Malaysian stocks worst among peers

Unless a huge inflow of foreign capital, no strong rebound is expected


THE benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is the worst-performing stock behind most of its regional peers with MSCI Malaysia for local currency year-to-date (YTD) at -9.8%.

Data compiled by Nomura Research Institute Ltd showed that MSCI Singapore is the top performer at 6.1% followed by MSCI Philippines (2%), MSCI Thailand (1.5%) and MSCI Indonesia (0.9%).

Based on MSCI Indices for US dollar, MSCI Malaysia’s YTD remained the worst performer at -13.9% followed by MSCI Thailand (-9.7%), MSCI Philippines (-2.8%), MSCI Indonesia (-1%) while MSCI Singapore maintained its good performance at 2.3%.

Rakuten Trade Sdn Bhd VP of equity research Thong Pak Leng said the Malaysian stock market performed weaker than regional peers mainly due to the removal of the RM200 stamp duty cap.

“It is also influenced by the increase in the stamp duty rate to 0.15% from 0.1% for stock trading.

“We do not expect any strong rebound unless a huge inflow of foreign capital,” he told The Malaysian Reserve.

Under Budget 2022, it was announced that there is a proposed increase in stamp duty rates to 0.15% from 0.1%, and the removal of the sales tax from brokerage activities for trading of listed shares.

Additionally, there will also be a removal of the RM200 cap on contract notes for the trading of shares. If passed into law, this will take effect on Jan 1, 2022.

Bursa Malaysia reportedly said that the proposed increase in stamp duty rates on contract notes will make the local stock exchange the most expensive market to trade in Asean, points out.

According to the stock exchange, the cost of transactions on Bursa Malaysia was already among the highest in Asean prior to the Budget 2022 announcement.

Nomura Research Institute said the FBM KLCI is likely to open lower and take its cue from the US markets that sank after Federal Reserve (Fed) chairman Jerome Powell’s testimony before the Senate Banking Committee saying that the Fed will consider ending its bond purchase programme more quickly as inflation persists.

“We think Powell’s comments are consistent with our expectation that the Fed will announce a doubling of the current US$15 billion (RM63.45 billion) per month reduction in the monthly pace of asset purchases at the December Federal Open Market Committee meeting, effective mid-January, ending net asset purchases after mid-March, three months earlier than the Fed’s current trajectory.

“Commodities fell, including Brent crude oil prices, down 3.9% to US$70.57 per barrel,” it said in a note.