KUALA LUMPUR (March 17): Valuations of Malaysian stocks have turned more attractive following recent selldown though upside may be capped amid external uncertainties, Apex Securities said on Monday.

The FBM KLCI is trading at about 13 times the forward earnings against its five-year historical forward average of 16 times though investors may adopt the wait-and-see approach and “modestly” nibble on beaten-down stocks, the research house said in a research note.

“In view of ongoing external economic uncertainties, risk of further foreign funds outflow, we believe volatility remains on the forefront and along with the absence of fresh domestic catalyst,” Apex Securities said and slashed its year-end KLCI target to 1,680 from 1,760 previously.

Apex Securities joined research houses including TA Securities, Kenanga Investment Bank and RHB Investment Bank in cutting their targets for the FBM KLCI.

KLCI has rebounded off its one-year lows following a technical correction — loosely defined as a decline of 10% from its recent peak. The index is still down about 8% after several rounds of selldown since the start of 2025 as the US stepped up its trade war against its major trading partners.

“While full blown recession is still off the cards, we reckon potential global economic slowdown stemmed by uncertainties surrounding the ongoing and potential escalation of trade war may keep volatility on the cards,” Apex Securities said.

For strategy, the research house recommended only buying into dips in select, fundamentally sound beaten-down stocks as investors turned defensive while sentiment remains rocky.

Apex Securities is advocating sectors such as real estate investment trusts, utilities, healthcare except gloves, and logistics as a “safeguard” against external shocks with their clearer earnings predictability.

The research house’s top picks are Sunway Real Estate Investment Trust (KL:SUNREIT), Tenaga Nasional Bhd (KL:TENAGA), Malakoff Corporation Bhd (KL:MALAKOF), Westports Holdings Bhd (KL:WPRTS) and KPJ Healthcare Bhd (KL:KPJ).

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Analysts cut FBM KLCI valuation, year-end target on weak outlook