KUALA LUMPUR: Stocks listed on Bursa Malaysia are poised for a “secular bull run” this year as market experts are already seeing signs through patterns of solid momentum growth outlook.
Berjaya Mutual Bhd chief investment officer Datuk Dr Nazri Khan said technical analysts and market players are observing the strong foundations being built, with foreign funds beginning to flow in.
He said the sectors leading this charge are the aggressive stocks, particularly construction, property, real estate investment trusts, and ariticial intelligence-related technology, which is a positive indicator of a genuine bull market.
“We are finally witnessing the beginning of a secular bull market in Bursa Malaysia. This shift is significant because we have been stuck in a sideway market for over a decade. If I’m not mistaken, this stagnation dates back to when the market was around the 1,900 level,” he told SunBiz.
A secular bull refers to a long-term upward trend in the market.
Nazri pointed out that Bursa Malaysia-listed stocks offer a relatively high dividend yield compared to their counterparts in many other markets. In addition, the strong participation of government-linked entities in the domestic market provides an assurance to investors, making Malaysia a relatively safe option, especially during periods of market correction.
Over the last 15 years, he said, Malaysia’s price-to-earnings (PE) ratio has been one of the lowest, indicating that the market has been undervalued for some time, which enhances its attractiveness to investors.
“When the global market experiences a correction or pullback, defensive markets like Malaysia typically start to rise. This is mainly due to the abundance of dividend-yield stocks in the Malaysian stock market. In fact, Bursa Malaysia has been gaining ground over the past two months, coinciding with the pullback seen in the US and global markets. Bursa Malaysia is currently leading in this regard.”
Nazri said credit must be given to Prime Minister Datuk Seri Anwar Ibrahim, who has gained recognition internationally, especially in the Middle East. He added that Anwar’s efforts in promoting the Malaysian stock market have attracted foreign investment, particularly from Middle Eastern funds, which is a positive achievement for the country.
“Another factor worth noting is the ringgit, which has been undervalued for a long time. With interest rate differentials coming into play, where the US Federal Reserve cut interest rates by half a percentage point recently while Bank Negara Malaysia held steady, Malaysia stands to benefit. The low interest rate differential will likely attract capital inflows into the country,” he said.
Commenting on which sectors might benefit, Nazri said those tied to interest rates, such as growth stocks, are expected to lead. If interest rates continue to decline globally, sectors sensitive to these changes – such as banking, technology, and consumer luxury – will likely benefit.
Nazri said lower interest rates will reduce the cost of financing, which will be advantageous for these aggressive growth stocks.
However, smaller-cap stocks have yet to see much movement in Malaysia or the US, although they typically benefit more from interest rate cuts.
“In contrast, commodities like crude palm oil and oil have shown unexpected declines, suggesting that these sectors may remain soft for now. Overall, my focus remains on the technology, consumer luxury, and finance sectors, as these will likely show positive growth soon,” Nazri said.
