Author : iFAST Research Team
KEY POINTS:
- FTSE Bursa Malaysia KLCI suffered several large single-day declines, owing to the weak sentiment and high sensitivity to this most pressing of political concerns.
- Retail investors are reluctant to participate in the local market for the time being as the risk-off mood among Malaysian retail investors prevails
- As compared to nine months ago, most of the funds have raised their cash allocation further, indicating the degree of uneasiness that these fund managers are experiencing over the election.
- As the risk aversion of Malaysian equity fund managers shows no signs of abating, cash levels is likely to remain relatively higher until there is clearer picture after GE13.
- Apart from hoarding cash, Malaysian equity funds which are allowed to invest in foreign equities have opted invest overseas, favouring neighboring Southeast Asia countries
- Fund managers who need to stay invested even through volatile times, seeking refuge in the defensive sectors such as telecommunications and utilities.
- Our advice to investors is to stick to the fund managers that they are comfortable with and to let these professionals deal with mitigating the downside risk.
The general election (GE13) must be called by 28 April 2013, yet the uncertainty over the timing has been a source of volatility for the domestic equity market, particularly over the past few quarters. Plagued by the rumours about the impending parliament dissolution, the FTSE Bursa Malaysia KLCI suffered several large single-day declines, owing to the weak sentiment and high sensitivity to this most pressing of political concerns.
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