by FARA AISYAH / pic by TMR FILE PIX

SPECULATIVE trading activity is expected to dominate this week ahead of the government’s economic stimulus package announcement on Thursday and release of corporate results.

Rakuten Trade Sdn Bhd research VP Vincent Lau anticipated the proposed economic stimulus package will have a positive impact on the market and FTSE Bursa Malaysia KLCI (FBM KLCI) performance next week.

“I think as we get closer to the announcement, investors will do speculative trading activities. After the announcement, they will see what the concrete measures of the economic stimulus package are and buy the sectors involved.

“As of now, we can see that the aviation and tourism sectors are the ones badly affected by the coronavirus outbreak,” he told The Malaysian Reserve.

In anticipation of the economic stimulus announcement, Lau expects some companies may choose to postpone their financial results reporting to Friday, being the last day of filing.

The benchmark FBM KLCI closed 0.25% or 3.78 lower at 1,531.20 last Friday. The FBM KLCI has declined 5.02% or 80.18 points since closing at 1,611.38 on Jan 3, 2020.

Pheim Asset Management Sdn Bhd CEO and CIO Leong Hoe Kit said the market index dropped last week as investors continued to digest news of the disappointingly weak GDP growth in the fourth quarter of 2019 amid the possibility of further interest-rate cuts and the ongoing coronavirus epidemic.

“The economic stimulus measures could somewhat help boost investors’ confidence for a short while, but the sustainability of any uptick in market prices of shares after the government announces the stimulus package next week is doubtful, given there are many other adverse factors that will act as a drag on the market,” he said last Friday.

He believes the stimulus package could benefit consumer stocks as the measures to be announced will target to boost consumer spending.

Leong said measures such as civil servant payouts and lower Employees Provident Fund contribution rates would increase take-home income to boost consumer spending.

Areca Capital Sdn Bhd CEO and ED Danny Wong said it is hard to judge the direction of index in very short term, but in general, the market tends to stay quiet pending major news or development.

“Any stimulus package is welcome by the market, much depends on the expectation and actual outcome.

“We are positive on the market mid to long term in view of market liquidity, potential rebound of earnings, multiple years-low of index and more importantly almost all bad news have been factored in lately,” he said.

Wong is looking at a few sectors which are future-proof, including healthcare, tech-related companies and selected banks.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali recently said the government is finalising the economic stimulus package to be implemented immediately.

He revealed the economic stimulus package aims to reduce the impact of the Covid-19 outbreak, which has disrupted global supply chains.

In 2003, the government introduced a RM7.3 billion stimulus package called “The Package of New Strategies” to aid the economy overcome the stress on the economy caused by the SARS epidemic.