According to statistics, January 2025 became the worst performing first month of the year for Malaysian stocks in 30 years, mainly due to significant foreign selling pressure.
In a research report today, Lion Fund Composite Index fell by 5% in January compared to the previous month, marking the most severe January decline since 1995.
Foreign investors sold a net 3.1 billion ringgit of Malaysian stocks in January, the highest monthly net outflow of foreign funds since 2020.
Due to the impact of the tightening of advanced semiconductor exports by the USA, AI and datacenter concept stocks have been hit hard. In addition, the recent rise of Chinese AI startup DeepSeek has also heightened market uncertainty.
Foreign funds mainly targeted utility and property sectors for selling, with these two sectors accounting for more than one-third of the total net outflow.
Looking at industry indexes, the construction index performed the worst, while the industrial REITs index bucked the trend with a slight increase of 0.4%.
At the same time, local institutional investors took the opportunity to accumulate, buying a total of 1.23 billion Ringgit worth of stocks, while retail investors also had a net purchase of 1.2 billion Ringgit.
There is a turning point in February.
However, Lion Global International believes that based on historical data, Malaysian stocks tend to perform positively in February.
Due to the selling wave in January, the current valuation of the LFP Composite Index is lower than its five-year average P/E ratio level, providing investors with an opportunity to "buy on dips."
Historical data shows that the LFP Composite Index has had an average return rate of 0.8% in February over the past 10 years, and it reached 2.2% over the past 47 years.
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