Bursa lower in line with regional trend
Except for Public Bank, other banking stocks rebound
KUALA LUMPUR: Bursa Malaysia closed slightly lower on the second day of trading after Pakatan Harapan’s historic elections victory, in line with weaker regional markets.
After gaining earlier in the day, the FBM KLCI shed 10 points in the last 10 minutes to close at 1848.2 points, down 2.22 points or 0.12% from Monday’s close.
Turnover was 4.31 billion shares valued at RM4.44bil, with 499 gainers, 561 losers and 326 counters unchanged.
MSCI’s world equity index, which tracks shares in 47 countries, was down 0.3%, while its broadest index of Asia-Pacific shares outside Japan fell 0.8%.
Regionally, Hong Kong’s Hang Seng Index slid 1.23% and Jakarta’s Composite Index tumbled 1.83%.
The ringgit also closed slightly lower, down 0.2% to 3.957 against the US dollar.
Earlier, Bernama quoted Tan Sri Zeti Akhtar Aziz as saying that the ringgit is expected to perform better when investors’ confidence is restored both in the economy and country.
She said the new government was working hard to address all areas of concern.
“I believe the fundamentals are still there (intact). When the fiscal regime and conditions improve, it will also contribute towards improved ratings.
“This is because all other categories – the financial system, macroeconomic condition, inflation, and financial stability are ready and should have a higher rating.
“But because of the fiscal issue, I understand, we (have been accorded) a single A when actually we (Malaysia) have the potential to be rated double A,” the former Bank Negara governor said after chairing a meeting with fund managers.
The government, she said, wanted to improve the fiscal position both on the revenue and expenditure side so that there would be project reprioritisation, efforts to increase efficiency and reduce wastage.
Among the top losers on Bursa yesterday was Public Bank, which fell 80 sen to RM24 on profit-taking, erasing 5.57 points, while its major shareholder LPI also lost 30 sen to RM16.30.
Other banking stocks rebounded, with CIMB regaining some of the previous day’s losses, up 20 sen to RM6.75 and pushing the FBM KLCI up 3.36 points.
Hong Leong Bank added 36 sen to close at RM18.86, RHB Bank added 18 sen to RM5.48 and AmBank rose six sen to RM3.51.
AmBank Research told clients in a report that on the whole, fundamentals of banking stocks were expected to remain intact with the domestic economic growth “still expected to be on a positive trajectory notwithstanding a change in the government”.
“Despite the knee-jerk reaction to the prices of banking stocks yesterday, the reforms to be undertaken are expected to have a positive impact on the economy and the sector in the longer term,” the research outfit said.
Areca Capital fund manager Danny Wong’s view on the market is a short-term positive “until the market and new government stabilise”. “Buy on weakness for the short term,” he said. He singled out high-dividend yielders such as certain consumer stocks as good buys for the longer term.
Among consumer stocks, F&N added 50 sen to RM36.20 while Nestle fell slid RM1.60 to RM139.70 as investors locked in profit.
Oil and gas counters Petronas Dagangan lost eight sen to RM26.34 and Petronas Chemical closed 10 sen lower at RM8.60 while Petronas Gas was unchanged at RM17.54.
Three counters which hit limit-down on Monday – government services provider MyEG Services Bhd and construction players George Kent Bhd and Gabungan AQRS Bhd – extended their declines for the second day.
Before trading began yesterday, Bursa announced that the intra-day short-selling and proprietary day trading of MyEG Services, George Kent, Gabungan AQRS as well as Excel Force MSC Bhd had been suspended for the whole day from 8.30 am.
George Kent, which is the project delivery partner for the LRT project from Bandar Utama to Klang, hit limit-down in early trade, falling 82 sen to RM1.94.
MyEG Services, which is linked to the previous ruling party, fell 54 sen to RM1.27, while
Gabungan AQRS fell 24 sen to 88 sen.
Meanwhile, RAM Ratings said its gA2 sovereign rating of Malaysia was expected to remain intact.
“We anticipate some economic and fiscal policy changes which introduce uncertainties in the near term as details are scant at this juncture.
“However, the strong emphasis by the new leadership on governance and institutional reforms is a long-term positive for the nation’s fundamentals,” it said.
It expected major reforms and policy changes in the near future, of which the removal of the Goods & Services Tax (GST) was among the most prominent, given the potential loss of part of the RM44bil in GST revenue projected for 2018.
However, it said this revenue shortfall could be plugged via the re-introduction of the sales and services tax, the windfall from the higher-than-budgeted oil prices, and the temporary cessation of some large government-linked projects.