Unloved by foreigners, local investors chase stocks higher
STOCKS on Bursa Malaysia jumped 1% on Wednesday after the stock market reopened following an extended Hari Raya AidilFitri weekend.
At 1,450 points, the FBM KLCI was 18% or 230 points higher from its March low of 1,220 points.
The swift recovery from the March sell-off was driven by glove makers’ surging run, with shares in top producers trading at new highs.
Elsewhere, retail participants continued to chase up rotational plays.
But the prospects of weaker corporate earnings and the worst gross domestic product (GDP) outlook in years have sapped overseas investors’ appetite for local stocks.
Data from the stock exchange showed foreign funds were persistent net sellers of local stocks every week over the past three months.
According to the latest weekly moneyflow report by MIDF Research, overseas fund managers have pulled out around RM11bil for the local bourse since March 3.
Year-to-date the outflow had reached RM12.6bil, higher than the RM11.4bil outflow recorded for the whole of 2019.
Trade slumps on disrupted global supply chain
GLOBAL trade tumbled in March at its fastest pace in more than a decade, with leading indicators pointing to steeper falls in the coming months as the coronavirus pandemic takes an increasingly heavy toll on businesses.World trade volume declined 4.3% in March from a year ago, according to the world trade monitor published on Monday by the Netherlands Bureau of Economic Policy Analysis. On a month-on-month basis, it fell 1.4% for a third straight decline.
The downturn was particularly bad for Europe, with trade falling by more than 7% and industrial production falling by over 12%. In China, trade and production rebounded in March, following a sharp decline in January and a consolidation in February.
The report said the slump in March was the initial sign of the damage from the various Covid-19 measures imposed by governments worldwide to combat the disease.
“Partial figures for April show a mostly negative picture, and leading indicators such as Global New Export Orders point to a stronger decline in global trade in the coming months, ” the report said.
“We expect a stronger decline in trade and production in April and May, in line with a tightening of Covid-19 measures in many regions.”
Global energy spending to drop by US$400bil
The International Energy Agency (IEA) said the coronavirus pandemic has paved the way for the largest decline of global energy investment in history, with spending set to plummet in every major sector this year.
In its World Energy Investment report, published on Wednesday, the IEA said the unparalleled decline in worldwide energy investment had been “staggering in both its scale and swiftness”.
The IEA said it now expects global investment to tumble by 20%, or down by about US$400bil compared to last year.
The Paris-based organisation had earlier this year predicted a 2% increase in energy spending this year.
Last Friday, Petroliam Nasional Bhd (Petronas) said it would reduce capital expenditure by about a fifth this year, while operating expenditure will be cut by 12% from previously budgeted figures.
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