KUALA LUMPUR: Bursa Malaysia continued its upbeat momentum today, reaching almost a one-year high and breaching the 1,500 level in the process.
At closing, the benchmark FBM KLCI added 0.21 per cent or 3.13 points to 1,498.83, hitting a high of 1,503.93 at 10.19am, lifted by persistent buying in selected heavyweights led by the financial services sector.
Over the past one year, the key index closed at a high of 1,500.33 on Jan 20 last year.
Today's performance is also attributed to expectations of a dovish turn in global monetary policy and anticipated improvements in the country's corporate earnings.
SPI Asset Management managing director Stephen Innes said the FBM KLCI Index had risen more one per cent so far in January.
"It has not only one of the best performers regionally, but globally also, as global stock indexes got off to a really poor and negative start to the year. This means, Bursa has been bucking the global trend," he told Business Times.
The rally has extended to small to-mid-cap stocks which was fuelled by digital infrastructure and construction projects in Johor, contributing to the positive performance of smaller companies.
All this goodness will attract foreign direct investments, which will typically drive broader moves especially around AI transformation and likely some interest from other parts of Asia and foreign airline investors in the AirAsia-Air Asia X deal.
Innes said international investors are closely examining Malaysia's emerging economic sectors, especially in the areas of green energy transformation and the country's potential to elevate semiconductor exports
"Furthermore, there is a focus on AI-linked companies, driving local investor interest in the tech space. The transition to AI is considered a decade-long process, and companies providing tools and infrastructure for this revolution are expected to benefit," he added.
In the latest MIDF report, foreign investors emerged as the net buyers of Malaysian equities for the fourth consecutive week, mopping up RM524.9 million worth of equities last week.
It reported net foreign inflows on all trading days but Tuesday.
Innes said while the deceleration of the US and Eurozone economies in 2024 presents challenges for overall Asian exports, specific products notably AI-related goods and semiconductors are expected to drive more robust exports, offsetting some of the broader economic challenges.
Malaysia is positioned to benefit from this trend, particularly in its tech-related industries, he added.
"The positive outlook for AI-related goods and semiconductors reflects the ongoing global demand for these products," said Innes.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the FBM KLCI has been undervalued for quite some time with price-to-earnings ratio (PER) currently hovering around 15 times.
The average PER is around 17 times and should the PER revert to its average, the FBM KLCI could end the year at 1,650 points.
On a year-to-date basis, FBM KLCI has risen by 3.11 per cent.
"What it means is that there is a potential that the index might go higher," Afzanizam added.