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PETALING JAYA: Bursa Malaysia emerged as the worst performer in Asia-Pacific, with the holiday fever gripping local stocks.
The lower-than-expected rate hike in the United States, which sent a positive wave to global equities, failed to excite investors in Malaysia.
Liquidity in the market also remained low yesterday, as analysts said investors have moved to the sidelines in the shortened trading week.
The benchmark FBM KLCI declined 17.45 points or 1.09% to 1,582.98 points yesterday.
Volume of shares traded was recorded at only 2.68 billion, with a trading value of RM2.38bil.
Losers trumped gainers, with 628 counters down against 380 stocks that ended in green. A total of 421 counters were unchanged.
Elsewhere across Asia, many stock exchanges performed stronger as the market optimism from Wall Street spilled into the region.
China’s Shanghai Composite Index rose by 0.68%, while Taiwan’s Taiex was up by 0.79%.
India’s Sensex inched up by 0.06% and Australia’s S&P/ASX 200 increased by 0.82%.
Stock exchanges in Japan, South Korea and Indonesia were closed for the holiday.
Meanwhile, Singapore’s Straits Times Index and Thailand’s SET index fell by 0.17% and 0.54%, respectively.
Speaking with StarBiz, Rakuten Trade head of equity sales Vincent Lau said most regional stock exchanges enjoyed positive “spillover effects” from the spike in US stocks.
The three main stock indices of Wall Street, namely Dow Jones Industrial Average, Nasdaq and S&P 500 surged by 2.82%, 3.19% and 2.99% respectively.
The rally occurred after Federal Reserve (Fed) chairman Jerome Powell said the US monetary policy authority is not actively considering rate hikes of 75 basis points, something that many Wall Street banks have anticipated. The Fed raised the federal funds rate, or the benchmark interest rate, by 50 basis points – for the first time since 2000.
“This is more of a relief rally, considering that investors were worried about a sharp hike of 75 basis points.
“With the recent comments from Powell, it has cleared up uncertainty about the US monetary policy outlook. The Fed is less hawkish than expected.
“This optimism has spilled into the Asian region, but here in Malaysia, investors are still in a holiday mood.
“Probably, the domestic market will reflect the relief rally better next week,” Lau said.
Meanwhile, fund manager Danny Wong attributed the FBM KLCI’s dip yesterday to the banking stocks underperformance.
“Banks drifted lower, as Bank Negara is seen to be raising rates slower than its US counterparts.
“It’s a similar case as Hong Kong’s banks,” he said.
Wong, who is the CEO of Areca Capital, explained that investors are worried about a slow interest rate hike as it would delay banks’ earnings recovery.
“Coupled with concerns about inflation, there are chances for Bank Negara to undertake a more gradual hike in the overnight policy rate,” he said.
Nevertheless, Wong remains positive about the overall outlook for Bursa Malaysia.
Particularly, he expected a further improvement in market sentiment and stocks to perform better in the second half of 2022.
“The positive sentiment from the reopening of the economy will still have an impact.
“Business confidence is up, and the biggest beneficiary of the reopening of the economy will be the consumer-related businesses.
“We can already see how stores and restaurants are packed during the Hari Raya holidays,” he pointed out.
Wong added that exporters listed on Bursa are also expected to perform better, capitalising on the weak ringgit.
A weak ringgit would make products manufactured in Malaysia cheaper abroad, and exporters would earn more from the increased sales and the favourable exchange rate.Meanwhile, Rakuten’s Lau said that the Fed’s latest rate hike should cap the downside risks, moving forward.
“Locally, the ‘feel good’ factor from the possibility of a general election this year and the latest round of withdrawal from the Employees Provident Fund (EPF) would boost the market.
“With the EPF members applying to withdraw RM40.1bil under the special scheme, most of the cash will go back into the economy, including the stock market.
“This will not only improve private consumption, but also the stock market liquidity,” according to Lau.
When asked whether recessionary fears would cap any potential growth in the local stocks, Lau opined that the risk could have bottomed.
“When people are over-pessimistic, it means that it could be the right time to buy. This is especially considering that there are many positive catalysts ahead, amid the risks,” he said.