Bursa Malaysia sings the blues in 2018

KUALA LUMPUR: Battered blue chips led to Bursa Malaysia singing the blues in 2018 as eventful dramas mainly orchestrated by the bad boy of the global stage -- the United States (US) -- has led to a sombre mood for most global and regional stock markets.

The local equity market was constantly being rattled by the lingering US-China trade friction, US Federal Reserve’s (Fed) interest rates hikes, geopolitical events, volatile stock markets and fluctuating crude oil prices.

The unprecedented change in the Malaysian government for the first time in 61 years, along with the drastic changes in the leadership and boards of agencies and government-linked companies, have prompted funds to move to the sidelines as they grappled to understand the future state of the country and its economy.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) finished the year at 1,690.58 on Dec 31, down 106.23 points, or 5.91 per cent, from 1,796.81 on the last trading day of 2017 on Dec 29.

Commenting on the performance, Rakuten Trade Sdn Bhd Head of Research Kenny Yee said the factors mentioned above, coupled with disappointing third-quarter corporate earnings which retreated 5.9 per cent from a year earlier, put paid to the benchmark index reaching the 1,900-level as projected by the research house earlier.

“We have lowered our forecast for Bursa Malaysia to reach 1,780 at end-2018 from 1,900 predicted earlier due to the recent results season which saw many companies’ performances being downgraded, especially in the plantation and gaming sectors,” he told Bernama.

Voicinghisdisappointmentover the local bourse’s performance, Yee pointed out that the telecommunications and gaming companies were among the top losers, being hit hardest over the year, mainly due to the policies announced by the government after the 14th General Election (GE14) on May 9.

The government’s announcements such as reduction in broadband price by at least 25 per cent by yearend has severely hammered the telecommunications blue chips.

This has resulted in the drop of Telekom Malaysia Bhd, along with KLCC Prop & REITS Stapled Securities, from being the components of the 30-stock FBM KLCI on Dec 24, to be replaced by Top Glove Corporation Bhd and AMMB Holdings Bhd.

As for gaming counter Genting Malaysia Bhd, the company’s shares hit limit down on Nov 5, shattered by the higher gaming tax announced in the 2019 Budget on Nov 2.

The share price has continued to slide since then, exacerbated by the Fox-Disney theme park fiasco, coupled with the impairment loss of RM1.83 billion on the group’s investment in the promissory notes issued by the Mashpee Wampanoag Tribe in Massachusetts, US.