KL stock market expected to stay volatile

Alliance Research Sdn Bhd expects the stock market to remain volatile and the FBM KL Composite Index to stay above 1,400 points in the third quarter of this year.

Its head of research Soh Meng Hui said that for the current earnings season, most companies, especially banks, had surpassed market expectations.

He said the financial institutions are likely to lead the stock market to higher ground.

However, the research house is watching the ongoing debt problem in Europe, the slower-than-expected economic recovery in the US and the tightening of liquidity in China.

"These are among the few key risks that we are keeping an eye on. All in all, we are cautiously optimistic about market conditions in the next six months," he said.

Soh was speaking at a recent investment seminar, titled "Market Outlook for Second Half 2010 and Investment Strategies", in Sandakan, Sabah, which was hosted by Alliance Bank.

Another speaker, Wawasan Open University senior lecturer Dr Ch'ng Huck Khoon, said a serious investor must understand his or her risk appetite and be savvy in financial planning.

He said investors should also be knowledgeable to select winning stocks on Bursa Malaysia.

"An investor should always choose a fundamentally strong stock by observing the performance of the company. Another important lesson to note is the 'averaging up' and 'averaging down' strategy," he added.