The key index fell 10.78 points or 0.68% to close at 1,564.12 yesterday, marking the lowest point since Aug 25, 2015

by FARA AISYAH/ pic by TMR

MALAYSIAN equities continued to languish as the FTSE Bursa Malaysia KLCI (FBM KLCI) hit a four-year low yesterday, taking cues from the US and global markets.

The key index fell 10.78 points or 0.68% to close at 1,564.12 yesterday, marking the lowest point since Aug 25, 2015, when it ended at 1,503.68 points.

“The bourse was down largely due to the US and global markets, as well as weak US manufacturing data. The US is also imposing tariffs on European goods,” Rakuten Trade Sdn Bhd research VP Vincent Lau told The Malaysian Reserve (TMR).

US manufacturing data showed the lowest reading in over 10 years in September, owing to escalating US-China trade tensions stroking fear of a global economic slowdown.

The index from the Institute for Supply Management came in at 47.8% in September — the lowest since June 2009, marking a second consecutive month of contraction.

Four of the top five losers on the local bourse yesterday were companies in the consumer products and services sector.

Dutch Lady Milk Industries Bhd was the biggest loser with a RM1.20 or 2.02% decline to RM58.30, followed by Nestle (M) Bhd which declined 70 sen or 0.48% to RM144.50.

Public Bank Bhd fell 42 sen or 2.13% to RM19.28, British American Tobacco (M) Bhd decreased 30 sen or 1.61% to RM18.30 and Heineken Malaysia Bhd dropped 26 sen or 1.08% to RM23.86. It’s possible for the FBM KLCI to head even lower, Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said.

“The performance of the FBM KLCI is attributable to external developments. As the years progress, it’s becoming clear that US economic data will worsen and fall to the level of approaching a recession. Weak US economic data in some regard are consistent with recession,” Pong told TMR. He added that the timeline is also quite accurate as he expects the US to approach recession by end-2019.

The benchmark equity gauge is down 7.5% for the year-to-date and heading for the worst year in at least a decade, as per Bloomberg data.

In the past 52 weeks, the FBM KLCI declined 12.9%, while the MSCI AC Asia Pacific Index fell 3.9%.

The tabling of Budget 2020 next week could play a tiny part in keeping investors away from buying local shares, Rakuten’s Lau said.

“Most people are expecting it to be an expansionary budget which would spur the market, particularly on infrastructure-linked stocks,” he said.

Although Pong concurred there’s some anticipation for Budget 2020 to boost markets, he said general expectations remain modest.

According to MIDF Amanah Investment Bank Bhd analyst Adam M Rahim, international investors continue to sell local equities last week, albeit at a slower pace.

Foreign investors sold RM150.9 million net of Malaysian shares last week compared to RM249.3 million the week before.

“So far in 2019, there have been 26 weeks of foreign net selling,” said Adam. The month of September — excluding the last trading day — saw foreign net outflows of RM486.7 million net, among the lowest of the four

Asean markets monitored by MIDF. On a year-to-date basis, international funds have taken out RM7.83 billion worth of local equities from Bursa.

In terms of participation, foreign investors experienced the largest weekly drop in average daily traded value of 50.8% to drop below the RM1 billion mark at RM882.4 million.

Meanwhile, the ringgit strengthened against the greenback to 4.1860 at 6pm yesterday, compared to Wednesday’s close of 4.1930.

On the back of the weaker US data prints, the US dollar has lost some of its shine from a growth differential prospect and with US yields toppling a yield differential perspective also, AxiTrader Asia-Pacific market strategist Stephen Innes said.

“The ringgit remains glued to 4.19, but this belies the fact that local markets have a lot to digest. A Goods and Services Tax proposal by a domestic think tank is garnering lots of press, and Prime Minister Tun Dr Mahathir Mohamad versus Datuk Seri Anwar Ibrahim’s succession talk moves on.

“However, with Budget 2020 getting delivered on Oct 11, this is now being viewed as the next significant catalyst with is likely keeping investors cautious on local bonds, equities and currency,” Innes said in a note yesterday.