese renminbi.

Speaking to reporters on the sidelines of Aberdeen Standard Investments' 2020 Market Outlook, Aberdeen Standard Islamic Investments (Malaysia) Sdn Bhd CEO Gerald Ambrose said the strengthening Chinese renminbi will result in stronger capital markets in Malaysia.

"The other conclusion we had today is that the semiconductor industry has hit a floor in October, and demand for 5G and new technology for mobile phones will be so strong next year that the IT manufacturing sector in Malaysia, in particular, has some catching up to do, and the outlook [is] very bright," said Ambrose.

He added that Malaysian bonds have had a good year in 2019, as they give a return significantly above inflation.

"If you look at some other parts of the world, you are getting a negative return," Ambrose remarked.

He said the oil and gas (O&G), semiconductor, banking, insurance and takaful sectors looked "attractive" moving forward.

Ambrose further said that if there is a downturn next year, there might be a need for the government to perform an economic stimulus.

He explained that large infrastructure projects will have a knock-on effect on the economy, hopefully leading to higher disposable income.

When it comes to foreign outflow, Ambrose said foreign shareholding could not feasibly get any lower and that a pickup in the ringgit will be beneficial for foreign investors coming back in.

"If there is a pickup in the renminbi, there will be a pickup in all ASEAN currencies, which will lead to an outperformance of ASEAN markets, and we haven't seen that in a long time. So I feel quite optimistic that foreigners will feel they have missed out and will come back in," he explained.

Multinational companies are now appearing to reduce their investment exposure to China's manufacturing sector and are moving to ASEAN, said Ambrose, highlighting the aluminium, O&G and IT industries in Malaysia as good destinations within ASEAN to redirect such investments to.

"I do think it is inevitable that funds will come back to ASEAN and Malaysia," he opined.