Focus on fundamental investment, stock market crash may continue for weeks.

Report: Ling Qiaosen

Pessimism and panic have enveloped Asian stocks. Market participants believe that individual investors should focus on fundamental investments and seek stability during market volatility.

Huang Zhenghan, the founder and CEO of Tradeview Capital, responded to enquiries from Nanyang Business Daily, stating that the current stock market downturn is expected to last for one to two weeks and a rebound is unlikely to occur quickly.

The main reason for the plummeting Asian stocks is the worry about the economic outlook stirred up by external factors.

Among them, weak US economic data, escalating Middle East tensions, and the tightening measures by the Bank of Japan have all caused market panic, leading to a continuous decline in the stock market.

Huang Zhuhansaid: "In the continuing environment of panic, the stock market has entered an arbitrage mode, and believes that the market will tend to choose to observe and hold on to the previous profits."

He also urged retail investors not to hastily deploy investment strategies during this period, because in the uncertain capital flow, this stock disaster is estimated to continue.

"Since the panic sentiment may not dissipate too quickly, coupled with the recent appreciation of the ringgit, foreign funds are likely to arbitrage the exchange rates during the period, further deteriorating the overall Asian stocks."

Huang Zhuhansaid that in order to seek stability in the chaos, in addition to temporarily observing and waiting, retail investors should also shift their investment focus to financially stable stocks.

"The so-called financial stability refers to companies with healthy cash flow and balance sheets. If they can provide a weekly interest rate of 5% to 6%, it could be a good option to enter during this period."

"Due to the rising risk of U.S. economic recession, coupled with the escalated turmoil in the Middle East, avoiding emotional investments is the best strategy."

In addition, Huang Zhuhansaid is also not bullish on the prospects of technology stocks and urges retail investors to avoid investing in related sectors.

He said: "From the perspective of the decline in US technology stocks, it is estimated that the relevant sectors of the Malaysian stock market will also be affected. Therefore, it is not recommended to deploy in the technology sector during this period."

On the other hand, the director of research at MIDF Investments, Ilyaas and the chief strategist Sajini also expressed that considering the increased risks from external factors, retail investors should be cautious in deploying their investments during this period.

"Due to concerns about the US Federal Reserve's interest rate cuts, geopolitical issues, and the US economic downturn, stock market volatility may further intensify. Thus, we recommend investors to adopt a stock selection strategy focusing on fundamentals, as the volatility of such stocks is expected to be relatively low."

They believe that the investment strategy for the second half of the year may shift towards stocks with lower volatility and lagging behind the overall market, with a specific mention of the financial sector.

Regardless, despite the current volatility in the stock market, the bank still maintains a cautious optimistic outlook on the Malaysian stock market.

"Looking ahead, we expect a positive outlook for the global stock market, as the US Federal Reserve's interest rate cuts will loosen its monetary policy and macro profit growth prospects."

"With the strengthening of the ringgit against the US dollar, it is expected to attract foreign capital inflows and stimulate a market rebound."