We expect global growth momentum to be sustained in 2018, expanding at +3.6%, the same pace as 2017, on the back of synchronized expansions of G3 economies, which will fuel world trade growth. This, in turn, is positive for ASEAN economies as we see spillover to domestic demand from export recovery.

A key macroeconomic theme is the outlook of "benign normalization and unsynchronized unwinding" in major central banks' monetary policies. Key risks are inflation and financial stability. Inflation surprise will alter major central banks' policy outlook and can trigger “re-pricing” in global financial markets, which in 2017 has been characterized by buoyant equity market amid the prolonged decline and depressed risk-free yields. China's “de-leveraging and de-risking” also warrants close monitoring as our baseline case is growth soft-landing instead of hard landing.

Malaysia's macro backdrop remains positive in 2018 as we forecast another year of above-5% real GDP growth, at +5.3%, continuing the momentum from 2017. For the currency, we expect the MYR's recovery momentum to continue with end-2018 USDMYR forecast of 3.95, reflecting the positive underlying fundamentals for the currency.

GE14 will be a major driver of investors' sentiment in early 2018, in our view. Post GE14, we expect the focus to return to basic fundamentals which are well supported. For equities, we estimate core earnings to grow +9.7% in 2018 for our research universe, and +5.0% for the KLCI. Our end-2018 KLCI target is 1,840. In this writeup, we highlight five investment themes, and refresh our top BUY picks for 2018.