KUALA LUMPUR (July 5): The FBM KLCI will benefit when foreign investors return to emerging markets (EM) and when they do, stocks like Malayan Banking Bhd (Maybank), Genting Bhd, Kuala Lumpur Kepong Bhd (KLK) and Telekom Malaysia Bhd (TM) should do well, according to Rakuten Trade Sdn Bhd.

Kenny Yee, the head of research at Rakuten Trade, Malaysia's first fully online equity broker, told reporters at its market outlook briefing for the second half of 2018 that index-linked blue chips are ripe for the picking following some of the heaviest selldown seen in May and June.

"As I said earlier, go for index-linked counters and among the 30 index-linked counters, these are the top four that we have," Yee said.

Yee explained that Maybank, Genting, KLK and TM are among some of the blue chip counters that are trading near or below 2-standard deviation of the companies' average share prices.

He also added that the valuation of the benchmark index is attractive at the current level.

Recall that net foreign selling has escalated after the 14th general election, which saw a change in government.

For Yee, some of these net foreign selling are attributed to the uncertainties under a new government as market observers seek clarity in the country's future direction.

"We have seen some kitchen sinking done by the new administration, which is rather painful for some of us, especially for the market observers, but we think this only as a short-term pain.

"Malaysia will definitely be on a firmer footing after this kitchen sinking exercise," Yee added.

He however pointed out that the foreign selling is not exclusive to Malaysia alone as most of the EMs also saw huge foreign outflow amid uncertainties surrounding a potential trade war between the United States and China as well as the interest rates hike and concern of a faster-than-expected tightening by the US Federal Reserve.