It will take some time for the world’s real economy and corporate activities to fully recover from the great Covid-19-induced pause

By SHAZNI ONG

THE progressive relaxation of the Movement Control Order (MCO) which, allows for more essential manufacturing companies and services to operate is expected to inject the much-needed stability in the local stock market hurt by the Covid-19 pandemic.

MIDF Amanah Investment Bank Bhd strategy head Kifni Kamaruddin said the underlying sentiment remains edgy with occasional bouts of heightened price volatility.

“The market may encounter another wave of selling pressure namely the second downward thrust, possibly in the third quarter as the real extent of economic or corporate earnings impacts of Covid-19 become manifest,” said Kifni.

Despite the liquidity injections (both fiscal and monetary) worth trillions of dollars by various governments and monetary authorities worldwide, it would take a bit of time for the world’s real economy and corporate activities to fully recover from the great Covid-19- induced pause.

“On the above score, in the ensuing quarter, the economic or corporate earnings data may continue to deteriorate based on a year-on-year basis, while the monthly sequential jump may peter out as pent-up demand in the aftermath of the economic pause is duly satisfied.

“During this period, we may see the next wave of selling in the equity market,” he said.

Government-linked investment companies (GLICs) remain active and are expected to support the market through their trading activity in various stocks.

Over the last four months, GLICs like the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), Retirement Fund Inc (KWAP) and Lembaga Tabung Haji (TH) have been actively trading in the market.

The Malaysian Reserve looks briefly into their trading activities so far, based on available Bloomberg data and Bursa Malaysia filings.

EPF

The retirement fund sold shares in AirAsia Group Bhd, Star Media Group Bhd, MSM Malaysia Holdings Bhd, WCT Holding Bhd and MyEG Services Bhd.

AirAsia, in a Bursa filing on Feb 11, said the EPF disposed of some 18.56 million shares in the low-cost carrier on Feb 6, subsequently ceasing to be a substantial shareholder.

Star, in a Bursa filing on April 14, noted the EPF disposed of 12 million shares in the media group on April 9, while MSM, in a Bursa filing on April 9, said the EPF disposed of eight million shares in the sugar producer on April 2.

WCT, in a Bursa filing on April 13, said the EPF disposed of some 7.43 million shares in the engineering and construction firm on April 8, while MyEG, in a Bursa filing on April 17, said the EPF disposed of seven million shares in the IT service management company on April 14.

The EPF also disposed of shares in Velesto Energy Bhd, Astro Malaysia Holdings Bhd and Serba Dinamik Holdings Bhd.

Nonetheless, the EPF acquire shares in companies like Inari Amerton Bhd, Sunway Real Estate Investment Trust and Axiata Group Bhd, CIMB Group Holdings Bhd, Petronas Chemicals Group Bhd and Malakoff Corp Bhd.

PNB

The country’s largest asset management firm through its unit trust funds, has been supporting the shares of its companies like Velesto and buying into defensive stocks. Data shows the fund manager has been acquiring shares in Tenaga Nasional Bhd, Sime Darby Bhd, Telekom Malaysia (TM) Bhd and

Kuala Lumpur Kepong Bhd.

KWAP

KWAP had been actively selling and acquiring shares in Sime Darby amid the disposal of its shareholding in Serba Dinamik recently.

Serba Dinamik, in a Bursa filing on April 17, said KWAP has a 5.47% direct interest in the international energy services group after the public services pension fund disposed of three million shares on April 16.

KWAP raised its shareholding in TM over the past few months but has begun disposing of some of the shares recently. Bursa filings also reveal KWAP has been acquiring shares in FGV Holdings Bhd too.

TH and Khazanah

The two GLICs have been rather quiet in the recent market correction. Axis Real Estate Investment Trust is one of the known companies that TH has disposed of some of its shares so far.

Khazanah Nasional Bhd, which has substantial stakes in eight listed companies, has not made many trades in any of the counters it owns despite the fall in valuations in March leading to the enforcement of the MCO on March 18.