Bursa Malaysia expected to continue recovery momentum

Bursa Malaysia is anticipated to sustain its recovery momentum this week, buoyed by a growing investor appetite for risk and the continued attractiveness of local blue-chip stock valuations. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) shows significant potential to extend its strengthening rally, aiming to overcome the lackluster performance recorded throughout May.

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Following the sustained weakness recorded in May, the index's rebound at the end of last week indicates the market is building a solid foundation.

Mohd. Sedek Jantan, Director and Investment Strategy and Economic Analyst at IPPFA Sdn. Bhd., noted that the FBM KLCI's resurgence in the final two trading sessions of last week signals a stabilization in short-term market sentiment. "Following the sustained weakness recorded in May, the index's rebound at the end of last week indicates the market is building a solid foundation," he stated.

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We believe this recovery has the potential to continue into this week, supported by improving risk appetite and attractive valuations among selected Malaysian blue-chip components.

"We believe this recovery has the potential to continue into this week, supported by improving risk appetite and attractive valuations among selected Malaysian blue-chip components," Mohd. Sedek told Utusan Malaysia. He added that a global investment trend shift is expected to favor the local bourse, as the fervor surrounding artificial intelligence (AI) rallies in global markets begins to cool. This situation could lead investors to shift towards defensive sectors and undervalued large-cap stocks outside the United States.

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This shift in holdings could provide additional support for the FBM KLCI. We see the index potentially retesting the 1,700-point level and further strengthening within the target range of 1,710 to 1,715 points this week.

"This shift in holdings could provide additional support for the FBM KLCI. We see the index potentially retesting the 1,700-point level and further strengthening within the target range of 1,710 to 1,715 points this week," he projected. Regarding foreign fund flows, Mohd. Sedek explained there is ample room for foreign investors to re-enter the local stock market after three consecutive weeks of net selling. He believes stronger US macroeconomic data will continue to support global risk sentiment, but the high valuations of US equities will prompt global fund managers to seek opportunities in emerging markets. "Global asset managers are now looking for markets that offer much more attractive and competitive price valuations. In this regard, Malaysia is strategically positioned to directly benefit from the reallocation of these foreign capital flows," he added.

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Global asset managers are now looking for markets that offer much more attractive and competitive price valuations. In this regard, Malaysia is strategically positioned to directly benefit from the reallocation of these foreign capital flows.