PETALING JAYA: The sharp market pullback this week caught many traders by surprise but analysts feel that the uptrend remains intact in the longer term.
“Valuations were too rich and a correction is healthy,” Kenanga Research head of research Yeonzon Yeow said.
The index had climbed 30% since the middle of March before correction set in earlier this week. From a peak of 1,095.91 points on June 12, the KL Composite Index (KLCI) dropped to a low of 1,052.48 on Thursday.
“I think there’s still about 10% to 15% of correction to go from the peak,” Yeow said.
“When we start seeing real economic recovery after the third quarter of this year and fresh catalysts come onstream, the market will react positively.”
Areca Capital Sdn Bhd chief executive officer Danny Wong also remains bullish on the market in the medium to longer term. “I actually think this is the start of a bull run and investors should accumulate on weakness,” he said.
“Asia will take the lead in the next couple of years. Compared with the pre-Asian financial crisis days, our gearing levels are lower, earnings stronger and we have a more resilient banking system.
“Already, we are near the bottom or off bottom, of an economic recovery.
“As equity recovery generally moves six months ahead of an economic recovery, I would say we are at the beginning of a bull run,” Wong said.
Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose concurs. “With interest rates down all over the world, money tends to find its way to the most attractive investment and to me, that’s Asia,” he said.
However, he feels that the KLCI is going to “wobble around in this trading range for a very long time”.
“I don’t feel a soaring confidence about the West; my gut feel is that momentum has gone there, and if we are going to be following them, it’s going to be difficult,” Ambrose said. “Certain quarters have priced in a full recovery there (but), I don’t believe in that.”
Pong Teng Siew, head of research at Jupiter Securities, believes the liquidity, which had been driving the market up in the recent rally, has reached its tail-end.
“The recent rally in Malaysia was supported primarily by domestic funds. The next peak might not happen until later this year as foreign funds gradually move into emerging markets following the easing of the interest rates there,” he said.
Source : The Star Saturday June 20, 2009
By Yvonne Tan
east43street:
Yes it is a heavy correction. After correcting downward, it will start to correct upward. There are so many companies so cheap out there. It is still not too late to own a good pick.
Saturday, 20 June 2009
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