Wednesday January 23, 2013
Buying opportunities emerge in M'sian stock market
By TEE LIN SAY
PETALING JAYA: With the FBM KLCI having dropped by close to 50 points over the last two days, some analysts are seeing a buy opportunity emerge, as prices of blue chips and certain stocks in the oil and gas, property and consumer sectors retrace to attractive levels.
Analysts said that the drop in the last two days was driven mostly by sentiment, rather than real fundamental concerns.
On Monday, the FBM KLCI fell 2.4% or 40.81 points on a volume of 1.83 billion shares valued at RM2.6bil.
This was the single largest daily loss since October 2011.
Yesterday, the market lost another 6.97 points, or 0.43%, to close at 1,628.66 points on a volume of 1.27 billion shares valued at RM2.23bil. At its lowest on an intraday basis, the market retraced some 33 points to 1,602.13 at 9.09 am.
Speculation on the drop in the Composite Index was heavily skewed to the impending date of the general election and how fund managers were increasing their cash levels to stay defensive.
A dealer said that if one were to look at the drop of the stocks over the broader market, most stocks had not retraced substantially in the last two days. This indicated that the level of fear in the market wasn't as bad as most people had thought.
“The drop in the market was overdone. I would liken it to a bungee jump' kind of fall. All bungee cords have strings attached to them. So there must be a rebound,” said TA Securities senior technical analyst Stephen Soo.
He said that the market had an important support level at 1,602 points, which would be a very compelling level to accumulate. At current levels, he would still recommend investors to bargain hunt, although more cautiously. This is because Soo sees two strong resistance levels at the 1,624- and 1,650-point levels.
“We have been having trouble looking for stocks that we like, especially with valuations running up towards the end of last year. The recent selldown is very good for us. What caused it? Why would I want to join everyone in the selling?
“We are value investors and do not react to short-term concerns such as elections. So, we are topping up on some of the stocks that are already in our model portfolio,” said Ambrose.
He added that the stocks that he liked were those that offered a decent yield in the banking, cellular and consumer sectors.
UOB KayHian added that the reaction of the market was not surprising, as they reckoned that many local institutional funds, although having ample cash levels, had not lifted their cash levels to the “maximum allowable” levels.
“They were in fear of under-performing the market, as many expected a follow through from the surprisingly strong window-dressing activities towards end-2012,” said the research house.