Maybank Investment Bank (Maybank IB) has forecast equities to weaken leading up to the polling date, as market players and investors price in political risks.

The research house however adds that the weakness in the benchmark FBM-KLCI will be mild when compared to the 12th general elections - where the index corrected 8.9 percent between the date parliament dissolved and polling day - largely due to lower valuation of the index at 14 times 12 month price earnings (PE) multiples against 18 times PE multiples in 2008, before the 12th general election.

Also, Maybank IB highlights that the present global economic outlook is turning positive, as opposed to the onset of the global financial crisis before the March 2008 elections.

"Domestic economic fundamentals and corporate balance sheets stay strong, corporate earnings growth remains intact (although in single digits due to a high base), and liquidity continues to build," the research house added.

The research house added that foreign investors, who had bought into the market earlier, could lock in some profits as well, which could further soften the market.

"Investors with lower risk appetites may choose to stay on the sidelines until polling is over, while those with higher risk appetite should look to accumulate on weakness ahead of polling," Maybank IB said.

In 2010 foreign buying amounted to RM16 billion, in 2011 RM1.8 billion, RM13.7 billion in 2012 and was already close to the RM9 billion mark, in the first quarter of 2013.

The jittery sentiment is already apparent. In a knee-jerk reaction on Wednesday the benchmark FBM-KLCI tumbled 50 points or about three percent prior to the announcement of the dissolution of parliament, but clawed back to end the day largely flat, despite there being only 176 gainers against 435 losers, with 211 counters  unchanged and 159 untraded.

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