KUALA LUMPUR (Sept 25): The FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to return to the 1,465-point level in the third quarter of 2023, thanks to potential window dressing activities during the period and Prime Minister Datuk Seri Anwar Ibrahim's productive visit to the US, according to Hong Leong Investment Bank Research (HLIB Research).

The benchmark index last flitted around that level in February. As of 12.30pm, the FBM KLCI experienced a minor decline of 7.30 points, settling at 1,442.93 from last Friday's close of 1,450.23. The index opened at 1,449.01.

In a research note on Monday, the research house said that despite the FBM KLCI tracking a downturn on Wall Street and facing technical challenges, it is expected to extend its sideways consolidation phase amid the current risk-off environment, with support levels at 1,420 to 1,440 points and resistance levels between 1,465 and 1,478 points.

HLIB Research said investors should buy on dips to take advantage of a more promising 4Q2023, setting a year-end target of 1,530 points.

Besides the window-dressing activities and the PM's trip to the US, the recent conclusion of the six state elections is also expected to bring about an improvement in risk appetite, and a pick-up in merger and acquisition (M&A) activity.

Additionally, the KLCI's valuation currently stands at a modest 13 times the estimated earnings for 2023, compared to the 10-year historical average of 16.7 times.

Malaysia's commitment to long-term fiscal sustainability and competitiveness through initiatives such as the National Energy Transition Roadmap (NETR), National Investment and Industry Blueprint 2030 (NIMP 2030), 12th Malaysia Plan-Mid-Term Review (12MP MTR), and the development of Forest City's special financial zone is expected to drive economic growth and attract investments.

Furthermore, September has witnessed a resurgence in foreign net inflows for the third consecutive month, signaling renewed confidence from international investors in the Malaysian market.

In addition to these positive indicators, China's economy, a significant driver of regional growth, is exhibiting signs of a rebound following a series of stimulus measures aimed at reigniting its sluggish economy.