PETALING JAYA: Every cloud has a silver lining. In this case, the recent massive selldown in the local stock market may serve as an opportune time for investors to buy on the dip especially given that several artificial intelligence (AI)-related and data centre stocks have surged in recent weeks.
Apex Securities head of research Kenneth Leong believes that the recent market correction may present a bargain hunting opportunity for a longer term investment horizon perspective.
“Valuations are turning slightly attractive with the FBM KLCI trading at price earnings multiple of 14.8 times which is below the long-term historical mean average of 17 times.
“While AI-related and data centre companies share prices have tumbled in recent days, we think that fundamentals remain intact which provides an opportunity to nibble onto beaten down stocks,” he told StarBiz.
Leong favoured Frontken Corporation Bhd
with a “buy” recommendation and a target price of RM4.33 while Aurelius Technologies Bhd has a “buy” call with a target price of RM3.83.
He explained that these counters are expected to buoyed by the firm outlook of the global semiconductor sales, which remain on recovery trajectory, supported by AI revolution, rising cloud services and technological advancement
“We also like renewable energy-related companies riding onto a slew of government-led incentives and blueprints outlined in recent years, while the upcoming tabling of Budget 2025 may see greater emphasis on this sector. Our top picks are Samaiden Group Bhd and Pekat Group Bhd.
However, Leong reckoned the selldown will taper off as investors will be shifting their focus back onto the US Federal Reserve over signs of impending interest rate cuts.
“Further signals over the potential quantum or timing of rate cuts may provide affirmation to stabilise the recent selloff,” he added.
Similarly, Malacca Securities head of research Loui Low said that there is likely to be a buy on dip opportunity within construction, property, utilities and building material stocks.
“There will be some margin calls in the near term and sell off may persist for a while. Investors could look for buying opportunities after another round of selling pressure,” he added.
The sharp decline in the local stock market saw the FBM KLCI plunge as much as 4.58% to touch an intraday low of 1,538.83 following a global market rout amid concerns the United States could be heading for recession.
The benchmark index ended the trading day yesterday 4.63% or 74.57 pts to 1,536.48. All the sectors were negative with property (9.74%), technology (9.12%) and construction (9%) leading the losses.
The widespread selling in the market prompted Bursa Malaysia to trigger a slew of suspensions in intraday short selling (IDSS).
The technology sector saw four stocks affected by the IDSS suspension; Notion VTEC Bhd, SMRT Holdings Bhd, TT Vision Holdings Bhd and Infoline Tec Group Bhd.
In the industrial sector, IDSS in Icon Offshore Bhd, VS Industry Bhd, Nationgate Holdings Bhd and Kobay Technology Bhd were also suspended.
In the construction sector, WCT Holdings Bhd and Kimlun Corp Bhd were affected, and in real estate, the IDSS suspension was in place for Mah Sing Group Bhd and KSL Holdings Bhd.
The suspension in IDSS also covered oil-and-gas services firm Deleum Bhd and Ranhill Utilities Bhd.
Similarly, South Korea exchange triggered circuit breakers on the Korea Composite Stock Price Index after the index fell 8%.
