TINY RIPPLE
THE exemption of Sales and Services Tax on construction services and building materials has failed to spare Bursa Malaysia’s construction index from fallout of Turkey’s economic crisis. But analysts say the stocks will see gains once sentiments are back t
THE Bursa Malaysia construction index was not spared from fears that Turkey’s economic crisis could spread to the global economy.
This is despite the exemption of the Sales and Services Tax (SST) on construction services and building materials.
However, an analyst believes that construction stocks will make gains once sentiment turns positive.
The Turkish crisis has sent shock waves through stock markets, with FTSE Bursa Malaysia KLCI experiencing its largest one-day fall in a month.
The key index fell 1.24 per cent, or 22.41 points, to end at 1,783.34 points yesterday.
Two construction index-linked stocks, namely Fajarbaru Builder Group Bhd and Pesona Metro Holdings Bhd, rose to register single-day gain of two and 1.79 per cent, respectively.
But the rest of the construction stocks either remained flat or fell into the red, with the biggest losers being DKLS Industries Bhd and Vizione Holdings Bhd.
Fajarbaru and Pesona are principally involved in construction services and trading of building materials.
Among the key benchmark index-linked counters, PPB Group Bhd was the only gainer while Nestle Malaysia Bhd remained flat from Friday’s close.
Malaysia Airports Holdings Bhd was the biggest loser, followed by IHH Healthcare Bhd.
Malaysian Association of Technical Analysts adviser Nazarry Rosli said the decline was brought about by weak sentiment due to the Turkish lira crisis.
The market was also overdue for a “technical correction” after a long stretch of gains, he said.
He said the market would be back to its uptrend momentum soon.
“On the construction index, it will rise again, taking into account the SST exemption once the sentiment turns positive again. The news will help spur building material trading activities,” said Nazarry.
Finance Minister Lim Guan Eng on Sunday said building materials and construction services would not be subject to the SST.
This was a departure from the Goods and Services Tax (GST) regime, which applied a six per cent levy on basic building materials such as bricks, cement and sand, among others, he said.
This had led to increased construction costs under the GST era, including an increase in house prices.
“The pressure on house prices, as well as industrial and commercial buildings, is expected to ease with the abolition of the GST and exemption of SST,” said Lim.