PetChem emerges top on Bursa Malaysia as other heavyweights fall

Its market capitalisation grew by 10% to RM73b as of yesterday, surpassing both TNB and CIMB


Petronas Chemicals Group Bhd (PetChem) is now the third-largest company by market capitalisation on Bursa Malaysia as the weaker market in the past 12 months wiped out billions in value from select blue chips.

Underpinned by a record fiscal year, the integrated chemicals producer’s market capitalisation grew by 10% year-on-year (YoY) to RM72.96 billion as of yesterday, surpassing both Tenaga Nasional Bhd (TNB) and CIMB Group Holdings Bhd which were ranked third and fourth respectively in market capitalisation terms previously.

PetChem now sits behind Malayan Banking Bhd (Maybank) and Public Bank Bhd which retained their positions as the top two market capitalised stocks on Bursa Malaysia, according to Bloomberg data.

The FTSE Bursa Malaysia KLCI (FBM KLCI) declined 5.9% last year and continues to trade in negative territory in 2019 on poor corporate earnings reported for the fourth quarter of 2018 (4Q18) and tepid economic data.

TNB and CIMB have been hit by the weaker market, losing RM20 billion and RM17.83 billion respectively in market value over the year.

Maybank and Public Bank, though retaining their positions as the top two, collectively lost close to RM18 billion in value over the year (as at yesterday). The banks recorded market capitalisations of RM102.21 billion and RM88.08 billion respectively as of yesterday.

IHH Healthcare Bhd was the other company to move up the ranking and sits at fifth with a RM47.53 billion market capitalisation.

The weaker outlook of the banking sector, foreign selling and the dearth of market catalysts have kept the FBM KLCI in the red in 1Q19, down 3.42% year-to-date (YTD).

It closed 14.97 points lower at 1,628.66 on Monday — the lowest closing since end-2016 — before recovering 4.17 points yesterday to end the day at 1,632.83.

A recovery in the near term for the benchmark will be contingent on the performance of the banking sector, which saw all but one of the top six listed banks trading in the green yesterday, though lower overall on a one-month basis.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said the falling FBM KLCI is perceived as a one-off trend fuelled by the recent downgrade of banking stocks.

“Malaysian banks are heavyweights on the FBM KLCI and the index’s recent decline is not representative of the overall market,” he told The Malaysian Reserve (TMR).

He said overall market activity — which saw a total of 2.75 billion shares worth RM1.97 billion traded yesterday — is encouraging.

Penny stocks are still the most actively traded, with investors interest remaining on counters like Sapura Energy Bhd, Perdana Petroleum Bhd and Gagasan Nadi Cergas Bhd yesterday.

Local banks, which make up about a third of the FBM KLCI in terms of weightage, are bracing for slower loan growth and higher net interest margin pressure this year on expectation the economy is set to grow at a slower pace this year.

Rakuten Trade Sdn Bhd head of research Kenny Yee Shen Pin believes a technical recovery from oversold position could be on the cards.

“We believe the selling to be overdone and the FBM KLCI is due for a rebound…before catching up regional peers,” he told TMR.

The continued absence of market catalysts will keep the exchange muted even if banking stocks were to recover and investors search for the next driver of growth.

Foreign funds were net sellers again last week, disposing of RM162.1 million net of local equities, but renewed interest in the construction sector could have investors returning to the Malaysian market.

Bursa Malaysia’s construction index is already up 24.8% YTD and Putrajaya green-lighting 121 infrastructure projects worth RM13.93 billion should prove a further boon to the sector.

“Based on recent news flow, the construction sector could have a positive impact on the local market (after the government approved hundreds of infrastructure projects),” Yee said.

“A recovery of the ringgit would also be another market catalyst and this will be dependent on the direction of US interest rates this year.” he added.