Without the return of foreign investors, revving up the “engine” of the bourse can be an arduous feat.
PETALING JAYA: The Malaysian stock market is in dire need of liquidity and without the return of foreign investors, revving up the “engine” of the bourse can be an arduous feat.
Rakuten Trade head of research Kenny Yee said the valuations of almost all of the top 10 constituent stocks on FBM KLCI have been suppressed due to incessant selling by foreign funds.As a result, these stocks are currently trading below their historical price-to-earnings ratio. Nevertheless, Malaysia is not the only country in South-East Asia to suffer from foreign fund outflows. Year-to-date, Vietnam, the Philippines and Thailand have also faced massive foreign outflows, with the latter two experiencing larger outflows than Malaysia.The return of some foreign funds, supported by solid earnings growth as well as alluring valuations, would push FBM KLCI to touch 1,650 points by end-2021, he said.
Market breadth was negative, with 633 decliners trumping 377 gainers. A total of 422 counters remained unchanged.RHB Bank Alexander Chia“Valuations wise, US equities are currently trading at around 50% above its historical average. Though corporate earnings remain robust, growth should retrace back to normalcy.“Although Malaysia may not be at the top of the investment list, it can enjoy some spillover effect if the foreign monies make a U-turn into the Asian region,” he said.
The ACE Market was worse affected as the market capitalisation tumbled by almost 10% in the same period. “We expect to see investor sentiment gradually pivot to recognise the gradual re-opening of all remaining industries and sectors,” he said. “We retain our view that the market has largely priced in risk premiums associated with the constant shifting sands of Malaysian politics.
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