PETALING JAYA: News of headway in the race for a Covid-19 vaccine and rotational play in stock themes sent stocks on Bursa Malaysia higher.
Taking the lead from Wall Street, the FBM KLCI along with key Asian markets rallied as early-stage data for a potential Covid-19 vaccine renewed hopes for a rapid reopening of the global economy.
Rotational plays too gripped trading activity as “healthcare” stocks took a backseat after giving way to oil and gas stocks on Monday.
The rotation in Bursa moved from the construction, railway and airlines stocks in the morning to plantations in the afternoon session.
Stocks rose on anticipation of the economy going back to normal and the revival of infrastructure projects.
But after two positive days, the market breadth was slightly negative despite the bullish index.
The FBM KLCI closed 13.81 points higher to 1,424 yesterday with churning still at a high level with volume remained high at 9.5 billion shares done on value of RM4.6bil.
There were 500 gainers, 553 losers and 335 unchanged counters. The number of shares traded was a record 11.2 billion on Monday.
Meanwhile, oil and gas stocks continued to be heavily traded, although it was mostly profit-taking yesterday.
With oil prices having rallied over the last week, many oil stocks have recovered and are close to their pre-March levels.
Brent oil, which touched a low of US$19.33 in early April, has now recovered to the US$34 level at press time.
“We continue to advocate selling on strength and avoid the ‘bargain hunt’ wagon. Buy and hold activities ought to be put on hold for now. Continue to look for short term trading opportunities today, ” said CGS-CIMB head of retail research Kong Seh Siang.
Many of the world’s economies have begun to loosen restrictions on businesses.
In the United States, the Federal Reserve has also signalled that the central bank has more firepower to assist in the recovery efforts.
These developments set off an upsurge in global stock markets, with Wall Street having its best day in about six weeks.
In Malaysia, construction stocks also received a boost, with news that work for the East Coast Rail Link’s (ECRL) section A, comprising a 210.4km stretch from Kota Baru to Dungun, is set to commence soon following final approval from the government.
In recent days, there has been industry talk of a potential recovery in the KL-Singapore High Speed Rail (HSR) initiative.
As a knee-jerk reaction, the share price of rail contractors have reacted positively.
“We believe industry expectations of a bilateral renegotiation of the high speed rail project following the end-May deadline of the review period are also plausible given the lack of new mega high-impact contracts available for rollout once the ongoing MRT 2 and LRT 3 projects are completed.
“We believe investor-interest in larger cap rail players will return and could gravitate towards the past winners of the HSR contract in 2018, ” said CGS-CIMB Investment analyst Sharizan Rosely in a report.