KLCI loses RM109.5b in value over 5 days

The gauge could reach an extreme level, making bottom-fishing likely, particularly in banking, plantation, consumer and dividend yield stocks


MALAYSIAN equities continued their downward spiral yesterday, with the benchmark index of the country’s 30 largest stocks recording its fifth straight day of losses as the Covid-19 case count keeps rising.

The FTSE Bursa Malaysia KLCI (FBM KLCI) fell 1.4% or 17.57 points to close at 1,239.01 yesterday, bringing total market capitalisation loss over the last five days to RM109.52 billion. The MSCI AC Asia Pacific Index slipped 0.11%.

Among the main index-linked laggards were Malaysia Airports Holdings Bhd, Axiata Group Bhd, CIMB Group Holdings Bhd, Press Metal Aluminium Holdings Bhd, Genting Bhd, Public Bank Bhd and RHB Bank Bhd.

Gainers included Maxis Bhd, IHH Healthcare Bhd, Hong Leong Financial Group Bhd and Petronas Dagangan Bhd.

Maybank Investment Bank Bhd said the gauge could reach an extreme level, making bottom-fishing likely, particularly in banking, plantation, consumer and dividend yield stocks.

On the other hand, BIMB Securities Sdn Bhd believed markets might rebound out of hope, though the worst is yet to come.

“Malaysia recorded its worst one-day outbreak over the weekend, raising the number to 428 — the highest cases among Asean. We think this could impact market sentiment as consumers turned increasingly cautious on spending.

“Secondly, there is little evidence to suggest that the coronavirus outbreak could have reached its peak soon and if this pandemic would end by summer,” it said in a note.

Malaysia reported 117 new Covid-19 cases yesterday, bringing the country’s total to 790, including 60 recoveries and two deaths.

History suggests the impact of an economic shock could be a drawn out affair for financial markets as seen in 2008 to 2009, when the global financial crisis hit, BIMB Securities added.

 “The S&P 500 found a bottom at -58% in six months, while the FBM KLCI fell by 47% in 10 months,” it stated.

Malaysia isn’t alone in the bear market territory, though. Global stocks have been roiling in recent days as governments worldwide struggle to contain the Covid-19 pandemic.

Since 2019, or over the last 15 months, the FBM KLCI has lost 26%, sliding from 1,691 to 1,257 points. About 6% of the decline occurred in 2019, while the remaining 20% was lost in the first quarter this year.

Meanwhile, the MSCI Emerging Markets Index has fallen 14% from 966 to 827 points over the same period.

According to AmInvestment Bank Bhd, a silver lining in the seemingly unabated fall in the FBM KLCI is visible.

“Assuming the FBM KLCI is to fall by about another 100 points from the current level to 1,150 points, this will bring the FBM KLCI in line with the MSCI EM Index’s 10-year (2010-2019) average price-earnings ratio of 13.3 times.

“This will put Malaysia back onto the radar of international emerging-markets fund managers, who currently generally feel less excited about Malaysia due to its high valuations,” the research house said.

Oil also slumped to the lowest in nearly 17 years, with Brent crude touching US$27.85 (RM121.70) per barrel as at press time.

“Both Brent crude and West Texas Intermediate continue wilting as the ongoing price war and the exponential increase in countries closing borders crushed any rebound hopes.

“Producers and refiners are now madly scrambling to find onshore and offshore storage facilities for the upcoming weave of oil that nobody wants in April,” Oanda Corp Asia-Pacific senior market analyst Jeffrey
Halley wrote in a note yesterday.

That alone, according to Halley, will keep a lid on prices, even without the demand shock from the Covid-19 pandemic.