Bursa rebounds but ringgit weakens slightly

Overall broader market sentiment was positive as gainers outnumbered losers while the ringgit was slightly lower yesterday


THE appointment of Tun Dr Mahathir Mohamad as interim prime minister (PM) herald an improvement in investor sentiment and fuel buying of stocks on Bursa Malaysia despite the downtrend in regional markets as nations struggle to contain the spread of the coronavirus.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) closed yesterday 0.73% or 10.82 points higher a notch above the psychological level of 1,500 points as investors did some bargain hunting.

“The overall broader market sentiment was positive as gainers outnumbered losers. The ringgit closed at 4.2338 against the US dollar and there was no drastic depreciation.

“All these showed that the appointment of Dr Mahathir as the interim PM on Monday provided some level of comfort to the capital and currency markets,” Pheim Asset Management Sdn Bhd CEO and CIO Leong Hoe Kit told The Malaysian Reserve yesterday.

Notwithstanding, Leong noted that the domestic political situation is still very fluid at the moment and there are still a lot of uncertainties.

“With the political situation still in limbo, immediate KLCI support could possibly be at the 1,470 points level, while the ringgit is not expected to breach 4.30 in the very short-term horizon. Investors await new developments with bated breath,” he said.

On Monday, the benchmark index fell 41 points to 1,490 and yesterday’s rise claws back the year-to-date loss to 5.53%.

The improvement in investor sentiment yesterday saw gainers overcome losers by 531 to 380, while 407 unchanged and 685 untraded.

Investors bought into stocks like Tenaga Nasional Bhd (up 16 sen), Public Bank Bhd (+12 sen) and Malaysia Airports Holdings Bhd which rose 2.89% or 19 sen to RM6.77.

Nestlé (M) Bhd slipped 0.28% or 40 sen lower to RM142, while Hong Leong Financial Group Bhd fell 1.62% or 26 sen lower to RM15.80. The ringgit fell to 4.2338 against the US dollar.

Hong Leong Investment Bank Bhd in a recent strategy note said several changes have emerged in Malaysian politics which has brought about questions on the government’s continuity.

“Regardless of the outcome, uncertainties on policy continuity will plague Malaysia, at least in the near term. Policies at risk include the fuel subsidy change and the Covid-19 stimulus. This further solidifies our view for another 25 basis points Overnight Policy Rate cut in the first half of the year,” the investment bank noted.

Rakuten Trade Sdn Bhd VP of research Vincent Lau said the local equity market has been deeply oversold and should be able to maintain above the 1,500 level with the proposed stimulus package lending support to the market.