Many of the more risk-averse retail investors may now feel they have missed the boat, as the market continued to head north in the past two months.

After all, this was a crisis on a global scale that presented a once-in-a-lifetime opportunity for many people to accumulate wealth out of depressed asset prices and global equities have soared in recent weeks. For those with bigger risk appetite, they are already reaping the rewards, and may well have already taken profits.

Regional bourses have gained from March 31 to last Friday, with Nikkei 225 up 16.32%, Hang Seng Index 28.09%, Shanghai SE Composite Index 10.64%, Kospi Index 17.07%, Straits Times Index 31.66%, KLCI 17.68%, Jakarta Composite Index 29.88% and Ho Chi Minh Stock Index 30.48%.

From March 31 to last Friday, the Dow Jones Industrial Index was up 12.69%, while the S&P 500 Index rose 16.46%. The Dow Jones rose 164.8 points to 8,574.65 and S&P 500 rose 21.84 to 929.23 last Friday.

The key questions then are whether it is still timely to pour money into stocks and how much higher can local equities climb? And of course, the now ubiquitous question: Will there be another leg down in equities?

Analysts said at the end of the day, an individual’s propensity to take risk over a particular period determines whether he or she should invest in equities or any other asset class now or at any other time.

TA Investment Management Bhd deputy chief investment officer Vivien Loh felt it is still not too late to get into equities. “If one takes a long-term view, I don’t think it is too late because in one year’s time, share prices should be higher,” she told The Edge Financial Daily.

“Foreign fund managers could be buying local stocks,” added Loh, who recommends shares of oil and  gas firms, besides construction and financial services entities.

OSK Research Sdn Bhd analyst Shin Kao Jack offered a technical view on the Malaysian stock market.

Shin wrote in a recent note that the local bourse was beginning to see a new bull market, hence, the likelihood of more stocks hitting limit-up, rising market volume and gains stretching into overbought territory.

“Both the near-term and mid-term technical outlooks of the market are now aligned with a firm bullish bias. The bulls are unstoppable,” said the technical analyst who foresees an immediate resistance and support for the KLCI at 1,041 and 1,008 points respectively.

The benchmark index rose 3.31 points to 1,026.78 last Friday, on volume of 3.3 billion units, similar to the previous day when the index fell 0.49 point.

Global investors are seeing light at the end of tunnel. This follows a slew of more optimistic indicators in major economies which have lent credence to  market expectations of a recovery in the broader landscape towards the end of the year.

At the same time, the surge in crude oil prices, another key indicator, also mirrored the  market’s hope that waning consumer demand would gradually reverse its course in the next few months.

For those who had managed to capitalise on the battered valuations of local stocks when the KLCI sank into the 800-point region, the current rally would have yielded decent capital gains for them.

RAM Holdings Bhd group chief economist Dr Yeah Kim Leng said: “There are hopeful signs of stablisation in global demand, particularly in the US, and more so in countries like China. The worst may be over although the financial restructuring in the US and Europe has yet to be unwound.”

Manufacturing activities in the US, the world’s largest economy, shrank by a smaller quantum in April this year.

Nomura International (Hong Kong) Ltd head of regional strategy for Asia research division Sean Darby said: “It is possible that equity markets in Asia have bottomed out already but  property prices will still have to adjust downwards.”

The US Purchasing Managers Index (PMI) of the Institute for Supply and Management for the manufacturing sector climbed to 40.1 during the month from 36.3 in March. Readings above 50 indicate an expansion while readings below 50 show a contraction. April 2009 was the fourth consecutive month US manufacturing activities shrank at a slower pace.

China’s PMI for the manufacturing sector increased to 53.5 in April this year, from  52.4 in the preceding month.

Malaysia has released weaker economic updates. The country’s economy grew at a smaller quantum of 0.1% in the fourth quarter of 2008 from a year earlier. Third-quarter gross domestic product expanded at a yearly pace of 4.7%.

However, it is worth noting that contractions in certain local economic indicators were happening at a slower pace, possibly early signs of a recovery in the nation’s fortunes.

Malaysian exports for March 2009 fell at a smaller quantum of 15.6% to RM43.65 billion from a year earlier although imports shrank at a faster pace of 28.7% to RM31.14 billion.

In February 2009, exports recorded a yearly decline of 15.9% to  RM39.6 billion while imports fell by an annual rate of 27.3% to RM27.6 billion.

However, on monthly terms, exports in March 2009 posted a double-digit growth of about 10% compared with February 2009 numbers, while imports expanded by 13%.

While believing that this was still a good time to move into the market, Jupiter Securities head of research Pong Teng Siew advised investors to stay on the side of caution and be nimble.

“There is still time to go in, as there seemed to be a renewed stable uptrend, with the market up by almost 20% since mid-March, and is no longer prone to sharp downturn as in the past. This trend could go on for some time.

“But there is a danger of local funds, which are a net buyer at the moment, being exhausted and we could see a sharp correction later on, if foreign funds do not return,” he said.

What then are the opportunities for investors who want to join the bandwagon?

Pong pointed out that steel and food-related commodities were ripe for recovery, although crude palm oil (CPO) prices had been overpriced, while the property sector was being propped up by low interest rates.

The top performing sectors in the KLCI were mostly cyclical, including building materials, oil and gas, construction, technology, motor and timber, outrunning defensive stocks such as consumer, telecom, gaming, media and infrastructure, according to a report by RHB Research.

Pong said selected property counters still have upside potentials as a stable interest rate regime meant not much volatility in the property market.

On the ringgit, he said with most central banks stopping to accumulate reserves in the US dollar, the trend going forward would be a weakening greenback against most major currencies. “The local currency should strengthen against the dollar in the near term,” he said.

Given anticipation of a further cut in overnight policy rate (OPR) later this year and potential deterioration in trade and investment activities, the pressure would be enormous on the ringgit to sustain its strength, said AmResearch in its latest note on the performance of Malaysia’s economy.

“In this regard, we are of the view that the ringgit would likely trade between 3.60 and 3.65 to the dollar for the rest of 2009,” said the research house.

This article appeared in The Edge Financial Daily, May 11, 2009.