KLCI makes less-than-convincing gains as pandemic weighs on sentiment

KUALA LUMPUR (Jan 19): The main index of Bursa Malaysia made less-than-convincing gains in the mid-morning today as the government’s RM15 billion Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI) assistance package did not seem to boost sentiment, which appeared to be more influenced by the coronavirus pandemic.

At 10am, the FBM KLCI had gained 4.92 points to 1,614.44.

Losers led gainers by 416 to 404, while 420 counters traded unchanged. Trading volume was 1.75 billion shares valued at RM1.03 billion.

The gainers included Milux Corp Bhd, Toyo Ventures Holdings Bhd, PMB Technology Bhd, Cymao Holdings Bhd, Far East Corp Bhd and Khind Holdings Bhd.

The actively traded stocks included Vsolar Group Bhd, ARB Bhd, KTG Bhd, PNE PCB Bhd, JAKS Resources Bhd, i-Stone Group Bhd, Samaiden Group Bhd and Dagang NeXchange Bhd (DNeX).

The decliners included Fraser & Neave Holdings Bhd (F&N), KESM Industries Bhd, JF Technology Bhd, Hong Leong Financial Group Bhd (HLFG), Unisem (M) Bhd and Frontken Corp Bhd.

Reuters said Asian share markets edged ahead today as investors wagered China’s economic strength would help underpin growth in the region, even as pandemic lockdowns threatened to lengthen the road to recovery in the West.

Data out yesterday confirmed China’s economy was one of the few in the world to grow in 2020 and actually picked up speed as the year closed, it said.

Inter-Pacific Research Sdn Bhd said there was more weakness among index-linked stocks yesterday with the selling extending for the third consecutive day amid sustained selling of banking stocks on worries over potential lowering of the overnight policy rate (OPR) in the upcoming Bank Negara Malaysia (BNM) Monetary Policy Committee meeting.

In its daily bulletin today, the research house said while the heavyweights were subdued, lower liners and broader market shares, particularly technology-related stocks, rallied as rotational interest picked up pace.

It said this helped trading volume to rise, even as the overall market breadth remained negative.

Inter-Pacific said speculation about the OPR will continue to weigh on the performance of banking stocks over the near term, while other heavyweights could continue to dither in the absence of fresh leads with market players adopting a largely wait-and-see stance.

“As it is, rising domestic Covid-19 cases, coupled with the ongoing movement control order (MCO), is keeping many market players wary of the impact on the economy and, correspondingly, corporate earnings for 1Q21 (the first quarter of 2021).

“Therefore, we think downside pressure could linger among the index-linked stocks and the consolidation trend is likely to continue for the time being. As such, the 1,600 support [level] is still in play and if it gives way, the 1,590 level will become the next support. The resistance [levels], meanwhile, are at 1,620 and 1,640 points respectively,” it said.

Meanwhile, the research house said it sees little impact from the government’s latest stimulus measures as much of the aid is from initiatives already announced earlier as well as supplementary to earlier initiatives.

“Nevertheless, it is still welcomed as it would help to ease some of the financial burdens of those affected by the pandemic, even as the measures are not as encompassing as hoped for, particularly for small businesses.

“Among lower liners and broader market shares, however, there should still be further upside despite the recent run-up already seen as overdone, especially among technology stocks.

“Therefore, we think further near-term gains could prompt increased profit-taking activities, which could make it more difficult for the upside to be sustained, in our view,” it said.

Source: TheEdgeMarkets