Just barely 2 months ago, I raise a question about the legitimacy of a long and consistent bull run of Bursa Malaysia.
Over the past few days, many counters have turned red, resulting in a negative YTD performance as of the time of writing.
The Malaysians would argue that “hey, isn’t everyone affected? Even Nvidia is down from its historical high!”
Fair point. But how did Singapore and Vietnam manage to outperform in these instances?
A deeper dive into Malaysia’s mid & big caps shows a uniform trend – all sectors are experiencing selloffs, unlike Vietnam and Singapore, where specific sectors are pulling up the market. For Singapore, it is inherent that the Terrific Trio of banks are doing the heavy lifting so far.
So should Bursa investors be concerned, or is this sell-off a buying opportunity?
The selloff by segments
Looking at the list as above, I would broadly categorise it into 6 categories: construction & property, consumer products & services, food & beverage, hospitality & leisure, oil & gas, and technology.
The construction and property segment is an interesting one. While not companies are riding on the data centre tailwind, those that were have seen a sudden u-turn in share prices. The likes of UEM Sunrise Berhad (KLSE: UEMS), and Sime Darby Property Berhad (KLSE: SIMPROP) have seen their share prices correct more than 20% from their highs.
The Genting Group of companies continue to face pressure on their share prices. Even though the travel and leisure industry should have normalise, Genting is still struggling to achieve pre-pandemic results. While there are ongoing positive news for its growth and expansion outside of Malaysia, they do come with sizeable capital outlays. This comes along with the news of Tan Sri Lim Kok Thay relinquishing his role as the group’s chief executive officer (CEO), being succeeded by Datuk Seri Tan Kong Han, while he remains as Executive Chairman.
The consumer defensive stocks aren’t living up to their defensive reputation as well. Mr DIY Group (M) Berhad (KLSE: MRDIY) and Nestle (M) Berhad (KLSE: NESTLE) have both seen their share prices dip by 10% and 13% respectively. While Nestle Malaysia has openly spoke of the challenges it faced, mainly due to rising commodity and raw material prices, Mr DIY looks still to be growing, albeit not at the speedy pace prior IPO. So the correction, is most likely in tandem with the broader Malaysia market sell-off.
The technology stocks are the one that make up the bulk of the sell-off. Even companies with solid fundamentals like ViTrox Corporation Berhad (KLSE: VITROX), Pentamaster Corporation Berhad (KLSE: PENTA), Inari Amertron Berhad (KLSE: INARI) have seen corrections ranging from -20% to almost -30%. Together with the other technology stocks, they could be caught in the sector rotation theme that is playing out in the US markets. But hey, did the Malaysia tech stocks even rally +200% last year?
Perhaps none stole the thunder (for bad reasons) as much as NationGate Holdings Berhad (KLSE: NATGATE). With revenue surging +726% YoY, the company’s share price skyrocketed +120% over the past 1 year.
However, recent news of the company’s alleged involvement in fraud related to prized Nvidia chips have seen its share prices tumbling more than -50% from its peak. As the chip wars entering a new chapter, with questions being raised on how Deepseek got their hands on Nvidia chips, this has continued to create ripple effects rather than halo effects on the local technology and semiconductor scene.
Is the Malaysia market really un-investable fundamentally?
I guess I am having the last laugh with my ever scepticism towards the Malaysia market.
I think un-investable is a bit over the edge. Difficult is a more suitable word. There are plenty of good businesses in Malaysia. But that is just one side of the coin. There also needs to be great governance and minority shareholder interest focus.
That means accretive earnings per share and or dividends per share. Not just great results at the expense of dilution of outstanding shares and earnings accretiveness.
While some of my investing pals have likened the Singapore market as a clear pond, while Malaysia feels like a muddy pool, there are 2 sides of a coin to this analogy.
Would you rather fish in a clear pond with big fishes visible, or cast your line into a muddy pool with potential bigger fishes, but also the risk of snagging a crocodile?
No right no wrong choices. Personally, I’d prefer to not get ambushed by a crocodile!
For those who are seasoned Bursa investors, you do you, this looks to be a great opportunity to get great companies at discount. But when the tides would turn would still be up to the macroeconomic news to decide.
p.s. if you want to learn how to analyse and find the best stocks to buy, Alvin shares our strategy at this live webinar.