KUALA LUMPUR (June 13): The local stock market tumbled to the lowest level since November 2020 on massive global sell-off, on fears over the stubbornly high inflation in the US, which could lead to more aggressive rate hikes.
The benchmark FBMKLCI index — which saw all its 30 constituents in bloodbath — plunged as much as 35.1 points 2.3% to 1,458.85 points on Monday (June 13), before narrowing the loss to 29.12 points or 1.95% to close at 1,464.83 points.
It was the largest single-day drop since March 7 this year. Year to date, the FBMKLCI has lost 6.55% from 1,567.53 points on Dec 31, 2021.
Asian equities also took a beating on Monday, with South Korea's KOSPI Index being the top loser (-3.52%), followed by Hong Kong’s Hang Seng Index (-3.39%) and Japan’s Nikkei 225 Index (-3.01%).
On the broader market, losers trounced gainers 1083 to 138, while 254 counters were unchanged.
Bursa Malaysia's Technology Index suffered the most with a 5.67% slump, taking cue from the US Nasdaq which tanked more than 3% last Friday (June 10). The Dow Jones and S&P 500 lost 2.5% and 2.7% respectively.
The Healthcare Index and Energy Index plunged 3.97% and 3.94% each.
Worth noting is that the FBM ACE Market index also skidded 4.24%, compared with the FBM Emas and FBM Small Cap, which declined 2.39% and 3.71% respectively.
Heavyweight banking stocks lost strength, with Hong Leong Financial Group Bhd, CIMB Group Holdings Bhd and RHB Bank Bhd tumbling 4.06%, 2.18%, 1.86% respectively.
Of Bursa's top losers list (by value), Malayan Pacific Industries Bhd came in at the top spot after it closed down 5.07% or RM1.62 to RM30.32. Also on the list are plantation stocks: Batu Kawan Bhd, which settled 4.91% or RM1.30 lower at RM25.20 and Kuala Lumpur Kepong Bhd, which closed 3.12% or 78 sen lower at RM24.2, ranking them the second and fifth top losers respectively.
Consumer stocks Fraser & Neave Holdings Bhd was the day’s third top loser, settling down 78 sen or 3.8% at RM19.72, while Dutch Lady Milk Industries Bhd was the sixth top loser as it closed at RM32.8 after shrinking 66 sen or 1.97%.
Two heavyweight glove counters Top Glove Corp Bhd and Hartalega Holdings Bhd were not spared from the sell-down, plunging 8.85% or 10 sen and 8.06% or 29 sen to RM1.03 and RM3.31 each.
When contacted by The Edge, Rakuten Trade Equity Research vice president Thong Pak Leng said market sentiment was negative on Monday, as investors took cue from a surprise US inflation data that raised the possibility of an intensified monetary tightening from the US Federal Reserve.
This comes after the US Consumer Price Index (CPI) reached a 40-year high as it rose 8.6% year-on-year (y-o-y) in May, adding to investors' concerns about a recession caused by tightening monetary policies.
“We reckon the market undertone to remain jittery, amid the heightened global market risks and volatility. Notwithstanding this, we reckon the market is oversold, hence providing opportunities for investors to accumulate stocks at attractive levels, given their cheaper valuations,” he said.
Concurring with Thong’s view, TA Securities chief investment officer Choo Swee Kee said investors are extremely jittery about how high the US Federal Reserves (US Fed) is going to raise rates if inflation numbers do not come down over the next few months.
Similarly, Malacca Securities head of research Loui Low said investors are worried about the hawkish US Fed, which could lead to more sell-down in the near term.
“Everyone is looking at selling in anticipation of a high interest rate upcycle and more hawkish tone from the US Fed, after the inflation numbers are still going up.”
The US Fed's Federal Open Market Committee is likely to maintain a hawkish stance when its members meet on June 14 and 15.
Technically, Thong expects the KLCI to rebound once it reaches 1,450 points, considering that the market is currently “oversold”.
“We anticipate the index to trend within a wider range of between 1,450 and 1,480 points for the week with immediate support at 1,450 points, while resistance at 1,490 points,” he added.