Consumer, banking stocks lead Bursa Malaysia recovery

Significant capital gains are seen among penny stocks such as Euro Holdings and LKL International with an increase of 325% and 164% respectively


THE rise from 10-year lows for the local stock market has been led by strong gains in industry heavyweights as valuations became compelling and institutional funds started buying.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI), as of last Friday, was trading 137 points higher from 10-year low of 1,207 points hit on March 19, 2020, when the country went on a partial lockdown to combat the Covid-19 spreading.

Bloomberg data shows heavyweights in the consumer, banking, and oil and gas (O&G) sectors that experienced high volatility before the Movement Control Order (MCO) were imposed have started recuperating ever since as the exchange curtailed short-selling activity.

Carlsberg Brewery Malaysia Bhd and Serba Dinamik Holdings Bhd have gained 38.14% and 31.86% respectively in share price since the decade-low point was achieved.

Carlsberg’s share price last Friday closed at RM24.70 against RM17.88 a month ago with its market value increasing as much as RM2.08 billion within the period.

Its rival Heineken Malaysia Bhd’s value has also risen by 22%, while gaming multinational, Genting Bhd, has retraced some 28% of the lows as cheaper valuations led investors into the counters and other consumer stocks.

Serba Dinamik, which was also hit by the fall in crude oil prices, has seen its market value increasing by a billion ringgit as its share price climbed 36 sen from a low of RM1.02 on March 19.

The tech sector was also caught in the crossfire of the Covid-19 outbreak and subdued global economic prospects, but Inari Amertron Bhd has risen by 30% in terms of share price due to buying by institutions like the Employees Provident Fund.

Its share price was up by 31 sen from RM1.04 a month ago, while its market cap is up RM1 billion.

Smart money also bought into Press Metal Aluminium Bhd which has registered an impressive 29% rise in share price to RM3.67 from RM2.85, with its market value rising by RM3.31 billion in the process.

The cut in the Overnight Policy Rate and the MCO, despite being fundamentally negative to earnings of banks, have not stopped investors from buying into sector bluechips like Public Bank Bhd.

Its share price is up 26% from RM12.66 on March 19, when it closed at its lowest in seven years. The bank’s shares closed at RM15.88 last Friday, pushing the company’s market value up by RM12.5 billion to RM61.65 billion, but well below the RM25 levels it was trading at in early 2019.

The rollout of fiscal and monetary stimulus measures across the world to combat the slowdown caused by the Covid-19 pandemic has helped markets recover sharp losses suffered.

On a year-to-date basis, the benchmark FBM KLCI is down 245 points, while the Brent crude oil futures contract price has reacted in a similar manner, falling by up to 69%.

Bloomberg also shows significant capital gains were seen among penny stocks with some surging over 100% since March 19, 2020.

Stocks like Euro Holdings Bhd, LKL International Bhd and Alam Maritim Resources Bhd have seen an increase between 150% and 325%.

Euro Holdings have seen its share price increasing the most at 325% following the mandatory takeover offer from SPA Furniture (M) Sdn Bhd.

From being valued at RM53.46 million in mid-March, the office furniture maker now has a market value of RM227.2 million.

LKL International rose as much as 164% to 25 sen after the group said it is ready to fulfil the high demand for medical equipment from hospitals in Malaysia and foreign countries as the Covid-19 pandemic takes hold.

The hospital bed maker’s market value also increased by RM66 million to RM107.2 million.

RHB Retail Research said LKL International may rise higher after breaching the 23 sen mark.

“The immediate resistance is at the 28 sen level, followed by the 30 sen threshold,” it said. LKL International closed at 26 sen yesterday.