Bursa Malaysia continues slide to 11-year low

The FBM KLCI took cue from its regional counterparts which were in a bloodbath and also from the major sell-off on Wall Street to finish the day at its lowest in 11 years on the back of the pandemic panic and sliding oil prices.

PETALING JAYA: There seems to be no end to the onslaught on Bursa Malaysia as the benchmark stock index fell for the sixth consecutive trading day as investors liquidated their shares for cash on day two of Malaysia’s movement control order (MCO) amidst fears of the coronavirus disease (Covid-19).

The FBM KLCI took cue from its regional counterparts which were in a bloodbath and also from the major sell-off on Wall Street to finish the day at its lowest in 11 years on the back of the pandemic panic and sliding oil prices. The index closed 19.29 points, or 1.56% lower, at 1,219.72 points yesterday, the lowest since Oct 7 2009 when it was at 1,218.61 points.

It shed 11.3 points at the open to 1,227.71 points before jumping 15.11 points to 1,242.82 points just two minutes later and it all went downstream after that. It almost hit the 1,100-point mark after it touched an an intraday low of 1,207.80 points yesterday just minutes before midday break.

Bursa saw 849 decliners and 170 advancers while 224 counters remained unchanged.

Top laggards in the benchmark index included Malaysia Airports Holdings Bhd, which plunged 11.9% to RM4.07, Genting Malaysia dropped 9.91% to RM1.91 while Hong Leong Financial Group Bhd saw its share price slid 6.72% to RM11.38.

IHH Healthcare Bhd was the top gainer after its share price rose 7.29% to RM5.15 while Sime Darby Plantation Bhd and Sime Darby Bhd jumped 4.42% and 2.98% to RM4.25 and RM1.73 respectively.

It was also not an easy day for oil and gas (O&G) companies with the Brent crude oil price dropping to US$26.45 per barrel as at press time, which saw Sapura Energy Bhd sliding 13.33% to 6.5 sen yesterday. It was the most actively traded counter with 191.58 million units exchanging hands.

Serba Dinamik Bhd Holdings Bhd was down 19.86% at RM1.13 while Velesto Energy dropped 13.64% to 9.5 sen.

Across the region, everything was in the red with South Korea’s Kospi shedding the most, plunging 8.39%, followed by Taiwan’s Taiex falling 5.83% and the Jakarta Composite Index which fell 5.2%.

Hong Kong’s Hang Seng Index dropped 2.61% while Japan’s Nikkei 225 fell 1.04%.

Singapore’s STI was also hammered with a decline of 4.73%.

JF Apex Securities, in its daily market commentary, said the FBM KLCI extended its losing streak amid exacerbation of the Covid-19.

Vision Group partner Chua Zhu Lian said the worst may not be over as the crisis was largely driven by an unexpected pandemic, a black swan event that caught many governments off-guard.

“I believe we are now in a market driven by a sentiment of negativity and emotions of fear where investment decisions have deviated from common fundamentals and conventional investment logic.

“What is important for investors is that the quantum of fall can and will be exacerbated by leverage in the market, which is one of the factors causing such drastic declines in the market, ” he said, adding that putting aside the negativities, the current situation is an opportunity to purchase stocks at attractive valuations.

“In my opinion, avoid leverage, pick the strong horses in the market and hold on tightly to ride on the market recovery. In the long run, the market will always be a weighing machine, ” said Chua.

CGSCIMB head of Malaysia research Ivy Ng said historically, the FBM KLCI corrected between 16% and 79% from its peak during a market downturn period.

During bear market conditions such as what Malaysia is experiencing now, the index had fallen between 45% and 79%, she noted.

“Applying a 45% decline to our current situation results in the KLCI falling from its previous 2018 high to 1,042 points.

“We advise investors to seek shelter in defensive and high-dividend-yield stocks until the concerns over the global spread of Covid-19 subside, ” Ng said.

She also pointed out that FBM KLCI earnings fell 8.7% during the 2008 global financial crisis due to the collapse in commodity prices and consumer sentiments before rebounding in 2009.

Assuming a similar degree of decline in earnings, she said the research house’s FBM KLCI target falls to 1,300 points.

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