KUALA LUMPUR (Aug 6): Bargain hunters emerged on Tuesday to pick up stocks that were bashed down during the two-day precipitous decline that wiped out market capitalisation worth RM153 billion.

Some see the selldown over the past two days as a second chance for investors who have missed the boat to enter the local stock market earlier this year.

The FBM KLCI gained 37.91 points, or 2.47%, closing at an intra-day high of 1,574.39. Among the 30 component stocks, 28 posted gains at the closing bell. 

Petronas Chemicals Group Bhd (KL:PCHEM) was the biggest gainer in the 30-stock index, climbing 27 sen or 5.08% to RM5.59, followed by Kuala Lumpur Kepong Bhd (KL:KLK) which gained 92 sen or 4.49% to RM21.42, SD Guthrie Bhd (KL: SDG), which went up by 19 sen or 4.43% to RM4.48, and Petronas Dagangan Bhd (KL: PETDAG) which climbed 76 sen or 4.41% to close at RM18. 

In the broader market, 1,078 gainers versus 308 losers and 342 were unchanged. Bursa’s daily trading volume stood at 6.39 billion shares versus 9.26 billion shares on Monday, while trading value was at RM5.32 billion, down from RM7.97 billion the day before.

Year-to-date, the Main Market indices are still in the green, led by FBM Emas Index (up 10.23%), the top-30 benchmark FBM KLCI (8.23%), and the FBM Small Cap Index (7.4%).

The FBM ACE Index, however, is down 4.9% year-to-date as the sell-off more than erased gains seen since March.

Following the selldown, institutional investors now think it is an opportune time to buy stocks at the local bourse. 

The ongoing shift in global fund flows and the resulting correction will likely be temporary, said Choo Swee Kee, the chief investment officer of TA Investment Management Bhd. Once the US begin cutting interest rates, equity as an asset class would become attractive again, he noted.

“These massive movements of funds shook the market, but they do not indicate a downturn in the economy,” he said. “We expect the market to stabilise once these imbalances in funding reach equilibrium.”

While traders might find opportunities in fundamentally strong stocks for bargain hunting after the recent selldown, “we advise investors to remain cautious during the current market turmoil,” said Apex Securities Research in a note.

“Investors can gradually accumulate stocks that have dropped below their intrinsic value during this period of market volatility,” the house said.

Blue chips may have a head start when foreign funds pour in, said Peter Lim Tze Cheng, founder and chief research officer of Trident Analytics Sdn Bhd. TA’s Choo also highlighted that blue chips may offer more stability and certainty compared to smaller companies.

Both Choo and Lim are bullish on the technology sector, among the worst-hit in the market stampede amid concerns over the disappointing earnings of their global counterparts and the design troubles of chips powering artificial intelligence (AI). There are now also fears over the health of the US economy.

Choo said he continues to believe technology is the way to future growth and likes ideas that could benefit from new developments in AI, data centres, chip design and the internet of things given the incentives.

For Lim, the semiconductor in particular would be in a multi-year cycle at least until 2027.

https://www.theedgemarkets.com/node/721911