Malaysia Equity Market: “Buy in MAY and hold all the WAY”?


The Malaysia Bull Rally started from 2012 January has yet to come to an end yet so far. With the only concern political risks that the market is facing right now, retail investors have been seen staying at the side lines while foreign funds have been seen flowing into the Malaysia Equity Market continuously. But that did not create a huge rally to the Malaysia Equity Market and neither to majority of the listed stocks YET! At any point of time a drop in our local market FBMKLCI index is only a healthy market correction. But what will happen next will be very interesting for everyone to take note! Is it really a ‘Sell in May and go Away” or “Buy in May and hold all the Way?” -William Au

Article taken from ‘The Star’

“Foreign funds were in the market to buy Malaysian equities for the 16th consecutive week, and “believed last week’s tally was among the highest ever”.

Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew said the “unusually” huge inflow seen last week, the largest net inflow since the 2008 financial crisis, was probably associated with the strengthening of the US dollar. Year-to-date, the greenback was firmer against the ringgit by 1.15%.

“The US dollar has come out from a weak spell, which lasted for a period from 2002 to 2007.

“Now that the greenback has strengthened again, it allows US dollar-based investors to buy more,” he said.

He said a similar trend was seen in 1995 and 1996, when there was a large inflow of funds into the emerging markets.

On the exceptionally large funds that flowed in last week, Areca Capital chief executive officer Danny Wong said monetary policies from major economies “are here to stay”, resulting in “hot money” flowing into Asian markets in the hope of seeking “good returns”.

As for local funds, which have been net sellers, Wong observed that some investors might be preserving cash to buy during dips, while others would rather manage risks than aim for high returns.

He said foreign buying outpaced local buying, as foreign investors saw opportunities in the Malaysian market, which has been one of the worst performers year-to-date due to the latent general election risk, presenting attractive valuations compared to regional peers in the process.

Meanwhile, local fund managers remained cautious as they were close to the situation, but were under pressure to perform because the FBM KLCI was heading north last week, he added.

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