Foreign selling on Bursa Malaysia eases this week

By BERNAMA / Pic By TMR File

THE 2019 novel coronavirus (2019-nCoV) and the development of the US-China trade relations continued to weigh on Bursa Malaysia’s sentiments this week.

On Feb 3, the FBM KLCI slipped to a nine-year low as investors turned cautious while assessing the possible impact of the virus outbreak.

Foreign investors continued to exit Bursa Malaysia in the first four days of the week, although the selling tapered down to RM284.9 million from a net outflow of RM409.1 million in the same period a week earlier.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid (picture) said the equities market seemed to be at a crossroads, between the good numbers coming out from the US and the coronavirus outbreak.

“The Phase 1 deal is gaining traction as China has announced that it will halve additional tariffs on US$75 billion (RM310.5 billion) worth of US imports,” he told Bernama.

The average participation rate for foreign institutions stood at 26.06% compared to 19.45% in the same period last week.

Meanwhile, local institutions recorded RM160.49 million worth of net buying during the Feb 3-6 period, compared to RM143.81 million during the Jan 28-30 period.

Moving on, Mohd Afzanizam said markets’ focus will be on the 2019 fourth-quarter (4Q) GDP report, which will be announced on Feb 12.

“There are also talks of fiscal stimulus as the government may launch it in the face of global uncertainties brought by the coronavirus outbreak which is likely to have a material impact on China’s economy.

“As such, the equities market should trade rangebound this week,” he added.

Last Friday, the FBM KLCI ended 0.11% higher, or 1.72 points, to 1,554.49 from last Thursday’s close of 1,552.77.

Meanwhile, the Netherlands- based ABN AMRO Bank NV expects regional growth in Asia to stabilise at 5.3% in 2020, following a material slowdown in 2019.

Senior economist Arjen van Dijkhuizen said assuming a transient SARS-like shock, growth in China and emerging Asian economies would likely to be weaker in the first half of the year (1H20), particularly in 1Q, while the 2H20 could be stronger.

“That said downside risks stem from a longer duration of the 2019-nCoV crisis which could lead to a sharper than expected slowdown in China, with contagion effects to the rest of the region.

“Other risks stem from a possible re-escalation of the US-China tension or new US tariffs/sanctions directed at other Asian countries and from other geopolitical risks.

As of Feb 8, 722 people have died in mainland China from the coronavirus, the Chinese government said.

Meanwhile, the People’s Bank of China has cut its seven-and fourteen-day reverse repo rates by 10 basis points to 2.4% and 2.55% respectively, while adding around US$175 billion of fresh liquidity into China’s banking system.

Beijing also announced various targeted fiscal measures such as tax breaks and subsidies to support corporates and households affected by the coronavirus crisis.

“We expect Beijing to frontload further monetary and fiscal easing measures, including further inte- rest rate and reserve requirements ratio cuts,” said van Dijkhuizen.

Bursa Malaysia Bhd rose last Thursday in line with stronger Wall Street overnight performance after China said it would halve tariffs on US$75 billion of US imports. — Bernama