PETALING JAYA: Regional markets continued their selloffs from last Friday but stabilised towards the end of yesterday’s trading session amid much uncertainty over new Covid-19 variant, Omicron.
Taking its cue from its counterparts, the FBM KLCI reversed most of its earlier losses, finishing marginally lower at 1,510.57 points, down 0.11% after touching 1,501.51 earlier in the day.
“We expect Malaysian stocks to be volatile this week as investors await more information on the new Covid-19 strain,” Mercury Securities said in a report to clients.
Investors around the world dumped stocks last Friday as fresh fears emerged after news spread that the Omicron strain, first detected in South Africa, could very well derail economic recovery plans and put a halt to central banks’ plans to raise interest rates.
All major indices in the United States ended in negative territory last Friday, with the Dow Jones Industrial Average shedding 2.5%, the S&P 500 falling 2.3% and the Nasdaq Composite losing 2.2%.
Nearer to home, Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index both shed more than 2% each on Friday, while at Bursa Malaysia, the FBM KLCI lost 0.87%.
The World Health Organization has labelled the new strain a “variant of concern”.
Over the weekend, it said it remained unclear whether this new strain was more potent than past variants. Still, in a sign suggesting that investors may have overacted last week, US stock futures opened higher yesterday.
Oil prices were also up after falling 13% on Friday, the lowest it has been this year.
Reports around the world are now quoting a South African doctor, who having treated Omicron cases, has said that “symptoms of Omicron were so far mild”.
“Are we in for a fresh wave, time will tell but one thing for sure is that volatility is the name of the game for now,” one fund manager remarked.
Across Bursa Malaysia yesterday, declines were mostly contributed by stocks deemed to be directly affected should there be a derailment in economic recovery.
These included most banks and consumer-related shares.
Glove stocks, which have suffered declines in recent months, were the obvious stars of yesterday, propping the index up and lending positivity towards overall sentiment.
Areca Capital CEO and fund manager Danny Wong (pic) told StarBiz that although the “element of risk is there, it may be too early to judge, pending more detailed study on the Omicron”.
“I do think investors over-reacted (on Friday) out of fear that another wave of the Covid-19 pandemic is looming.”
Meanwhile, in its technical review report yesterday, Kenanga Research said from a technical perspective, even after falling by 86.1 points or 5.4% over the past six consecutive weeks to hover near its lowest level since mid-August, there are still no signs of selling pressure subsiding for the FBM KLCI.
“This being the case, continuing from where it left off, the FBM KLCI will likely face an extended test of resilience ahead with the market bellwether vulnerable to slide below our immediate support line of 1,510,” it said.
Kenanga technical analyst Goh Yin Foo said with November drawing to a close soon, investors may want to leave the month behind “and look forward to better times ahead”.
“Statistically, the odds are in their favour as the key market barometer has logged positive performances for the month of December in nine out of the last 10 years, including the most recent six years.
“This translates to an average monthly return of 2.2% since 2011,” Goh said.