Value to be found on local bourse

Rakuten Trade head of equity sales Vincent Lau told StarBiz investors should look beyond the tensions over Taiwan, and “cut through the noise”. “There is value to be found. Investors should look at the fundamentals and focus on corporate earnings,” he said.

KUALA LUMPUR: Fund managers have mixed views on the short-term outlook for the local bourse, as jitters over United States-China geopolitical tensions saw the FBM KLCI closing in negative territory yesterday.

The FBM KLCI closed 4.48 points lower at 1,490 yesterday with some 1.9 billion securities valued at RM1.35bil being traded.

Rakuten Trade head of equity sales Vincent Lau told StarBiz investors should look beyond the tensions over Taiwan, and “cut through the noise”.

“There is value to be found. Investors should look at the fundamentals and focus on corporate earnings,” he said.

He pointed out that tech-related companies like Dufu Technology Corp Bhd, one of the world’s largest precision metal components for disk spacers supply to the hard disk drive industry, had reported strong results for its second quarter.

Lau said there was still “a lot of interest” in tech-related companies that were listed on the ACE Market this year, such as LGMS Bhd, Cnergenz Bhd and SFP Tech Holdings Bhd.

However, Tradeview Capital chief investment officer Nixon Wong told StarBiz he expects more risk aversion this week with profit taking and downward pressure on the local bourse in the near term, amid the heightened geopolitical tension in Taiwan.

“The local bourse might have bottomed out. Foreign funds have returned. I think the current situation represents a buying opportunity,” he said.

“The second quarter 2022 earnings season in the United States has been positive – many companies have reported earnings that beat expectations.

“Fundamentals-wise, the labour market in the United States is still tight and there are views that inflation may have peaked,” added Lau, pointing out that the US economy had shrank for a second consecutive quarter, meeting a criteria for a technical recession.

However, Tradeview Capital chief investment officer Nixon Wong told StarBiz he expects more risk aversion this week with profit taking and downward pressure on the local bourse in the near term, amid the heightened geopolitical tension in Taiwan.

While Wong noted the local bourse had been in positive territory over the past one week (1.8% higher week-on-week) on the back of foreign buying and expectations that concerns over a United States recession may have been priced in, he said the tensions over Taiwan added another layer on top of other existing concerns.

These centred around inflation and recession “which have weighed on stock market prices”. “I believe the impact over the longer term is unlikely to be significant unless the situation (over Taiwan) escalates,” he said.

“However, sentiment in the stock market is likely to remain constrained. Investors should meanwhile adopt a wait-and-see strategy until the situation becomes more stable as there may be series of responses by China over the coming days or weeks that remain difficult to envisage,” Wong pointed out.