Malaysian economy will grow stronger in the second half of this year, driven by the removal of the political uncertainty and the government’s firm economic policy, says Credit Suisse Securities (M) Sdn Bhd Managing Director Stephen Hagger.

He said Malaysia would join a very exclusive club currently comprising the Philippines and Thailand which have all the three certainties, primarily economic, corporate earnings and political stability.

In the first quarter of this year, the Malaysian economy has been put on hold, with everyone predicting the date of the 13th General Election, he said.

“Based on our forecasts, the Malaysian economy is to grow somewhere around five per cent this year, boosted by the government’s Economic Transformation Programme (ETP),” he told reporters at a forum entitled “GE13 – What it means for Business?”

Hagger said the consistent growth of the gross domestic product and political stability in Malaysia would strengthen the economy.

He said the Malaysian government’s present focus was to reduce the budget deficit to four per cent this year.

“Everyone is working towards achieving a budget surplus by 2020 and we are heading in the right direction.

“The Kuala Lumpur Composite Index (KLCI) is looking very carefully to signs that the current deficit is under control although there is no great rush, but the direction must be there and this is very much in the control of the Malaysian government,” he said.

Asked for his recommendations for a stronger KLCI, Hagger said the KLCI would be bolstered by construction and banking stocks.

“I expect construction stocks like Gamuda, IJM and UEM Land to move uptrend, spurred by the government’s projects under the ETP,” he said.

He said banking stocks such as CIMB, RHB and OSK would also be bullish.

On Maybank, Hagger said the appointment of the bank’s Managing Director and Chief Executive Officer Datuk Seri Abdul Wahid Omar as a Minister in the Prime Minister’s Department in charge of the Economic Planning Unit, would create a huge impact on the bank.

“However, there is not too much worry about that as the bank is still strong and will remain bullish this year,” he added.