PETALING JAYA: Opportunities for bargain hunting are beginning to emerge on Bursa Malaysia following the latest bout of profit-taking on the benchmark FBM KLCI.
But analysts cautioned that buying opportunities remain selective amid persistent foreign selling pressure and rising global uncertainty.
The FBM KLCI has slipped below the psychological 1,700-point support level again at 1,699.02 as foreign funds continue to pare exposure to equities, with investors increasingly gravitating towards safer assets such as US Treasuries amid rising yields and elevated geopolitical risks.
Tradeview Capital chief executive officer and founder Ng Zhu Hann said profit-taking has been ongoing as investors reassess risk appetite in an environment of higher yields and market volatility.
“The FBM KLCI broke slightly below the 1,700 support line again. Foreign funds have been taking profit or selling. We have seen 10 consecutive days of non-stop selling,” he told StarBiz.
Ng said the recent shift in foreign fund flows was closely tied to rising US Treasury yields, which have made risk-free assets comparatively more attractive than equities.
“At this point, investors appear to favour risk-free treasuries compared to asset classes such as equities,” he added.
Despite the recent weakness, Ng believes opportunities are beginning to surface within selected blue-chip counters, particularly in the banking and utilities sectors where valuations remain relatively undemanding.
“My advice is, if you still want to stay invested, is to go to the blue chips,” he said, pointing to Hong Leong Financial Group Bhd
as an example of an undervalued stock trading at attractive price-to-book levels while still offering good dividend yields.
“Many blue chips or utility names are undervalued at this point,” he said.
However, Ng warned investors to exercise caution with technology stocks, noting that many counters within the sector had already staged substantial rallies and may now be vulnerable to further profit-taking.
“But also do note that all the tech stocks have rallied a lot, and it is better to be careful here,” he said.
Ng said bargains within FBM KLCI-linked counters are contained to selected stocks in the current environment.
“FBM KLCI stocks would still have some bargains, but not broad-based, and I would think the bargains are especially seen at the banking sector,” he said.
He also highlighted weakness among certain consumer counters, although he felt that not all declines necessarily meant they were buying opportunities yet.
“Some consumer names have come down a lot, for example Farm Fresh Bhd, but it may not yet be a buying opportunity. Some are anticipating that the second-half consumer spending may come down even further,” he noted.
Globally, major investment houses continue to maintain a cautious but constructive stance on equities despite continued geopolitical tensions, especially in the Middle East.
According to the JPMorgan Chase Wealth Management in its Mid-Year Outlook 2026 report, geopolitical shocks historically tend to have limited long-term damage on diversified investment portfolios unless they result in sustained energy supply disruptions.
The report noted that while the conflict in the Middle East continues to pose downside risks, markets have largely rallied on expectations that policymakers in both the United States and China would seek to prevent a prolonged spike in energy prices.
JP Morgan Wealth Management said periods of heightened volatility may ultimately create opportunities for long-term investors, particularly in US equities.
During the 10% correction in US equity markets following the escalation of Middle East tensions, the report noted that the VIX volatility index breached the 30 level – historically associated with stronger forward returns for equities.
Its historical analysis showed that investors who bought into the S&P 500 when the VIX closed above 30 generated positive returns between 70% and 83% of the time, with an average gain of 12.4% over the subsequent six months.
The report also turned constructive on emerging markets, noting this asset class may be entering a stronger structural phase after years of underperformance relative to developed markets.
JP Morgan Wealth Management projected emerging market corporate earnings growth of 46% in 2026, while noting that emerging market valuations remained below long-term averages with price-to-earnings multiples at around 11.8 times.
The report said countries such as Taiwan and South Korea could benefit from the global artificial intelligence investment cycle due to their central role in semiconductor supply chains.
At the same time, it highlighted growing investment themes tied to global fragmentation: including defence, infrastructure resilience, energy security and commodity supply chains.
It also advised investors to diversify currency exposure and maintain allocations in gold, suggesting portfolio allocations of between 3% and 6% to the precious metal as protection against inflation volatility and foreign exchange swings.
Meanwhile, Goldman Sachs Global Investment Research said in its Global Market Views report on May 15 that markets may still be underestimating the downside risks associated with the Iran conflict and potential disruptions to oil flows through the Strait of Hormuz.
The investment bank said global equities and risk assets had already priced in substantial relief based on expectations that worst-case scenarios would be avoided.
However, Goldman Sachs Research cautioned that the longer a clear peace agreement and full reopening of the Strait of Hormuz fail to materialise, the greater the risk that markets may need to reprice geopolitical risks more aggressively.
“The prospect of more adverse outcomes is still very real, and we think that deeper downside tail is underpriced. Although markets are looking through any temporary disruptions, it may also be that another bout of market worry is needed to force an agreement that allows oil flows to resume,” Goldman Sachs Research said.
Although markets have so far tolerated rising bond yields alongside higher equity prices, investors may increasingly question whether such a combination remains sustainable, it said.
The research house noted that current market pricing already reflects significant optimism on the US growth outlook, with its internal estimates indicating markets are effectively pricing US growth at around 2.5%.
While Goldman Sachs expects inflationary pressures tied to higher energy prices to eventually ease, it warned that in the near term markets may continue to grapple with a more hawkish interest rate environment and elevated geopolitical uncertainty.
Still, Goldman Sachs Research said the eventual moderation in inflation pressures could help contain the upward pressure on bond yields over time, even if volatility persists in the coming months.
