Strong buying interest in healthcare stocks boosts KLCI amid pandemic

If it’s not for the strong market activity in the healthcare counters, Bursa would have closed 11% lower year-to- November, says chairman


HIGH profit-taking interest among investors in healthcare counters and robust demand for healthcare products helped the FTSE Bursa Malaysia KLCI (FBM KLCI) to stay resilient during the global health crisis, said Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar (picture).

He added that if it’s not for the strong market activity in the healthcare counters, it would have closed 11% lower year-to-November 2020.

A mix of rubber glove manufacturers and healthcare services increased the Bursa Healthcare Index to 2.18%.

A check on Bloomberg showed that the index rose 216%, heading for the best year in at least 10 years.

“With the support of Hartalega Holdings Bhd, IHH Healthcare Bhd and Top Glove Corp Bhd, the FBM KLCI only dropped by 1.6% year-to-November 2020.

“So if we were to remove the performance of healthcare, especially the glove counters, the number will be quite different, meaning that the FBM KLCI would have fallen 11% year-to-November 2020,” he said at the PowerTalk Webinar themed “Moving Forward: Banking and Capital Market Trends” organised by the World Islamic Economic Forum and Securities Industry Development Corp yesterday.

Abdul Wahid forecasts the demand for healthcare companies and their shares will continue to grow despite vaccine discovery as more people are acutely aware of the use of healthcare products.

“Manufacturers of personal protective equipment (PPE), including glovemakers, may not see the same kind of volume seen in the previous months, but due to greater awareness about hygiene, the usage per capita of gloves and other PPE products will be higher compared to the pre-Covid-19 era,” he said.

Besides the healthcare counters, Abdul Wahid said the Technology Index, which soared 72%, as well as Industrial Products and Services Index rose 4.7%, were the only two out of 13 Bursa Malaysia sectoral indices posted positive growth year-to-date (YTD).

The FBM KLCI reported its lowest of 1,219.72 on March 19, before rebounding to a YTD high of 1,628.26 on Dec 3, 2020.

Meanwhile, Abdul Wahid said Bursa Malaysia and the brokers benefitted from the doubling of business volume during the pandemic.

From January to November 2020, he said the average daily value on Bursa Malaysia surged about 114% to RM4.1 billion from about RM1.9 billion in 2019.

He said the bourse also saw significant retail participation, particularly by younger investors aged 26-45 who accounted for about two-thirds of the market participants, and 78% of the retail trading were conducted online.

“This is something that is very encouraging and something that we have not seen before,” he added.

Abdul Wahid said Bursa Malaysia will continue to work closely with brokers and make account opening as easy as possible to ensure continuous high retail participation from 2020.

Data from Abdul Wahid’s presentation slides showed that there were 18 new listings on Bursa Malaysia for the year-to-October 2020 period, raising total funds of RM5.99 billion compared to 30 new listings with RM6.66 billion funds raised in 2019.