KUALA LUMPUR (March 29): In 2024, the local stock market posted its first annual return since 2020, outperforming the MSCI Asia Pacific and MSCI Asean indices, and raised hopes that the trend would continue into 2025. It has not — at least not in the first three months of the year.

The local bourse has weakened in tandem with the lacklustre performance of regional markets, with foreign funds making a hasty and voluminous exit, raising concerns over how the bourse will perform in the second quarter.

The massive foreign sell-off has caught many analysts and fund managers by surprise. Tradeview Capital chief executive officer Ng Zhu Hann, for one, says, “I never expected the magnitude to be that serious in terms of the fund outflow, which is my biggest concern for the second quarter.”

Nonetheless, some quarters had anticipated a reversal of foreign fund flows, pulling out from the emerging markets that had performed well in 2024, as the prospects of aggressive rate cuts in the US have waned since late last year.

In general, the risk-off mode in the stock market is expected to continue in the second quarter, amid the lack of catalysts to offset the persistent outflow of foreign funds and escalating uncertainties from the tariff war initiated by the US’ trade policy under President Donald Trump.

Come April 2, all eyes will be on Trump’s announcement on reciprocal tariffs, which he says will be more lenient than those levied by trade partner countries.  

In a separate piece, The Edge highlights 10 stocks that are worth a look in the second quarter in the current challenging market conditions.

The picks were based on a list of 115 companies that had a market capitalisation of at least RM1 billion as at last Tuesday.

The Edge’s compilations show that 95 companies — or 83% — have registered year-to-date negative returns in terms of share price performance. The hardest-hit stocks included Hartalega Holdings Bhd (KL:HARTA) (-50.6%), NationGate Holdings Bhd (KL:NATGATE) (-45.45%), and Kossan Rubber Industries Bhd (KL:KOSSAN) (-38.16%).

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