After the knee-jerk fall on Monday, some semblance of relief could be seen on the Bursa Malaysia yesterday as the KL Composite Index (KLCI) bounced back. Bargain hunters were swooping in on stocks that have taken a beating.
At the close of the day, the KLCI was up by 33.03 points to finish at 1,206.56. However, this was not enough to roll back the 9.5 percent decline on Monday which was attributed to political uncertainty rather than economic conditions.
“We reiterate our view that a market correction will turn into an opportunity to buy on weakness in our preferred sectors of plantation, banks, oil and gas, and telecommunications,” RHB Research Institute said. But it cautioned investors that the market would see “false recoveries and knee-jerk reactions” in the short term as the political situation unfolds.
Another research firm, CLSA Asia Pacific Markets said: “Although (Malaysian) stock valuations are starting to look attractive, we believe it is too early to buy into the market due to the political uncertainties. We recommend that investors switch to high-yield domestic oriented companies and avoid politically-linked counters, especially those in the construction sector.”