PETALING JAYA: It was a storm of uncertainty with the ongoing war in Ukraine, unprecedented financial sanctions on Russia and even the threat of nuclear escalation.
The market was expecting volatility and that served to buoy two of Bursa Malaysia’s prominent sectors.
Oil and gas (O&G) stocks together with plantation counters jumped and, in return, lifted the benchmark FBM KLCI up 1.04% to 1,608.28 points.
Investors snapped up plantation and banking stocks as well as Petronas-related counters such as Petronas Chemicals Group Bhd, Petronas Gas Bhd and MISC Bhd.
Foreign funds continue to buy Malaysian stocks on the back of booming commodity prices, especially crude oil and crude palm oil. Malaysia is a net exporter of both commodities.
Last week, the price of Brent crude oil jumped as high as US$105 (RM441) per barrel, just a few hours after Russian President Vladimir Putin authorised a military operation against Ukraine, which exacerbated the prolonged supply shortage and rising energy prices.
That marked the first time since 2014 that the benchmark-setting price of Brent crude oil went above US$100 (RM420) per barrel. Brent oil was traded at US$102 (RM428.25) per barrel.
Hong Leong Investment Bank Research said the surge in global commodity prices presented trading opportunities in the oil and gas and oil palm sectors.
“The local bourse, too, has not been spared with its bellwether index down 1.9% from its year-to-date high of 1,605 points just a week ago. Still, there are pockets of trading opportunities from this,” it said in a note to clients.
managing director Datuk Seri Hadian Hashim expects the price of crude oil to average higher than US$80 (RM336) per barrel as forecast by the United States Energy Information Administration" src="https://apicms.thestar.com.my/uploads/images/2022/03/01/1498026.jpg" onerror="this.src='https://cdn.thestar.com.my/Themes/img/tsol-default-image2017.png'" style="width: 620px; height: 416px;">Icon Offshore Bhd managing director Datuk Seri Hadian Hashim expects the price of crude oil to average higher than US$80 (RM336) per barrel as forecast by the United States Energy Information Administration
Icon Offshore Bhd managing director Datuk Seri Hadian Hashim expects the price of crude oil to average higher than US$80 (RM336) per barrel as forecast by the United States Energy Information Administration.
“The main factor that will drive crude oil prices this year is tight supply by the Organisation of the Petroleum Exporting Countries.
“Supplies are declining around the world due to lack of investment from oil majors and supply chain disruptions,” he told StarBiz.
The price of crude palm oil too pushed higher into the RM7,000-per-tonne range on the back of uncertainty following the invasion of Ukraine.
Rakuten Trade head of equity sales Vincent Lau expects the stock market to remain resilient, driven by the growth in corporate earnings and projected higher economic expansion this year.
Rakuten Trade head of equity sales Vincent Lau expects the stock market to remain resilient, driven by the growth in corporate earnings and projected higher economic expansion this year.
“Many investors are focusing on the opening up of the economy, coupled with higher commodities prices, which is a boon for the country,” he told StarBiz.
Lau said the persistent inflow of foreign funds is a vote of confidence to the local stock market, which was trading below its historical valuation.
According to a report by MIDF Research, foreign funds bought equities worth RM675.65mil last week, from RM955.85mil in the prior week.
The research firm noted that international funds have been net buyers on Bursa Malaysia for six out of eight weeks in 2022.
“Overall, for the eighth week of 2022, foreign investors finished strong as net buyers at RM675.7mil, followed by retailers as the second-strongest net buyers at RM192mil.
“The local institutions were the only strong net sellers at RM867.7mil,” MIDF said in a report yesterday.
The research house believes that the decline in demand from Russia and Ukraine is likely to pose a minimal direct impact on Malaysia’s exports in terms of external trade.
“While the direct impact is limited, the electric and electrical sector outlook remains cloudy as supply disruptions could be prolonged.
“Additionally, the indirect spillover effect on external trade could come from weaker export demand, particularly from European and regional countries involved in the global supply chain of the semiconductor industry.
“For record, exports to EU countries accounted for 8.4% of total exports and 8.1% of Malaysia’s total trade in 2021,” MIDF said.
Rakuten’s Lau expects technology stocks to do better in the next three years as demand continues to remain strong.
“We expect the technology sector to continue to do well. But the movement of the global market would set the volatility of the local stock market.
“However, we do not expect any big swings from the upcoming interest-rate hike decisions by the Fed, as the market has already priced in any uncertainties,” he said.
Lau added that he is positive technology, banking and plantation sectors will do better this year.