Coronavirus infects Bursa Malaysia’s January market cap to a 3-year low

The deadly outbreak causes the local stock market to start the year on a wrong footing


THE coronavirus spread that has infected more than 40,000 in China with deaths over 900 people, the corporate impact on Bursa Malaysia has intensified. The local bourse dragged to its lowest in 38 months as investors and traders try to navigate the crisis.

The deadly outbreak was first identified last month amid growing alarm since end-December 2019, causing the local stock market to start the year on a wrong footing.

January’s market value was reported at RM1.65 trillion, a decrease from RM1.71 trillion recorded for December 2019 and the lowest since November 2016.

According to data from Bursa Malaysia, the stock market’s market value has been averaging between RM1.1 trillion from May 2000 to January 2020, and the value reached an all-time high of RM1.96 trillion in Jan 2018 and a record low of RM394.48 billion in April 2001.

As for this month, market value month-to-date stood at RM1.7 trillion, signalling recovery from the previous month’s low.

Head of Research BIMB Securities Research Azharuddin Nordin said markets will continue to grapple with the uncertainty of the impact of the virus.

“Now in its second month especially with the death toll continuing to rise. The key event this week will be the GDP announcement for the fourth quarter of 2019 (4Q19) tomorrow and the narrative that accompanies the economic data,” he said in a research report yesterday.

Azharuddin noted that Malaysian stocks in February so far rose across the board, but the impact of the virus is still being assessed.

As of yesterday, the death toll in China surpassed that of the 2002- 2003 SARS epidemic.

The outbreak can be traced back from Dec 31 last year, when China alerted the World Health Organisation (WHO) to several cases of pneumonia in Wuhan, a port city of 11 million people in the central Hubei Province.

The virus was then unknown until Jan 7, this year. Things turned worse when China reported its first death from the virus on Jan 11, a 61-year-old man who had purchased goods from the seafood market.

Shortly after that, on Jan 13, WHO reported a case in Thailand, the first outside of China, a woman who had arrived from Wuhan.

On Jan 30, after WHO’s global health emergency announcement, the local stock market experienced a bloodbath as offshore funds offloaded RM250.5 million net.

The benchmark index FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) followed suit to decline 0.9% to 1,531.1 points, the lowest close in more than five years.

Based on the data from Bursa, international investors dumped RM659.7 million net of local equities on the last week of January 2020, the largest weekly foreign net outflow in eight weeks.

Overall, for January 2020, international investors have sold RM138.3 million net.

As for year-to-date, net outflow stood at RM604 million versus RM1.2 billion in December 2019.

The FBM KLCI showed resilience last week, but this is line with the recovery in global stocks as fears from the coronavirus moderated and US stocks hit a record high.

The blue-chip index fell 0.75% or 11.69 points to 1,542.80 yesterday, the biggest decline since falling 0.94% on Jan 31, 2020.