Market realigns to upcoming changes


The benchmark index FBM KLCI closed 44.88 points lower to 1,562.71 points after it took a dive in the final trading hour with volume spiking by about 50%. “The drop in the FBM KLCI yesterday is likely driven by the MSCI rebalancing, as well as the upcoming reshuffling in the FBM KLCI components. Some funds were selling their positions from the recent rally in the stock market and holding cash to make new positions for 2021, ” a fund manager told StarBiz.

PETALING JAYA: The sharp plunge in the FBM KLCI just before the market closed yesterday could be due to investors realigning their portfolio ahead of the upcoming changes to the index’s components and the MSCI Malaysia index, according to fund managers.

The benchmark index FBM KLCI closed 44.88 points lower to 1,562.71 points after it took a dive in the final trading hour with volume spiking by about 50%.

“The drop in the FBM KLCI yesterday is likely driven by the MSCI rebalancing, as well as the upcoming reshuffling in the FBM KLCI components. Some funds were selling their positions from the recent rally in the stock market and holding cash to make new positions for 2021, ” a fund manager told StarBiz.

A remisier said some funds were making adjustments with the MSCI rebalancing and the value of stocks traded jumped from RM4.99bil to RM7.67bil at 4.45pm yesterday.

Top decliners included Petronas Dagangan Bhd, Public Bank Bhd, Tenaga Nasional Bhd, Petronas Chemicals Group Bhd and Malayan Banking Bhd.

Meanwhile, top gainers included Supermax Corp Bhd, Petronas Gas Bhd and Fraser & Neave Holdings Bhd. “Supermax is likely to be added to the KLCI components, while KLCC Property Holdings Bhd could be removed from the 30-component index, ” said a fund manager.

In August, it was reported that Supermax and Kossan Rubber Industries Bhd were set to be added as constituents to the MSCI Global Standard Indexes.

“The market dropped 44 points as some funds shorted key stocks to ensure they were not caught in futures. Yesterday was the last day of the month for futures settlement, ” a remisier said.

Rakuten Trade Sdn Bhd research vice-president Vincent Lau (pic below) told StarBiz that the decline in the KLCI could be due to profit-taking activity and funds adjusting their portfolio for next year.



“The market should do better in December, and we are targeting the KLCI to close above 1,600 points at the end of the year. The theme will be on the economic recovery driven by Budget 2021 and depending on the vaccine news, ” he said.

Areca Capital Sdn Bhd CEO Danny Wong Teck Meng has a bullish view on the local stock market, especially with the uncertainties such as Budget 2021 and the US presidential election over. “Moving forward, the theme for 2021 will be on economic recovery and positive vaccine news. There will be an adjustment in the funds’ portfolio in December and we are seeing stocks that are proxies to the economy back in favour, ” he said.

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