PETALING JAYA: The stock market kicked off August on the wrong footing with strong selling, as investors took on a pessimistic front following a global surge in coronavirus (Covid-19) cases which led to various economic concerns.
The benchmark FBM KLCI dropped 31.14 points or 1.94% yesterday, even as the exchange saw a record high trading volume of 13.12 billion shares.
It all leads to one thing – the earnings season is here – and investors are realising their gains and closing their positions as they brace for the unprecedented quarterly results of the second quarter, which took on the full blow of the movement control order (MCO).
The barometer index extended its losses from a rocky political situation last Thursday, opening below the 1,600-point mark at 1,595.01 points at 9am yesterday.
It was all down south from then on, which saw the FBM KLCI closing at 1,572.47.
Rubber glove giants Top Glove Corp Bhd and Hartalega Holdings Bhd hit their all-time highs of RM26.88 and RM20.50 to add 5.23 points to the index, but it was not strong enough to sustain the weight brought by 27 other constituents of the FBM KLCI.
The only other advancer in the 30-stock index was KLCC Property Holdings Bhd, which added 10 sen or 1.28% to RM7.90.
The rising number of Covid-19 cases sparked fears of a second wave and fresh lockdowns, which were currently being considered by many countries after it was implemented in several cities.
This weighed on the oil prices, as investors fretted over a renewed situation of oversupply as the Organisation of the Petroleum Exporting Countries (Opec) and its allies start to ease production cuts.
Brent crude oil dropped 25 cents to US$43.27 per barrel as at press time, while the West Texas Intermediate (WTI) was down 33 cents to US$39.94 a barrel.
All these developments got investors scrambling for shelter in technology counters for their 5G theme play, healthcare-linked stocks and gold.
Gold climbed to its all time high of US$1,988.40 an ounce during intraday trading yesterday and eased to US$1,968.52 as at press time.
The red hot volume on Bursa Malaysia yesterday saw RM8.24bil worth of shares changing hands on the back of a negative market breadth with 707 losers compared to 505 gainers, while 294 remain unchanged.
Fortress Capital Asset Management chief executive officer Thomas Yong told StarBiz that they were not seeing any shift in trends except for some price consolidation as the earning reporting season commences.
Rakuten Trade Research vice-president Vincent Lau said it was not entirely a bad sign for the index to drop on a record high volume.
“The tech index is up, the Ace Market is up and the small caps are up. All is not lost, it is more of a rotational play.
“It is not a major concern because there is no broad-based selling. Investors are just starting to move towards tech-related stocks.
“The Nasdaq is at its all-time high, but the Dow is not, so the situation is not peculiar to Malaysia, ” said Lau.
Penny stocks dominated the most actively traded list yesterday, led by ACE-listed MD Technology Bhd, which jumped 10 sen or 83.33% to 22 sen with 811.22 million shares being done.
Malaysian Pacific Industries Bhd was the top gainer after adding RM2.02 or 15.3% to close at RM15.22.
AirAsia X Bhd, which is in a net liability position, coupled with the posting of its worst quarterly net loss ever last Thursday, saw the counter shaving 1.5 sen or 21.43% to 5.5 sen.
This also dragged AirAsia Group Bhd down, which lost four sen to 60 sen.
Banking counters were all in the red except for Affin Bank Bhd which remained unchanged. Oil and gas and construction counters were also mostly in the red.
Regional markets were mainly lower except for Japan’s Nikkei 225 and South Korea’s Kospi, which advanced 2.24% and 0.07%, respectively.
The Jakarta Composite Index was the worst performer after it fell 2.78% yesterday.