Friday 02 Jun 2023
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KUALA LUMPUR (March 14): Bursa Malaysia ended lower for the fifth consecutive day on Tuesday (March 14) following mixed cues on Wall Street overnight as investors dealt with the fallout from failed banks in the US, including Silicon Valley Bank (SVB), said an analyst.

At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell 28 points or 1.97% to 1,393.83 — an intraday low and a near five-month low.

The key index opened 4.87 points easier at 1,416.96 — its intraday high — and continued to slide throughout the day.

Market breadth was negative with losers outpacing gainers 878 to 180 while 296 counters were unchanged, 893 untraded and 11 others suspended.

Turnover amounted to 3.38 billion units worth RM2.50 billion.

UOB Kay Hian Securities (M) Sdn Bhd head of wealth research and advisory Mohd Sedek Jantan said the local bourse went through a volatile trading session, with the financial services index dropping 2.17% mainly due to a reaction from the SVB fallout.

"We expect Bursa Malaysia to remain volatile until the US Federal Reserve (Fed) makes a decision next week. Based on Fed chairman Jerome Powell's testimony and expectation that the upcoming February consumer price index may have cooled, we expect the Fed to raise rates by 50 basis points (bps).

"However, with the collapse of SVB, the Fed may reduce the rate hike (to 25 bps) or temporarily pause the rate hike. Markets are still digesting the broader backdrop of restrictive Fed policy and a softening economic and corporate earnings outlook, making equities more vulnerable to knee-jerk reactions to shocks like this," he told Bernama.

However, Mohd Sedek noted the crisis would not alter the economy or stock market's longer-term trajectory.

Ultimately, he believes investors are still waiting for economic paths to become clearer and expect equities to mount a more durable recovery as the year progresses.

Meanwhile, SPI Asset Management managing director Stephen Innes said financial institutions are struggling due to escalating tensions in the global financial world despite US Federal Deposit Insurance Corporation’s (FDIC) intervention to calm markets.

"The US financial stress could lead banks in Malaysia to retrench lending to the real economy and tighten broader financial conditions, the amplifying risk to the local economy. And now lower rate environment would likely hit domestic banks' profits.

"Even with over 100 bps of Fed cuts priced in, easing global financial conditions, equities have not rallied, suggesting buyers think a fire sale is on the way, especially if full-on contagion and default risk hits, which would clearly lead to some horrible domestic market outcomes, not to mention global recession risk seems more plausible again and this could dampen Malaysia’s export sector," he told Bernama.

Echoing Innes and Mohd Sedek, Areca Capital chief executive officer Danny Wong said the weaker sentiment on the local bourse, which was affected by the SVB fallout, came from foreign institutions and local retailers.

Meanwhile, Bursa Malaysia heavyweights Malayan Banking Bhd lost 10 sen to RM8.34, Public Bank Bhd gave up 13 sen to RM3.88, CIMB Holdings Bhd went down by 16 sen to RM5.17, Petronas Chemicals Group Bhd fell 15 sen to RM6.95, and Tenaga Nasional Bhd declined five sen to RM9.27.

Among the actives, MyEG Services Bhd trimmed half-a-sen to 77 sen, BSL Corp Bhd slipped one sen to five sen, and EA Technique (M) Bhd tumbled 11.5 sen to 17.5 sen, while Vinvest Capital Holdings Bhd was flat at 22.5 sen.

On the index board, the FBM Emas Index decreased by 193.51 points to 10,181.91, the FBM 70 Index fell 176.77 points to 13,067.61, the FBMT 100 Index shrank 183.14 points to 9,878.77, the FBM Emas Shariah Index lost 167.8 points to 10,482.15, and the FBM ACE Index declined 122.18 points to 5,176.88.

Sector-wise, the Financial Services Index dipped 341.16 points to 15,379.23, the Energy Index shed 28.55 points to 824.28, the Industrial Products and Services Index eased 4.04 points to 168.53, and the Plantation Index decreased 125.03 points to 6,667.3.

The Main Market volume shrank to 2.15 billion shares worth RM2.15 billion from Monday's 2.33 billion shares worth RM1.81 billion.

Warrants turnover improved to 480.6 million units worth RM74.85 million from 391.7 million units worth RM74.47 million previously.

The ACE Market volume slipped to 743.69 million shares worth RM274.16 million from 772.43 million shares worth RM269.65 million on Monday.

Consumer products and services counters accounted for 376.48 million shares traded on the Main Market, industrial products and services (542.94 million), construction (68.83 million), technology (356.52 million), SPAC (nil), financial services (126.46 million), property (148.92 million), plantation (36.83 million), REITs (11.4 million), closed/fund (2,000), energy (191.99 million), healthcare (87.9 million), telecommunications and media (74.74 million), transportation and logistics (95.54 million), and utilities (34.02 million).

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