KUALA LUMPUR: The downtrend in the stock market caused by rising tension in the Middle East could persist in the coming days but is expected to be short-lived.
Bursa Malaysia's benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was in the red on Wednesday following Iran's missile attack on Israel which spurred fears of a wider regional conflict.
The incident also caused most Asia stocks to sink, in tandem with the sell off on Wall Street.
The FBM KLCI closed 1.03 per cent per cent or 17.08 points lower at 1,639.31 versus 1,656.39 points on Tuesday.
The index started the day by trading below the 1,650 mark at 1,642.78. At midday, the FBM KLCI dropped 0.99 per cent to 1,639.94.
It dropped as much as 1.43 per cent or 23.31 points to hit an intraday low of 1,633.08.
The financial services sector saw a notable decline of 1.19 per cent or 231.18 points to 19,164.84.
Similarly, the healthcare sector experienced a drop of 1.45 per cent or 30.05 points to 2,043.04. The property sector slid 1.66 per cent or 18.02 points, closing at 1,069.60.
Tradeview Capital fund manager Neoh Jia Man said the current market downtrend has only just begun and could persist in the coming days.
"However, we view this correction as a healthy development, considering the FBM KLCI has rallied 13 per cent year-to-date.
"In the short term, the 1,600-point level will serve as a key psychological threshold, and we expect it to remain well supported above this level," he told Business Times.
Areca Capital Sdn Bhd chief executive officer Danny Wong said the recent geopolitical tension in the Middle East is not an unexpected event in the region.
"Unless it escalates to a bigger war regionally, it is likely to be short-lived judging from past records," he said.
"With index here not very high, indeed still below the mean on valuation, coupled with low foreign holdings and ample trapped liquidity along with stable politics and policies, downside risk of FBMKLCI is not big," he said.
Meanwhile, Neoh said the upcoming 2025 Budget is expected to shift investor's focus and reinvigorate the market.
"We anticipate that investors will shift focus to the upcoming tabling of 2025 Budget on Oct 18.
"While certain sectors may face challenges due to specific policy measures, we expect the budget to reinvigorate market sentiment and spark renewed investor interest," he said.