The fall in share prices on Bursa Malaysia has made it more attractive for investors to come in, said MIDF Amanah Investment Bank Bhd.

Its Head of Research Department, Zulkifli Hamzah, said Malaysia has been a laggard market to date, but positive macroeconomic elements are likely to support the local stock market in the near term.

"The whole world is getting better. The US and China are rebounding. Trade is improving, private consumption is good, the minimum wage is coming in and the purchasing power of Malaysians has increased," he said.

He was speaking to reporters after a luncheon talk titled "The Economics of Illicit Cigarettes" today.

The FBM KLCI saw a stronger-than-expected sell-down yesterday to 1,635.63 at around 41 points or a 2.4 per cent drop in a single day.

It also implied a 3.7 per cent decline from its all-time high of 1,699.68, triggered by fears over the uncertainties of the forthcoming 13th general elections.

It was speculated that Parliament could be dissolved by end-February and the general election would be held in March 2013.

"In every stock market in the world, before an election, there is an increase in volatility. Same thing happened in the US before the election, there was an increase in volatility before the election.

"In fact, even after Obama won, the volatility increased. After that, the market stabilised," said Zulkifli.

However, foreign investors are unlikely be too influenced by the election as foreign funds into Malaysia have seen a gradual upswing, he said.

"They are not going to leave the country just because of the election issue. What we are seeing now is probably what we call a noise in the market. It should normalise over time," said Zulkifli.

Meanwhile, Kenanga Research said a general election typically brings uncertainties and the FBM KLCI had previously declined approximately four per cent on average in two of the last three general elections.

In a research note Tuesday, it said mainstream investment choices would still be the names with high-dividend yield and those that have consistently delivered positive total return in view of the concerns and uncertainties over the general election.