PETALING JAYA: Rubber glove makers have again hoisted Malaysia’s benchmark stock index into the positive region even amid negative sentiments from the shaky global economic recovery and local political uncertainties.
As retail investors start cashing out with the loan moratorium ending in less than a week, fundamentals are now back in play in the market after a bull run of close to six months.
A number of sentiment-driven stocks with close to no fundamentals have come off their peak, some losing more than 50% as the stock market frenzy started tapering off.
Investors are starting to move back towards safe haven stocks such as rubber gloves as the Covid-19 shows no signs of abating and with no certainty of a vaccine being rolled out anytime soon.
When an institutional investor such as the Employees Provident Fund (EPF) ups its stake in rubber glove counters, it strengthens the confidence that there is still value in the long run.
The EPF bought 13.7 million shares in Top Glove Corp Bhd, increasing its stake to 5.05% on Sept 18. Just a day earlier, it had bought 4.7 million units in Kossan Rubber Industries Bhd, raising its stake to 8.09%.
Bursa Malaysia’s FBM KLCI bucked the regional trend, finishing 4.32 points or 0.29% higher, just marginally above the crucial 1,500-point mark at 1,500.80 points.
All other leading indexes in the region were in a sea of red after tracking the losses from Wall Street the night before.
The FBM KLCI got off on a jittery start at yesterday’s opening over the extended bearish sentiments from Wednesday when Opposition leader Datuk Seri Anwar Ibrahim claimed he had the majority support in Parliament, bringing the index down to an intraday low of 1,492.98 points.
It was then on an upward trend until it hit 1,504.78 points at 4.50pm before a last-minute selldown ensued, bringing the index down to 1500.80 points.
Hartalega Holdings Bhd was the top gainer yesterday after gaining RM1.40 or 9.66% to RM15.90, adding 1.40 points to the index.
Fellow glove maker in the 30-stock index, Top Glove, was also among the leading gainers, adding 53 sen or 6.61% to RM8.55.
Across the broader market, the breadth was negative with 578 losers to 451 gainers while 428 remained unchanged.
A total of 5.9 billion shares exchanged hands, valued at RM4.56bil.
UOBKayHian Research said in a note that the constantly shifting sands of Malaysian politics and accompanying market uncertainties were consistent with its expectations for Malaysian equities to remain in consolidation mode, even as the country’s bank loan moratorium comes to an end.
“Foreign net selling is likely to persist under the dual uncertainties of politics and bank delinquency trends through to the first half of 2021.
“Nevertheless, the added fiscal stimulus of RM10bil amounting to 1% of the GDP serves as a modest economic cushion.
“Most Malaysian equities would be positively swayed by the widely expected Covid-19 vaccine find by the year-end, ” the research house said, adding that it may need to reassess its end-2020 FBM KLCI target of 1,600 points as the political drama unfolds.
UOBKayHian said in another report that dividend yield-compression plays have not been rewarding to date, but it expected defensive high yielders to soon re-rate.
Among the factors that would be conducive for the rerating are the extended period of the low interest rate environment, a second quarter of earnings recovery and a relatively risk-averse sentiment.
“A company’s ability to deliver two or more consecutive quarters of steady or improving earnings is crucial to restoring investors’ confidence that the company’s cash flows can sustain dividends, ” it said.
Regionally, Hong Kong’s Hang Seng Index fell 1.82% while Japan’s Nikkei 225 and South Korea’s Kospi retreated 1.11% and 2.59% respectively.
Taiwan’s Taiex dropped 2.54% while Singapore’s Straits Times Index fell 1.22%.
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