PETALING JAYA: And so it ends. The local bourse took a humble bow out of 2020 in the red after a remarkable run for the year that was driven by liquidity.
A total of 26 out of the 29 indices declined amid strong selling pressure, led by the benchmark FBM KLCI shedding 17.20 points or 1.05% to 1,627.21 points.
The barometer index was down at an average of eight points the entire day until a last minute dumping of blue chips at 4.50pm, which weighed the index down by a further nine points.
Year-to-date, the FBM KLCI was up 2.93% according to Bloomberg data, outperforming all its Asean counterparts except for Vietnam’s VNINDEX, which rose 14.5%.
Compared with the intra-year low of 1,219.72 points during the March 19 crash, the index has rebounded 33.41%.
The FBM KLCI hit a high of 1,695.96 points in the morning of Dec 14 while its highest trading participation was recorded on Aug 11 with 27.8 billion shares traded.
Rakuten Trade Sdn Bhd research vice-president Vincent Lau told StarBiz that the sudden pullback may allow the market to start on a green note in 2021, rather than a last minute push up of the index.
“There were profit-taking activities towards the end so that there can be more upside when the market reopens in a new year.
“Regionally, there are concerns about the number of Covid-19 cases. And investors may be worried about the lifting of the suspension of regulated short-selling.
“These were generally the concerns today but it has been a good year for the market and it should be a better 2021, ” he said.
Lau felt that the themes for 2021 will be very much vaccine-related, coupled with recovery and rotational plays. The local bourse will still remain vibrant with ample liquidity in the market.
“Gloves may rebound because their valuations are quite low. It may not be the most exciting sector now but I think there’s still trading opportunities, ” he said.
RHB Investment Bank regional equity research head Alexander Chia said 2021 would be about recovery and how sustainable it will be.
He said the positive trifecta of good news seen in recent weeks including the better-than-expected vaccine news, receding near-term political risks and a relatively more stable incoming Joe Biden administration in the United States gave the market more confidence to start pricing in a recovery scenario.
In his market strategy report, Chia noted that fundamentals will come back to take centre stage despite the robust liquidity fuelling the price of risk assets.
“Markets are anticipating a strong rebound in corporate profitability in 2021 and 2022. While earnings recovery will be helped by a low base effect, investors worry about the historically poor track record of earnings delivery. An absence of earnings growth will ultimately limit the headroom for equities to move higher, ” he wrote, adding that the state of domestic politics also remains an underlying uncertainty for the market.
CGS-CIMB head of Malaysia research Ivy Ng (pic below) expected 2021 to be a better year as the strong rebound in corporate earnings is set to converge with a sea of ample liquidity to boost market performance.
She said a weak US dollar could spark the return of foreign investor interest in emerging markets including Malaysia, spurring further gains for Malaysia’s stock market.
Ng was almost spot on with her end-2020 FBM KLCI projection of 1,628 points. Her end-2021 target for the index is 1,759 points.
“Our preferred sectors are banks, gaming, oil and gas, media, packaging, electronics manufacturing services, rubber gloves and healthcare.
“The emergence of vaccines for Covid-19 has sparked hope that the global economy could bounce back strongly next year.
“The key concerns lie in the time required to ensure sufficient doses of vaccines are available to inoculate enough people to allow the lifting of lockdown measures, ” she said.
CGS-CIMB’s themes for 2021 are laggard plays, beneficiaries of foreign fund inflows, growth stocks, retail picks, dividend yielders, government-linked company picks, tourism recovery plays and shariah picks.
Bursa Malaysia concluded the year on a bearish note yesterday with 620 decliners against 474 gainers while 501 remained unchanged.
A total of 5.51 billion shares valued at RM3.11bil exchanged hands.
The FBM KLCI saw 26 constituents in the red while the remaining four closed unchanged.
Sime Darby was also among the top losers yesterday after the United States’ Customs and Border Protection (CBP) banned imports of its palm oil on allegations of forced labour.
Among the key Asian markets, Hong Kong’s Hang Seng Index rose 0.31%, China’s Shanghai Composite up 1.72% and Taiwan’s TAIEX advanced 0.31% but Singapore’s STI fell 0.89%. Japan and South Korea’s markets were closed.
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