Buy Malaysian stocks at rare crisis-level valuations, Areca says

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KUALA LUMPUR (April 7): Value has emerged in Malaysian equities battered by the global pandemic, offering investors a chance to hunt for bargains, according to Areca Capital Sdn Bhd Chief Executive Officer Danny Wong Teck Meng.

“It is a rare opportunity to pick up stocks at crisis-level valuations without being in an actual financial crisis,” he said. “Pandemics come and go, markets eventually go past it and move on.”

The FTSE Bursa Malaysia KLCI Index sank 15% in the first quarter amid a global rout. Valuations are near their cheapest in almost a decade. The gauge has climbed more than 11% from a March 19 low. Local institutional funds bought a net US$1.1 billion of shares in March while foreign investors were net sellers, stock exchange data show.

He also said there will unlikely be a major sell-down of foreign funds going forward as overseas holdings are at an all-time low following a streak of outflows over the past few years. International funds have dumped a net US$1.9 billion worth of shares so far this year, Bloomberg-compiled data show.

Malaysia’s market is quite attractive, with the KLCI now priced in two standard deviation below 10-year mean in terms of price-to-book value and price-to-earnings ratios, Wong said.