PETALING JAYA: With the government throttling up its preparation to inoculate the majority of Malaysians beginning Feb 26, the stock market is set to be a key beneficiary as investor exuberance makes a comeback.
Amid a more controlled Covid-19 outbreak, analysts said more investors will bet on recovery plays in expectations of a stronger economic recovery ahead.
A continued increase in crude oil prices is an additional catalyst for economic growth, considering the federal government’s reliance on petroleum-related revenue.
Pundits anticipate Malaysia’s economy to return to positive growth territory this year, after the country faced its worst recession in over two decades last year.
According to HSBC Global Research chief economist for Asean Joseph Incalcaterra, the start of Malaysia’s vaccination programme should help improve sentiment as Malaysian consumer activity is expected to rebound considerably in the latter part of 2021.
This is if the country comes close to attaining herd immunity, which appears likely by February 2022, if the vaccination programme proceeds accordingly to plan.
“Despite the immense disruptions of the pandemic, a relatively robust policy response in Malaysia has helped to prevent structural damage seen elsewhere.
“Well-targeted fiscal policy support allowed for a relatively resilient labour market, with somewhat limited retrenchments, while loan moratoria and subsidised facilities helped protect the financial position of small and medium enterprises and consumers, ” stated Incalcaterra in a note.
Often seen as a leading indicator of economic confidence, the stock market has witnessed signs of strength in investor sentiment over the last two weeks.
Not only that, following the Lunar New Year, the local bourse has recorded strong daily volume, exceeding 10 billion securities.
The FBM KLCI, which has been on a decline since mid-December 2020, has notched over 40 points since the start of February and has once again returned to above the 1,600-point mark.
Yesterday, while the main index of Bursa Malaysia ended its four-day winning streak, recovery play stocks led the list of outperformers among FBM KLCI’s 30 component stocks.
Oil and gas services provider Dialog Group Bhd was the best performer as it rose by nearly 4.8%.
The FBM KLCI closed near its intraday low, despite the overall market seeing more gainers than losers.
As profit-taking entered the market, the index erased its earlier gains in the day and closed lower by 1.93 points, or 0.12%, to 1,606.14 points.
Trading activity, however, was robust with 12.6 billion shares traded for a value of RM5.79bil.
On the broader market, a total of 748 gainers trumped 523 decliners. Meanwhile, 400 counters were unchanged.
Consumer stocks saw some buying interest, with Heineken Malaysia Bhd adding 48 sen to RM23.96, Nestle Malaysia Bhd gaining 40 sen to RM136.70 and Carlsberg Brewery Malaysia Bhd adding 22 sen to RM22.56.
Top traded counters were Dagang Nexchange Bhd, up five sen to 54 sen on the back of 598.88 million shares changing hands, DGB Asia Bhd jumping five sen to 14.5 sen on 594.91 million shares crossing and ARB Bhd gaining three sen to 36.5 sen on 412.3 million shares traded.
Across Asia, the rally in regional stock markets remained intact with Japan’s Nikkei rising 1.4%.
While China’s markets were closed for holidays, Hong Kong’s Hang Seng gained 1.4%. South Korea’s Kospi rose 0.5% and Australia’s ASX200 added 0.7%.