PETALING JAYA: Bursa Malaysia maintains its bearish tone as the third nationwide movement control order (MCO 3.0) which starts today weighs on sentiments.
In search of some positive elements, the market found none, instead, tech counters and chip makers slipped, tracking the tech-heavy Nasdaq Composite that retreated 2.55% the previous night.
If there was any consolation, Malaysia’s gross domestic product (GDP) for the first quarter of 2021 came in within expectations with a 0.5% decline.
The benchmark FBM KLCI extended its losses yesterday, closing 6.28 points or 0.4% lower to 1,577.64 points.
Across the broader market, it was a sea of red as decliners far outstripped gainers 980 to 199 while 360 closed unchanged, which saw all 29 indexes on the local bourse fall.
Malaysian Pacific Industries Bhd came in as the top loser after tanking RM2.36 or 6.15% to RM36.04.
With the absence of positive catalysts or themes in the market yesterday, traders returned to penny stocks once again, which dominated the most active list.
Focus Dynamics Group Bhd was the most traded at 484.04 million shares, down 1.5 sen to 6.5 sen. Two-sen counter Pegasus Heights Bhd came in second with 341.43 million shares traded, closing unchanged while Fintec Global Bhd shed half a cent to four sen with 148.32 million shares done.
Across the region, major indices were also down yesterday as surging commodity prices stoked inflation concerns on top of the tech sell-off.
Taiwan’s TAIEX plunged 3.79%, Japan’s Nikkei 225 fell 3.08%, Hong Kong’s Hang Seng Index dipped 2.03% while Singapore’s Straits Times Index declined 1.2%.
CGS-CIMB Research said the return of a nationwide lockdown raises the estimated daily economic losses in Malaysia’s economy to RM300mil a day compared with RM200mil a day for a targeted MCO and its baseline assumption of RM150mil a day for a conditional MCO. The research house estimated that each month of MCO would shave 0.3% point from its current annual GDP growth estimate of 5.7% in 2021.
It pointed out that potential extensions of the nationwide MCO 3.0 beyond June 7 may see the government contemplate further economic support, despite its increasingly narrow fiscal space, as a number of existing measures extended under the Pemerkasa stimulus package in March such as wage subsidies and cash transfers are due to lapse after June.
While a blanket MCO could help curb the spread of Covid-19, CGS-CIMB noted that it would be negative for the consumers, tourism, REIT, auto, healthcare and property sectors as the stricter lockdown will cut consumer spending.
“This could consequently dampen near-term sentiment and prompt investors to profit-take on recovery-play stocks (banks, auto, property, construction and tourism-related) that have done well, on concerns of earnings risks in the near term, and switch to defensive plays (utilities, telco and glove makers).
“REIT players with exposure to hotel and shopping mall portfolios as well as Genting Malaysia Bhd and Genting Bhd will likely be negatively impacted by the MCO due to stricter travelling rules and the maximum cap of 3 pax per vehicle, ” it said, adding that earnings risks are likely to be lower compared with the first MCO last year as more economic sectors are allowed to operate under MCO 3.0
Public Investment Bank Research also projected a RM300mil daily hit to the economy due to MCO 3.0
“The impact from the current MCO 3.0 is not likely to be dire, though we are wary over its effects on sentiment. We see no changes to fundamentals of the recovery story for now and retain our ‘overweight’ stance on the manufacturing, technology, consumer, oil and gas, gaming and rubber glove sectors, ” it said. The research house added that the cumulative earnings basket is the highest in the last six years, an encouraging note, suggesting that expectations of market improvements remain robust.
It said longer-term cyclical recovery plays like banking, oil and gas and construction appeared to be back on track.