Yoong believes that the strong performance of domestic mega caps could drive the FBM KLCI from its current level of 1,590 to 1,800 by the end of 2025.
PETALING JAYA: The local bourse is expected to perform better for the rest of the year having faced a massive selldown following the recent US recession fears.
Bursa Malaysia ended marginally lower yesterday, snapping a two-day streak of gains as investors grappled with market uncertainties.
Experts, however, remain optimistic about the local exchange’s potential for improvement for the rest of the year and beyond.
Tradeview Capital Sdn Bhd chief investment officer Nixon Wong said the local exchange is poised for further improvement, supported by initiatives such as the the National Energy Transition Roadmap (NETR), the New Industrial Master Plan (NIMP), and the special economic zones (SEZ).
“Following the recent correction in prices, valuations have retraced to a more attractive level, presenting more buying opportunities.
“Bursa Malaysia remains a relatively low-beta, defensive market, which may attract fund flows in a risk-off environment,” Wong told StarBiz.
He highlighted several key factors that will influence the market, including the upcoming corporate reporting season, decisions by the US Federal Reserve on interest rates and Budget 2025.
He noted that while ongoing subsidy rationalisation might negatively impact consumption, it could strengthen the fiscal position and improve the ringgit, potentially attracting more foreign investments.
Similarly, high-net-worth investor and former investment banker Ian Yoong Kah Yin also expressed optimism about Bursa Malaysia, attributing this positive outlook to Malaysia’s robust economic growth.
“The significant (economic) growth is seen across nearly all sectors. Foreign investors have returned in droves. Confidence has spilled over to domestic businesses given that Malaysians tend to be our own worst critics,” Yoong said.
He expected Malaysia’s gross domestic product (GDP) to grow by 5.6% this year, a notable increase from the 3.6% recorded in 2023, owing to strong domestic demand and export performance.
Yoong also highlighted the benefits Malaysia has gained from China’s plus one trend, noting that Malaysia has been the biggest beneficiary in South-East Asia.
On investment strategy, Wong suggested adopting a balanced strategy that involves taking profits from thematic stocks while focusing on strong stocks with healthy fundamentals and positive cash flows to support dividend payouts.
“Given that the recent market decline was driven by panic selling and margin calls reacting to negative headlines, and considering that the underlying fundamentals, though weakening, are not as dire as feared, we view the current weakness as a good buying opportunity for acquiring solid stocks at more attractive valuations,” he explained.
Wong suggested a cautious stance, recommending investors to consider deploying some cash into stocks with positive near-term catalysts that were previously too expensive.
“We aim to minimise investments in thematic-driven stocks, where valuations are still high and earnings may not materialise soon, and instead focus on those with strong fundamentals, cash flows, and dividend yields as downside support,” he added.
However, Wong noted risks such as upcoming US economic data that could significantly underperform expectations or suggest a higher probability of recession.
Yoong, meanwhile, highlighted opportunities in sectors benefiting from the growth of data centres in Malaysia.
He pointed out that power producers like Tenaga Nasional Bhd
and Malakoff Corp Bhd are poised to gain significantly, as data centres are expected to be major electricity consumers.
“The renewable energy sector will be major beneficiaries further up the line,” he added.
Yoong believed that the strong performance of domestic mega caps could drive the FBM KLCI from its current level of 1,590 to 1,800 by the end of 2025.
Yesterday, the FBM KLCI eased 1.49 points or 0.09% to 1,590.38 from Wednesday’s close of 1,591.87.
The index opened 5.91 points lower at 1,585.96 and moved between 1,579.69 and 1,593.24 throughout the trading session yesterday.
On the broader market, decliners surpassed gainers 651 to 445, with 467 counters unchanged, 880 untraded, and nine others suspended.
