Time to buy Malaysian shares

Recently, foreign flows into Asia have been very strong. In Malaysia, especially, we are seeing strong inflows into our Malaysian Government Securities, with foreign holding now at an all-time high of 51%,” David Ng(pic), Affin Hwang Asset Management chief investment officer told reporters during a media briefing on the global market outlook for the second half of 2016. (Thursday's pic(inset) shows David Ng during the Asset Management talk)

PETALING JAYA: Foreigners have been coming back to the Malaysian stock market over the last three to four weeks, and coupled with Malaysia’s relatively cheaper valuations and earnings estimates that are less bad, it is now a good time to start buying Malaysian stocks, said David Ng, Affin Hwang Asset Management chief investment officer.

“Most fund managers have been underweight on emerging markets over the last few years.

“Recently, foreign flows into Asia have been very strong. In Malaysia, especially, we are seeing strong inflows into our Malaysian Government Securities, with foreign holding now at an all-time high of 51%,” Ng told reporters during a media briefing on the global market outlook for the second half of 2016.

While foreigners have yet to come back to Malaysian equities in a big way, the fact that they are starting to flow in is a positive, as over the last 12 months, they have been overall net sellers of the Malaysian equity market.

“I would say that most of the bad news in the Malaysian market has already been priced in to the market. People have also gotten used to oil prices not going above the US$60 level,” said Ng.

In Malaysia, Ng favours the construction sector, as well as small and mid-cap stocks for outperformance.

On a larger picture, Ng said that most global fund managers have been very underweight on emerging markets, including Asian markets over the last four to five years.

“The valuations of emerging and Asian markets are cheaper than the rest of the world. Their yields are also a lot more attractive, considering that 40% or US$13 trillion of global Government bonds are yielding negative returns.

From a technical perspective, there is also already a high level of pessimism in these markets.

The big elephant in the room, which is China, is also showing some sense of stabilisation - things are getting less bad, and it has learnt from the mishaps of the past,” said Ng.

Source: The Star Online

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