KLCI selling pressure may persist, but sharp correction unlikely
Malaysian market analysts suggest that recent selling pressure on the FBM KLCI index is likely to persist due to global economic factors and foreign fund outflows. However, experts believe a sharp market correction is unlikely despite the underperformance of major banking stocks.
Why it matters
Understanding regional market trends in Malaysia provides insight into how global bond yields and foreign investment shifts impact emerging market benchmarks.
BURSA SGX Home Strategy Make The Edge Malaysia your preferred source on Google KUALA LUMPUR (Oct 2): Selling pressure on Malaysian large-cap stocks could persist over the next one to three months amid cautious global sentiment but is unlikely to trigger a sharp market correction, according to BIMB Securities.
“The recent weakness in the FBM KLCI is partly attributable to profit-taking and selling in banking stocks, but I would not characterise it as a banking-specific correction alone,” BIMB Securities analyst Mohd Redza Abdul Rahman told The Edge .
Banks account for roughly 40% to 45% of the KLCI’s market capitalisation, meaning relatively modest movements in major banking stocks can have an outsized impact on the benchmark, he said.
However, Redza said the weakness extended beyond banking stocks, with declining stocks outnumbering gainers by two to one on Thursday, reflecting broader weakness in market sentiment.
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