KUALA LUMPUR: The benchmark FBM KLCI Index's rebound on the first trading day of the second half of 2023 (2H23) has market players floating hope for a better second half as major economies such as the United States and China show signs of improvement.
Yesterday, the benchmark index closed 19.21 points or 1.4 per cent higher at 1,395.89 points. A 6.6 per cent drop year-to-date.
Market experts said factors such as stabilising of China's inflation and the upcoming state election could push the local index to end the year on a higher note.
The FBMKLCI index could potentially reach 1460 to 1480 levels, 100 points lower than previously predicted (1500) due to China's early reopening, they said.
SPI Asset Management managing partner Stephen Innes said there is a possibility that the United States Federal Reserve (Fed) is slowing down its rate hikes.
"There is a growing sense that we are nearing the end of the vicious for risk sentiment aggressive Fed rate hike cycle with inflation meandering down the mountain. "And locally while China's manufacturing fell suggesting activity remains sluggish, it is starting to show signs of stabilising which is particularly good news for Malaysia as China is the key trading partner," he told the New Straits Times.
Innes noted there is also some early portfolio balancing in the second half as investors are looking at "undervalued pockets" with lower valuations.
"What I mean by undervalued pockets includes manufacturers, particularly the big electrical and electronic equipment, and we could see a boost in commodity exporters."
"I have not heard of any change in strategy by the Employees Provident Fund to invest more locally, but that is something we do expect to happen especially if China's economy starts turning the corner again," Innes added.
Malacca Securities head of research Loui Low said the market bellwether might be weak now and trade below the 1,400 levels.
"Based on the current sentiment and nearer to the state elections, it might be slightly weak for now below the 1,400. "We think the better sentiment may come in after the conclusion of the state elections," he added.
