MALAYSIAN shares offer good value at the moment compared with American stocks or their regional peers, said a leading US equities research head.
According to Charles Wheeler, his company Standard & Poor's (S&P) has an overweight recommendation for Malaysian equities based on their low price-earnings (P/E) ratio valuation.
Malaysian stocks are attractive from a P/E valuation perspective. It is a much better time to buy them now than two or three years back,'' Wheeler told a news conference at the inaugural The Star/Standard & Poor's Investment Funds Award 2003 presentation in Kuala Lumpur yesterday.
Wheeler said Malaysian stocks were projected to trade at a P/E ratio of 13.5 times this year, which is lower than their valuation during the previous Gulf War.
Unfortunately, the Malaysian market is tracking the US and European equities markets, which are still relatively expensive at current price levels,'' he added.
He said a further slowdown in the US economy and concerns about the global equity market were capping price advances in the local bourse.
Essentially, Malaysian companies are competing for the same investment dollar in the global market. It is unlikely for investors to be aggressively buying in another equity market while they are taking hits in the larger markets,'' he added.
However, Wheeler believes investors would find value in local companies over the longer term.
Meanwhile, preference for bonds over equities would continue over the near term,'' he said.
Currently, S&P is neutral on stocks in South Korea and Hong Kong and recommends that investors be underweight on Japan. The firm also has an overweight recommendation for Thailand.
In choosing stocks, Wheeler singled out good dividend track record as a key consideration.
If dividend payment is there ... at least the investor would earn some income from time to time,'' he said.