Bursa to bounce back within 3 month after election, says analyst
KUALA LUMPUR, April 3 — Bursa Malaysia, which today registered the steepest fall in 10 weeks after the announcement of the dissolution of Parliament, will bounce back within three months after the 13th general election, says an analyst.
Earlier this morning, Prime Minister Datuk Seri Najib Tun Razak announced the dissolution of the 12th Dewan Rakyat to pave the way for the 13th general election.
Affin Investment Bank Head of Retail Research Dr Nazri Khan expressed optimism that the FTSE Bursa Malaysia KLCI (FBM KLCI) would post stronger gains in the second half of this year.
"This is based on certain factors like local and foreign investors currently on a huge cash war chest and on "standby mode" ready to invest," he told Bernama.
Bourses in the Phillipines, Thailand and Indonesia are up more than 10 per cent year-to-date, suggesting that Bursa Malaysia would also play catch-up post-election, he added.
Nazri said despite the selldown seen today, Affin Investment has maintained the 1,720 level as its official target for the FBM KLCI by year-end, which means any weaknesses now are excellent opportunities to accumulate stocks.
The key index moved between a low of 1,632.28 and a high of 1,692.85 throughout the day. Despite the temporary weakness, the dissolution of Parliament and the upcoming general election should be a positive catalyst to rejuvenate Malaysia's underperforming stock market, reduce market risk premium and push local stock prices higher over the medium term, he said.
In the meantime, Etiqa Insurance & Takaful Bhd's Head of Research Chris Eng said the market was generally showing knee-jerk selling, but this reaction was within market expectations as everybody was waiting for the announcement.
"Right now the KLCI is a major laggard compared to the other major Asian markets, but commonly there will be follow-through buying activities after this.
"Ahead of the 13th general election, the market would continue to be volatile, but the uncertainty in the market would be balanced by the value of the share prices.
"We expect the sectors related to the Economic Transformation Programme may show a downtrend but would bounce back after the end of polling day," he added. — Bernama