PETALING JAYA: The FBM KLCI, in tandem with most other regional and global bourses, recorded a 31.23-point drop yesterday, or 2.15%, following the decision by the US Federal Reserve (Fed) to hike rates by another 75 basis points (bps), bringing its benchmark lending rate to a new target range of 3.75% to 4%.
The FBM KLCI closed at 1,420.38, with 2.625 billion shares being traded, valued at RM1.89bil. There were 238 gainers, 660 losers and 361 counters traded unchanged.
Among the top losers were Nestle (M) Bhd
, Petronas Dagangan Bhd and Hong Leong Bank Bhd, while the top gainers amid a sea of red were IMASPRO Corp Bhd, Rapid Synergy Bhd and Carlsberg Brewery Malaysia Bhd.
Rakuten Trade head of equity sales Vincent Lau told StarBiz this could have been an expected knee-jerk reaction from investors following the latest US rate hike, and while the Fed has hinted it is looking at smaller hikes going forward, this still means the US central bank is maintaining its hawkish stance.
“The Fed is not expected to pivot any time soon, and as anticipated, Bank Negara has also raised its overnight policy rate (OPR) by another 25 bps.
“So, this has also contributed to the slide,” said Lau.
However, while he still expects the market to be volatile on the back of external factors such as the afore-mentioned US rate hikes and China’s adamance with its zero-Covid policy, Lau believes things can get better on the home front, especially once the 15th General Election (GE15) is done and dusted.
He added, “Just like there was a small rally in the market following the dissolution of Parliament, we see the market recovering some ground to reach the 1,500-point level post-GE15, particularly if a majority government can be formed.”
Meanwhile, Tradeview Capital chief investment officer Nixon Wong concurred with Lau that the decline in the local bourse yesterday was more of a spontaneous response.
This was most likely brought about by selling by foreign investors, coupled with the fall on the glove sector after the weak earnings report of Kossan Rubber Industries Bhd confirming the sustained pressure within the industry.
While Wong also believes the FBM KLCI would stabilise after GE15, he noted regarding the US rate hikes, “The Fed is stating they would continue to raise rates more than previously anticipated, albeit signalling smaller rate hikes may be on the horizon.
“The negative investment sentiment remains, as investors may be taking it as a cue that high uncertainty still lies ahead, ultimately depending on various economic reports such as upcoming inflation data, wage growth and employment data.”
Despite feeling that the economy would also slow down going into 2023, he opined that the country is unlikely to slip into a recession, and hence relatively was in a better situation compared to the developed markets.
“This could be an attractive investment point for foreign funds to return to Malaysia post-GE15, as we expect government policies to become more certain as well,” said Wong.
