The 2016 Budget Malaysia is a defensive budget as the government need to allocate and spend our Ringgit wisely during this challenging time. It is hard to cheer everyone from the Budget; one thing for sure, cost of living will be higher from next year.
High income earner will be paying more income tax and low income citizens will have more financial subsidy compare to this year. No matter which income group we are in, it is important to save and invest for ourselves, rather than relying on government subsidy.
Minimum wage will be increased effectively from next year. As a result, labor cost will be higher and business owner will transfer the cost to consumers and hence, things will be more expensive. We believe the business in food and beverage, retail industry and service industry will be affected.
Because of this, we foresee there will be more vacancy in properties. Business owner will consider shift out from existing rental property or look for alternative as rental cost is one of the main expenditure in business. So, property owners, please do not raise rental and keep your tenant happy in order to keep your wallet happy!
A way to stay in business without paying rental is to work from home. Of course, not every business will have the advantage to do that. For this to happen, business owner need to rely on good internet connection to stay in touch with customers. We think it is an opportunity to invest in telecommunication shares, especially the blue chips- Maxis and Digi!
For KLCI Index, we still see the resistant at 1730 and 1750. Support, 1680 and further down 1650. Do we have the chance to see 1800 by end of the year? We shall see.
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