Bursa Malaysia to see correction, selling pressure

KUALA LUMPUR: Bursa Malaysia is expected to move into correction and witness selling pressure when trading resumes on Monday, with stocks that are politically connected to the deposed Barisan Nasional (BN), particularly in the construction sector, become the primary focus.

Hermana Capital Bhd’s chief executive officer and chief investment officer Datuk Dr Nazri Khan Adam Khan said the prediction was based on the previous regime changes in Thailand,, the US and Italy,y, as well as UK’s exit from the European Union.

“Those corrections lasted one to two weeks before the markets stabilised and rebounded.

“Therefore, my forecast is that the (local) market will go down dramatically by five per cent, or about 18 to 19 points on Monday, but that is not the start of a downtrend, but just a price-in of a new risk premium,” he told Bernama.

Tun Dr Mahathir Mohamad-led Pakatan Harapan (PH) coalition made an upset victory in the 14th General Election ( GE14) by winning 121 out of the 222 parliamentary seats.

The stock market was closed on Wednesday for the 14th general election, as well as, on Thursday and Friday to observe special public holidays announced by Chief Secretary to the Government Tan Sri Dr Ali Hamsa over PH’s victory.

Nazri Khan said at the moment, investors awaited a clearer picture of PH’s policies, including details on the abolishment of Goods and Services Tax (GST) and the reintroduction of fuel subsidies.

“I believe these (measures) will be clarified in the coming week so that investors like us can price in (the market), and the market would trade higher again,” he said, adding the coming week would be a great buying opportunity for long-term investors.

“When you look at a similar scenario in other countries, a dramatic correction was seen when a regime change took place, but the markets rebounded within weeks after all the clarifications were reinstated,” he added.

On a Tuesday-Friday basis, the benchmark FTSE Bursa Malaysia KLCI was 4.68 points higher at 1,846.51 from 1,841.83 last week.

For the week just ended, the key index was mainly affected by the pre-election play and on the eve of the polling day, it closed at the biggest single-day gain since January 29, 2016, driven mainly by foreign fund inflows as investors banked on the victory of the ousted ruling BN.

The FBM Emas Index advanced 26.42 points to 12,885.71, the FBMT100 Index gained 29.10 points to 12,698.44 and the FBM 70 improved 24.38 points to 15,303.26.

The FBM Emas Shariah Index fell 12.08 points to 13,075.36 and the FBM Ace was down 15.84 points to 5,212.33.

On a sectoral basis, the Finance Index climbed 141.21 points to 18,090.59 but the Industrial Index slid 8.48 points to 3,196.55 and the Plantation Index dipped 55.99 points to 7,849.72.

Weekly turnover declined to 4.27 billion units worth RM4.89 billion from 7.08 billion units worth RM8.58 billion last Friday.

Main market volume dropped to 2.39 billion shares worth RM4.53 billion against 4.19 billion shares worth RM8 billion previously.

Warrants turnover shrank to 1.22 billion units valued at RM235.14 million versus 1.90 billion units worth RM407.34 million.

The ACE market volume slumped to 643.35 million shares worth RM122.59 million from 970.50 million shares worth RM165.11 million previously. — Bernama