PETALING JAYA: The FBM KLCI recovered from its earlier weakness in the day and closed on a positive note, even though market sentiment was dampened by the latest slump in global crude oil prices.
Fund-buying of MISC Bhd and Public Bank Bhd, on top of the decision by the Securities Commission Malaysia (SC) and Bursa Malaysia to extend the temporary ban on short-selling activities by two more months, provided support to the benchmark index of the stock exchange.
FBM KLCI rose by 2.04 points or 0.15% to 1,372.20 points yesterday, off the intra-day high of 1,377.37 points.
This also marks the second consecutive day whereby FBM KLCI has closed up.
The 30-stock FBM KLCI on Monday was up by 0.3 of a point or 0.02% to 1,370.16 points.
A total of 16 constituent stocks under FBM KLCI saw an increase in their share prices yesterday, while 12 counters declined and two counters unchanged.
Meanwhile, across the broader stock exchange, market breadth was negative as 548 losers trumped 305 gainers. A total of 369 counters were unchanged.
Turnover was 5.02 billion shares valued at RM2.49bil.
Crude oil prices faced a sharp retreat as the shortage of storage worldwide continued to send traders exiting from June contracts.
As at press time, international benchmark Brent grade crude oil price fell by 4.1% to US$19.16 a barrel, while US crude West Texas Intermediate (WTI) tumbled by 20% to US$10.21 a barrel.
Experts said the fall in Brent prices comes ahead of the futures contract expiry on April 30.
On the other hand, the drop in WTI prices was partly because of the move by retail investment vehicles such as exchange-traded funds that sell front-month June contracts and instead, buying into contracts of months later in the year.
This is to prevent huge trading losses like last week, when WTI prices slumped into negative territory.
Helping sentiment was the move by the SC and Bursa Malaysia to extend the temporary suspension of short-selling from April 30 to June 30,2020, confirming the report by StarBiz a day earlier.
“The extension of the temporary suspension will ensure that market management measures are still in place, to manage risks within the prevailing uncertain and challenging environment amid Covid-19 pandemic, as well as to mitigate any excessive speculative activities in the marketplace, ” both regulators said in a joint statement.
The temporary suspension began on March 24.
It involves the suspension of intraday short-selling (IDSS) and regulated short-selling (RSS), as well as intraday short selling by proprietary day traders.
The suspension does not however apply to permitted short-selling (PSS).
Commenting on the decision to extend the suspension, TA Securities head of research Kaladher Govindan told StarBiz that it is a good move to reduce market volatility in current uncertain times.
“The authorities can lift it when there are signs of stability.
“Short-selling provides liquidity and breadth to the market and provides an opportunity for investors to make a profit, even in a bearish market.
“Reaction to the lifting of this restriction is dependent on the timing and news flow during the period.
“If the uncertainty over Covid-19 prevails and limited commitment from Saudi Arabia and Russia to cut output, anticipation of market correction can induce greater short-selling activities, ” he said.
Across key Asian markets, the performance of respective benchmark indices were mixed as crude oil prices weighed on sentiment.
China’s Shanghai Composite Index closed down 0.2%, while Japan’s Nikkei average slipped 0.1%.
However, Hong Kong shares climbed to their highest level in more than a week, as the financial hub showed some signs of returning to normalcy after the government eased lockdown restrictions.
The Hang Seng index was up 1.2%.
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