KUALA LUMPUR (June 20): The FTSE Bursa Malaysia Top 100 index (FBM 100) dropped below 10,000 on Monday (June 20) for the first time since May 2020 amid a global rout in the stock market, dragged by concerns about the US economy falling into recession, which could reverberate globally.
The index, which comprises the constituents of the FTSE Bursa Malaysia KLCI and the FTSE Bursa Malaysia Mid 70 Index, opened 18.62 points or 0.18% lower at 10,118.39 on Monday, compared with last Friday’s (June 17) closing of 10,137.01.
The index fell as much as 148.61 points or 1.47% to an intra-day low of 9,998.4, before paring some losses and ending the session at 10,021.77 (dropped by 115.24 or 1.14%).
Hong Leong Investment Research technical analyst Ng Jun Sheng warned that the risk-off mood remained, amid lingering worries that a hawkish US Federal Reserve to combat red-hot inflation may inadvertently trigger a US recession, the possibility of which has already been flagged by several economic indicators, such as retail sales, housing starts and industrial production, which pointed to slower economic activities.
He added that Bursa Malaysia may witness further volatility in the short term, as investors recalibrate risks around elevated inflation, potential capital outflows amid an aggressive Fed and quantitative tightening (QT), a protracted Russia-Ukraine war, heightened US-China conflict, and political fluidity amid speculation about the 15th general election (GE15) in the second half of 2022 (2H22).
Having said that, the hammer candlestick pattern seen last Friday and a steeply oversold market may cushion further slumps in the KLCI, he said, with major supports at 1,429-1,445 levels, and resistances near 1,483-1,500 levels.
“Hence, the current beleaguered market presents a buying opportunity as the positives from reopening will still outweigh in 2H22 to drive economic recovery,” he said in a research note.
Similarly, Oanda’s senior market analyst for Asia Pacific Jeffrey Halley said the Asia Pacific equity market is poised for a corrective bounce following the selldown last Friday (June 17).
“After such a torrid week last week, a corrective bounce by the equity markets cannot be ruled out this week. However, that may have to wait for another 24 hours as US markets are closed today (Monday),” he added.
Nonetheless, Halley expects Asian markets to be off to a weak start as recessionary fears that swept the US last Friday continue to weigh on sentiments in Asia.
The FBM KLCI closed 15.5 points or 1.06% lower at 1,441.24 — also a level it has not seen since May 2020. The benchmark index was trading between 1,437.23 and 1,454.4 throughout Monday’s session.
KLCI-component stocks were overwhelmingly negative, with 20 losers versus nine gainers, while one closed unchanged.
Laggards among the KLCI components included MISC Bhd (down 21 sen or 2.84% to RM7.18), Malayan Banking Bhd (down 23 sen or 2.59% to RM8.65), RHB Bank Bhd (down 15 sen or 2.55% to RM5.73), Top Glove Corp Bhd (down 2.5 sen or 2.48% to 98.5 sen) and Press Metal Aluminium Holdings Bhd (down 11 sen or 2.34% to RM4.59).
Across the Asia-Pacific, South Korea’s KOSPI was the top loser after it closed 2.04% lower, followed by the Taiwan Stock Exchange (-1.75%) and Japan’s Nikkei 225 (-0.74%).
Meanwhile, Shenzhen Composite Index rose 1.27%, while Hong Kong’s Hang Seng climbed 0.42%.