PETALING JAYA: The local benchmark index has plunged to below 1,600 points, dragged down by glove stocks, in what observers called an oversold market.
The weakness in the local market was in line with its regional peers which also saw declines, largely due to the surge in US government bond yields and a strengthening US dollar.
This was prior to the announcement of the country’s multi-trillion-dollar stimulus plan.
Observers reckoned that the local stock market could be “oversold” and it is due for a “rebound” especially with economic recovery expected to pick up in the second half.
Rakuten Trade head of equity sales Vincent Lau expected the market to stage a rebound on positive news such as FTSE Russell removing Malaysia from a watch list of possible exclusions and expectations of a higher economic growth.
“The market has been down for several weeks which could spur bargain hunting and buying interest.
“The market has been oversold and a technical rebound is expected, ” he told StarBiz.
He pointed out that the decline in the local stock market is in line with the soft regional markets yesterday.
“Unless there is another lockdown, the market should remain vibrant as the economic recovery continues, ” he added.
The FBM KLCI fell more than 40 points before closing 35.68 points lower to 1,573.51 points dragged by glove and consumer products counters.
Glove stocks took a beating after the US Customs and Border Protection directed its personnel at all US ports of entry to begin seizing disposable gloves produced in Malaysia by Top Glove Corp Bhd.
Top Glove fell 26 sen to RM4.52, while Hartalega Holdings Bhd lost 43 sen to RM8.93 and Supermax Corp Bhd declined 14 sen to RM3.81.
Market breadth was negative as decliners outpaced advancers.
There were 858 losers and 302 gainers while 369 counters traded unchanged on Bursa Malaysia.
Despite the weakness in the market, stocks of the Berjaya group of companies gained more than 20% and were on the top actively-traded stocks.
Meanwhile, a fund manager said the Malaysian market was the worst performer among its regional peers due to the political uncertainties.
This came after the number of Covid-19 cases went below 1,000 for the first time on Monday, raising a concern that a potential general election is on the horizon.
Umno, at its annual assembly last weekend, decided to cut ties with Prime Minister Tan Sri Muhyiddin’s Parti Pribumi Bersatu Malaysia and to contest the upcoming general election without the Perikatan Nasional coalition.