By Nor Baizura Basri

KUALA LUMPUR, Aug 11 (Bernama) -- Share prices on Bursa Malaysia are likely to be higher next week on the back of increased foreign fund inflow, improved global sentiment and Budget 2013 rotation play, said Vice-President and Head of Retail Research of Affin Investment Bank, Dr Nazri Khan.

He said despite the Hari Raya holiday mood, the FTSE Bursa Malaysia KLCI FBM is expected to trend higher towards 1,650 level riding on these factors.

"We believe in a stronger Bursa performance in the near term due to the stronger-than-expected foreign buying despite a weakening ringgit against the US dollar.

"Foreigners have been aggressive buyers since September 2011. In July, foreign investors have turned net buyers with an accumulated net buying of RM3.1 billion, recording a new high in the accumulated foreign net buying position of RM11.6 billion since September 2011," he told Bernama.

Nazri said the strong foreign inflow was due to continuous implementation of Economic Transformation Programme projects, continuous capital market liberalisation initiatives and various domestic catalyst such as the launching of the RM26 billion Tun Razak Exchange.

Apart from that, the listings of mega initial public offerings (IPOs) such as Felda Global Ventures Holdings Bhd (FGVH)and IHH Healthcare Bhd (IHH), have put Malaysia as top IPO destination, second behind Shenzhen China for this year.

"These mega IPOs attract foreign funds into the market and generate market momentum or liquidity and are seen as more bullish for the broad market," he said, adding that the listings of FGVH and IHH would potentially upgrade the plantation and healthcare sector.

This expectation is also reinforced by the fact that FGVH and IHH will be included into the FBM KLCI constituent list in December, which will lead to portfolio rebalancing across FBM KLCI and other cousin stocks in the same industry and push the benchmark index higher, he added.

Besides that, there are signs of portfolio rebalancing with funds moving ahead of the Budget 2013 towards higher yield stocks.

In the past one month, the trend of flight to defensive/dividend stocks continued to be the prime investment strategy amidst global uncertainties, he said.

This can be seen from the outperformance of the consumer, telecommunications and real estate investment trust (REIT) sectors against the FBM KLCI in general.

Nazri said it was clearly seen that the FBM KLCI Component Stocks gained 2.2 per cent on average in the past one month while the aforementioned sectors gained 5.2 percent on average.

"Since the current estimated dividend yields of these stocks are still below their five-year average, we expect higher yield and hence more rotation towards these stocks and push the FBM KLCI higher," he said.

For instance, consumer, telecommunications and REIT offer five per cent in average dividend yields lower than the five-year average.

"We believe high dividend yield stocks especially those that are linked to Budget 2013 will be preferred for the rotation. These include stocks that focus on consumer goods, rural infrastructure, small and medium enterprises, green technology, affordable housing as well as the urban transformation plan," he said.

On another note, Bank Negara Malaysia will announce the gross domestic product figure for the third quarter this Wednesday, which will give some insight on the current position of the country's economy.

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI closed 10.32 points higher at 1,645.36 compared with last Friday's 1,635.04.