No rush to buy stocks yet, says Value Partners’ Cheah

KUALA LUMPUR: Fund management company Value Partners Group has advised investors not to rush into the market now to pick up cheap shares, following the tumble in most markets led by the United States.

“I won’t rush in to buy (stocks) today,” said Datuk Seri Cheah Cheng Hye, chairman and co-chief investment officer of Value Partners, at a talk on the second day of the China Conference held here yesterday.

“The US market is definitely and seriously overvalued by 40%... the US economy is due for a pretty bad recession, and its fiscal deficit is too large,” he added when responding to a question from the floor.

At 5pm, the KLCI was down 26.69 points or 1.54% to 1,708.49 . Its early low was 1,682.98 as heavy selling hit big cap stocks when markets opened after the overnight rout on Wall Street.

The two-days losses had erased 66 points from the KLCI and sent the index to its lowest since July 12.

Cheah opined that the US Federal Reserve has used up most of its “ammunitions” since the 2008 global financial crisis.

He does not think China will feel obliged to be the “goalkeeper” for the international financial market again, like what it did in 2008.

“China this time may not play the role of 2008. I am worried about the world,” said the Hong Kong-based fund manager.

In response to another question, Cheah said the weakening yuan should stabilise at 6.8 to 6.7 to the US dollar, as the Chinese government does not want to see capital flight and adverse reaction from the US.

“I am optimistic on the yuan as the government will want it to be stable. I also see the Chinese government keen to come to a settlement with the US on the trade war,” he said.