KUALA LUMPUR: Fund management company Value Partners Group advises investors not to rush into the market now to pick up cheap shares, following the tumble in most markets led by the US.
“I won’t rush in to buy (stocks) today,” said Datuk Seri Cheah Cheng Hye, chairman and co-chief investment officer of Value Partners, at a talk by him on the second day of the China Conference held here Thursday.
“The US market is definitely and seriously overvalued by 40%… The US economy is due for pretty bad recession, and its fiscal deficit is too large,” he added when responding to a question from the floor.
Overnight, the Dow Jones Industrial Average tumbled 831.83 points or 3.15%; and tracking Wall Street, Asian markets succumbed to selling pressure with all key regional indices falling over 3%.
Reuters reported China's benchmark Shanghai Composite Index dived to near four-year lows on Thursday, joining a global equities rout after a tech sell-off battered Wall Street overnight.
The Shanghai Composite slumped more than 6 percent before recouping some ground to end the day down 5.22 percent at 2,583.46 points, levels not touched since Nov. 25, 2014. It was the index's worst day since Feb. 25, 2016.
At Bursa Malaysia, the FBM KLCI was down 29.76 points or 1.72% to 1,705.42 was 3.35pm. It had earlier fallen nearly 50 points or 3%.
Cheah opines the US Federal Reserve has used up most of its “ammunitions” since the 2008 global financial crisis.
He does not think China will feel obliged to be the “goalkeeper” for the international financial market again, like what it did in 2008.
“China this time may not play the role of 2008. I am worried about the world,” said the Hong Kong-based fund manager.
In response to another question, Cheah said the weakening yuan should stabilise at 6.8 to 6.7 to a US dollar as the Chinese government does not want to see capital flight and adverse reaction from the US.
“I am optimistic on the yuan as the government will want it to be stable. I also see the Chinese government keen to come to a settlement with the US on trade war,” he said.
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