Rakuten Trade Says Chinese New Year Rally Out, Bargain Hunting In

KUALA LUMPUR, 3 February 2025 - Rakuten Trade, Malaysia’s first fully online digital broker, recently released its market outlook for the coming weeks, stating that the much-anticipated Chinese New Year rally is unlikely to materialize this year. Instead, its analysts recommend that investors focus on bargain-hunting opportunities within the current market environment.

While the period surrounding Chinese New Year celebrations has historically seen strong market performances driven by seasonal optimism and festive spending, Rakuten Trade’s Head of Research, Mr. Kenny Yee, and its Head of Equity Sales, Mr. Vincent Lau, have noted several factors that have dampened the usual rally. Liquidity squeeze, plus possible restrictive AI chip policies in Asia have created a more cautious local market atmosphere.

Rakuten Trade’s CEO Mr Kazumasa Mise concurred saying, “During this period, the local market usually records a retail participation rate of about 26%. This year, while it is on an uptrend month on month, we are seeing lower retail participation levels that do not mirror previous CNY rallies.”

“The market has been declining since the start of 2025, compounded by net foreign outflows. A stronger dollar and (potential) restrictive policies, particularly those targeting AI chips, have dampened sentiment in our local market. We believe that now is an ideal time for bargain hunting, especially for investors who can look beyond short-term volatility,” Mise added.

Rakuten Trade Head of Research Kenny Yee reaffirmed this, reinforcing his recommendation for solid bargain hunting in Q1 2025. “We anticipate the FBM KLCI to test 1,730 this year based on 16.0x PER premised on CY25 earnings growth. Last year was a solid year for our Ringgit reversing from the low of 4.80 to now 4.50 versus the greenback. We believe that the local currency is currently undergoing some normalization and expect to trend between the 4.30/4.40 range on the back of stubborn interest rates in the US.”

On the influence of the US market on Bursa Malaysia, Lau said, “The US market serves as the primary barometer for global equities. When they sneeze, Malaysia will catch a cold. However, a market rebound could be on the horizon once investors' uncertainty is alleviated. The recent weakness presents an opportunity for retail investors to pick up bargain stocks, especially tech-related stocks which should be beneficiaries of a stronger dollar. The sector remains a key priority of government initiatives such as the National Semiconductor Strategy, and the National AI Office which have seen huge investments in data centers.”

“The market should improve after Chinese New Year and with President Trump being sworn into office again — which will provide better clarity as the previous presidential administration policies were not in line with Trump’s and may be reversed,” Lau added.

Yee, however, warned investors about the potential market volatility ahead. “Though we expect a more disciplined Trump 2.0, we should be wary of a rockier path for equities. We expect nasty surprises emanating from the US as highlighted by its numerous headwinds. Wall Street is now being supported by ample liquidity. As such, we advise investors to be vigilant on heightening volatility, possibly by the second half of 2025, especially when sentiment begins to turn against the US’ perpetual high rates.”

On the upside, Yee added, “The domestic political environment seems somewhat steady, 2024 closed on a positive note. Is 2025 going to be the same? We hope so, as focus on the economy should be a priority now, especially with the recently launched JSSEZ (Johor-Singapore Special Economic Zone), which would be the much-required booster that may bode well for future FDIs.”

Although the current trends indicate a 2025 Chinese New Year rally is unlikely, the Rakuten Trade Research Team provided equity picks that are expected to perform well during this period.

*as at 22 January 2025.

Rakuten Trade continues to empower retail investors with expert insights through their highly accurate trading calls from their Research and Equity Sales teams. It remains committed to educating the public and enhancing financial literacy on trading on Bursa Malaysia and beyond borders through its research reports, educational resources, and webinars.