PETALING JAYA: The local stock market started the first two days of 2022 on a weak note as investors grew concerned about the Omicron variant that could dampen the global economic recovery.

       In the United States, the Omicron variant has pushed its Covid infections to a record-high of one million cases in 24 hours, according to news by Bloomberg.

       Nonetheless, despite the Omicron growth in infections, World Health Organisation director-general Tedros Adhanom Ghebreyesus said that it would be possible to end the pandemic in 2022 if 70% of the global population was vaccinated by the middle of the year.

       Yesterday, the main index FBM KLCI closed 7.15 points lower to 1,541.90.

       While some investors are worried that Omicron could delay the global economic recovery, others are worried that the variant could prolong supply-chain disruptions.

       CGS-CIMB Securities Sdn Bhd has reiterated the FBM KLCI to end 2022 at 1,612 and expects investors to tread cautiously throughout the year.

       It said the cautious tone was in view of potential headwinds buffeting the markets in the form of new Covid-19 waves (Omicron), the return of intra-day short-selling, foreign fund outflows due to the US Federal Reserve tapering move, and reversals of fiscal stimulus.

       “It was also due to the expectation of tighter monetary policy, corporate earnings risks due to higher taxes, the flood situation and political risks, with the probability of the 15th General Election being held in 2022 remaining high,’’ it said in a report yesterday.

       On the contrary, fund managers expect that this year’s economic recovery will remain intact and the market could do better this year.

       “We expect that the supply chain issues will be temporary and that the economic recovery is still intact,” Areca Capital Sdn Bhd CEO Danny Wong told StarBiz.

       He reckoned that the window dressing activities at the end of 2021 had led to a selldown in the FBM KLCI components over the past two days.

       “In addition, the lack of catalysts kept investors on the sidelines.

       “Nonetheless, we expect this year will be better than 2021 for the local stock market unless there is a lockdown,” Wong said, adding that technology stocks were once again in focus.

       Several news reports said that the Omicron variant may cause milder effects than the earlier Delta strain. “The current wave has shown fewer people in hospitals and fewer deaths. The market is forward looking and it expects the Covid-19 pandemic would shift to endemic this year,” said Rakuten Trade Sdn Bhd head of equity sales Vincent Lau.

       He said normalisation in the index stocks from window dressing is expected.

       Despite the weakness in the main index, Lau highlighted that the mid to small-capitalisation companies in the technology sector have been gaining interest among investors.

       “This could be driven by the rally in the Apple Inc stocks in the US that touched US$3 trillion (RM12.56 trillion) yesterday, and US-based electric carmaker Tesla delivering a record number of vehicles despite supply chain woes,” he added.

       Despite the uncertainty in the local stock market, US stocks rose in the first session of 2022, pushing the Dow Jones Industrial Average and S&P 500 to fresh record highs.

       Back on the FBM KLCI, glove stocks remained unexciting despite the rising number of Covid cases. “It could be due to the fact that the competition in the glove sector is increasing with new entrants domestically and overseas.

       “Coupled with the fact that the average selling price is normalising, profitability might also be normalising. Therefore, interest in the glove sector may not be as high as before,” said MIDF Research.