Strong buying support lifts market in volatile 1st trading day after GE14

A broker says market looks set to retest recent high of 1,896 this week as moves taken by new govt so far have been viewed positively by investors over long run


Volatility and strong buying support by domestic institutional funds marked the first day of trading on Bursa Malaysia since Pakatan Harapan’s stunning election victory last Wednesday.

Reopening after a three-day break, the local benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell sharply to hit a low of 1,797 in early trading before strong buying saw the index recovering to a high of 1,876 points and closing at 1,850 points, up 0.21% for the day.

“The strong buying from the lows in early trade gave the impression a relief rally was on the cards. The last minute selling sort of snuffed that out, but market action today shows there’s good support for the market,” said a trader with a local brokerage.

“The market looks set to retest its recent high of 1,896 this week as the moves taken by the new government so far have been viewed positively by investors over the long run. The volatility should ease in the next few tradings days,” he added.

According to Bloomberg data, the FBM KLCI saw its biggest intraday swing since early September 2015 as the day turnover hit 6.58 billion shares valued at RM7.31 billion and gainers outperformed losers by 930 to 405.

“The knee-jerk reaction was anticipated, however, it is still good as the index did not hit the circuit breaker,” Rakuten Trade Sdn Bhd research VP Vincent Lau said, adding that buying was led by government-backed local funds.

Lau said the formation of a council of five elders, including former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, will help to reassure investors that pragmatic business decisions will prevail under the new government.

That said, calls by the new government to review some investment projects and policies led investors to sell construction and former government-linked stocks.

The Pakatan Harapan’s election manifesto pledged to remove the Goods and Services Tax, realign the minimum wage and set petrol prices, which saw investors going long on consumer stocks with British American Tobacco Malaysia Bhd’s share price surging 25% to close at RM28.38.

Blue-chip food and beverage firms Nestlé Malaysia Bhd and Fraser & Neave Holdings Bhd climbed some 4%, while apparel retailer Padini Holdings Bhd jumped 9%.

A stock linked to the new leadership such as Opcom Holdings Bhd, whose CEO Mokhzani Mahathir is Prime Minister Datuk Seri Dr Mahathir Mohamad’s son, rose limit up or 50% for the day to a high of 90.5 sen.

Felda Global Ventures Bhd, the world’s largest palm oil producer and a vital cog in Malaysian politics, gained as much as 11.8% or 19 sen to RM1.80.

The weaker ringgit saw exporters like Inari Amertron Bhd gain as much as 7.6%, while Unisem (M) Bhd added 10%, Malaysian Pacific Industries Bhd rose 10.71%, Globetronics Technology Bhd gained 10.68% and Top Glove Bhd rose 3.86%.

Construction counters and stocks linked to the previous government saw heavy declines as Dr Mahathir’s new government promised to review all mega infrastructure projects.

CIMB Research has downgraded the construction sector to ‘Underweight’ from ‘Overweight’ on potential government action.

Gamuda Bhd’s share price hit a three-year low after it fell 17.65% or 89 sen to RM4.21, while George Kent (M) Bhd plunged limit down or RM1.18 to RM2.76.

Government e-services provider My EG Services Bhd plunged 30% and Datasonic Group Bhd slid as much as 7.37%.

Bursa Malaysia ended the morning session yesterday in positive territory after a roller-coaster opening.

The main index, which tracked the blue-chip stocks, fell by 40 points in the early trading. But the kneejerk reaction was short-lived and investors pushed the FBM KLCI 13 points higher during the session.

At the end of the morning session, the FBM KLCI closed the trading eight points higher at 1,854.52. The market even rose above 20 points during yesterday’s trading.

Market watchers said the decision of the newly minted government to declare a public holiday last Thursday and Friday helped the market to digest the transition of power.

At the close, Public Bank Bhd rose 92 sen to close at RM24.80, PPB Group Bhd jumped 82 sen to end trading at RM19.98, Hengyuan Refining Co Bhd was up RM1.46 to RM9.30, while KESM Industries Bhd increased RM1.54 to end at RM17.62. Bursa Malaysia Bhd rose 91 sen to RM8.19.

Major losers included CIMB Group Holdings Bhd which closed 35 sen lower to RM6.55, Ahmad Zaki Resources Bhd shed 30 sen or 41% lower to 42 sen, Malaysian Resources Corp Bhd lost 21.5 sen to 78.5 sen while AMMB Holdings Bhd was 27 sen lower to close at RM3.45.

The market is expected to continue with some volatility today, especially counters that had traded limit down.