Focus on fundamentals, and the stock disaster is likely to continue for weeks

Report: Ling Qiaosen

Pessimism and panic surround Asian stocks. Market participants believe that retail investors should focus on fundamental investments at this stage and seek stability during periods of stock market turmoil.

Huang Yuhan, founder and CEO of Tradeview Capital, pointed out in response to the “Nanyang Commercial Daily” inquiry that the current stock market crisis cycle is estimated to continue for one to two weeks, and there will probably not be a rebound too soon.

Concerns about the economic outlook caused by external factors are the main cause of the sharp decline in Asian stocks and blood flow.

Among them, weak US economic data, the heating up situation in the Middle East, and the Bank of Japan's move to raise interest rates all caused fear in the market, which in turn caused the stock market to decline steadily.

Huang Yuhan said, “In an environment where panic continues, the stock market has entered an arbitrage model. I believe the market will tend to choose to exit and wait and see to maintain previous profits.”

He also urged retail investors not to hastily deploy investment strategies during this period, because at a time when capital movements are uncertain, the stock crisis is expected to continue.

“Since the panic may not subside too quickly, and the ringgit has appreciated quite a bit recently, foreign investors are likely to arbitrage the exchange rate during this period, further worsening the overall Asian stock market.”

Huang Weihan believes that if they want stability in the midst of chaos, in addition to waiting and watching for a while, retail investors should also shift their investment vision to financially sound stocks.

“The so-called financial soundness refers to a company with healthy cash flow and balance sheets. If it can provide a weekly interest rate of 5% to 6%, it is not a good option to start during this period.”

“Due to the rising risk of a recession in the US economy and the escalation of turbulence in the Middle East, avoiding emotional investment is the best policy.”

Furthermore, Huang Weihan is not optimistic about the future of technology stocks, and urges retail investors to avoid investing in related fields.

He said, “Judging from the pattern where US technology stocks led the decline, it is estimated that it will also cause setbacks in related fields of Malaysian stocks. Therefore, deployment in the technology sector is not recommended during this period.”

On the other hand, MIDF Investment Research's Research Director Ilan Yahi and Strategy Director Seghini both said today that considering the surge in risk from peripheral factors, retail investors should carefully deploy their investments during this period.

“Stock market volatility may be further exacerbated by considering the Fed's interest rate cut, geopolitics, and concerns about the US recession. Therefore, we recommend that investors adopt a stock selection strategy that focuses on fundamentals, as the volatility of the relevant stocks will also be relatively low.”

They believe that the investment strategy for the second half of the year may shift to stocks that are less volatile and lagging behind major markets, with the financial sector being more prominent.

In any case, despite the current sharp turmoil in the stock market, the bank still views the outlook for Malaysian stocks with a cautious and optimistic attitude.

“Looking ahead, we expect the outlook for global stock markets to remain positive, as the Fed's interest rate cut will ease its monetary policy and macro-profit growth prospects.”

“With the strengthening of the ringgit against the US dollar, it is estimated that it will attract the return of foreign capital and stimulate a market rebound in the stock market.”