Bursa extends losses but at slower pace as political uncertainties weigh

KUALA LUMPUR: Bursa Malaysia extended its losses early Tuesday as political uncertainties and implementation of policies to battle the Covid-19 coronavirus were still cloudy but the selldown could provide some buying opportunities for the brave hearted investors.

At 9.04am, the KLCI was down 5.68 points or 0.38% to 1,484.38. Turnover was 144.42 million shares valued at RM83mil. There were 53 gainers, 396 losers and 136 counters unchanged.

On the external front, Japan’s Nikkei fell 3.7% for the biggest daily drop since late 2018. The market was closed on Monday, Reuters reported.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped another 0.2%, having already fallen 2.5% on Monday. Australia lost 1.8%, but South Korea’s market was trying to stabilise.

On the outlook for Malaysia, Stephen Innes, chief market strategist at AxiTrade said the country was facing the double whammy effect from the Covid-19 and the collapse of the Pakatan Harapan government.

“Political uncertainty on the back of Tun Dr Mahathir Mohamad’s resignation and as the power struggle intensifies leaves the government in a state of gridlock at a time when policy inputs are most needed to ward off the economic tumult from a protracted US-China trade war and the double whammy effect from the Covid-19, ” he said.

At Bursa on Monday amid the selldown by funds, retail investors saw a chance to pick up battered down stocks.

Retail investors were net buyers at RM237.8mil but local institutions were net sellers at RM163.4mil and foreign funds RM74.3mil.

In Tuesday’s trade, Carlsberg fell RM1.34 to RM33.62 and Heineken RM1.24 to RM27.12 on worries of a hike in taxes by a new government.

F&N fell 30 sen to RM30 and BAT 26 sen to RM13.70.

Allianz lost 30 sen to RM15.20, Globetronics 23 sen to RM2.16, KESM 22 sen to RM9.46, QL Resources 19 sen to RM8.21 and Petronas Gas 16 sen to RM16.34.

United Plantations rose 24 sen to RM26.60 after its proposed bonus issue while IGBB added 15 sen to RM3.25, Axiata six sen to RM4.20 and PMB Tech five sen to RM3.15.

Kossan and Supermax added four sen each to RM4.68 and RM1.62.

Meanwhile, Public Invest Research said in its strategy note that heightened levels of uncertainty may be the order of the day, with this supposed failed attempt not likely to deter the various parties given the fragility of the current ruling coalition.

“In the interim however, the market will throw up trading opportunities until the dust fully settles. Stocks hammered in the aftermath of yesterday’s sell-down could bounce back fairly quickly.

“Sector-wise, construction may get a shot in the arm from even more expansionary expenditures as purse-strings may be loosened in efforts to drive Malaysia’s near term economic growth.

“A temporarily-weak Ringgit should be good for the manufacturing sector (particularly exporters) though coronavirus-related concerns and its impact on global demand may impede upsides. On the other end of the spectrum, sin (gaming and alcohol) stocks which saw some selling pressure from the near-inclusion of PAS into the supposed ruling coalition could regain some favour,” it said.

Public Invest Research said its year-end 2020 KLCI target of 1,680 was under review for the impact of COVID-19 on market earnings, as well as for the country’s potentially new political landscape.

“For stocks however, we still like AMMB Holdings, Genting, Hibiscus Petroleum, Johore Tin, Magni-Tech Industries, Mega First, Sarawak Plantations, Serba Dinamik, SKP Resources and Ta Ann Holdings,” it said.

Source: TheStar