Bursa investors take profit ahead of Budget 2019

Market sentiment turns cautious ahead of Budget 2019

PETALING JAYA: The local stock market ended slightly lower amid mild profit-taking ahead of today’s Budget 2019 announcement.

Moving against the positive trend in regional bourses, the benchmark FBM KLCI yesterday fell 2.35 points, or 0.14%, to close at 1,706.92, off an intra-day low of 1,701.28, in a trade that saw 2.18 billion shares worth RM1.66bil changing hands.

According to analysts, some investors had also turned cautious in anticipation of a wider fiscal deficit and fewer expansionary measures to boost the economy. Sentiment was also somewhat dampened after data showed a mild contraction in Malaysia’s manufacturing sector.

Despite the decline in the FBM KLCI, led by the selldown in selected blue chips, the overall market breadth was positive, with gainers outpacing losers 434 to 364. This was buoyed by buying in middle and small-capitalised stocks.

Meanwhile, the ringgit strengthened against the US dollar yesterday in tandem with regional trends.

The local currency gained 0.12% to 4.179 against the greenback.

The Pakatan Harapan-led government is scheduled to table Budget 2019 at 4pm today. It will be the inaugural budget for the new administration that came into power after winning the 14th general election on May 9.

A broker told StarBiz that profit-taking was to be expected after a strong window-dressing rally to end the month of October on Wednesday, whereby the FBM KLCI surged 23.33 points, or 1.38%, to close at 1,709.27.

“It is only to be expected that investors would want to take profit after the strong gains on Wednesday, and ahead of the Budget 2019 announcement, as they wait to see what the new government is going to do for the country’s economy,” the broker said.

“In general, the prevailing sentiment is somewhat cautious because the government has already forewarned us ‘not to expect too much’ because of the financial state of the country and the need for fiscal consolidation,” he added.

Budget 2019 is widely expected to present a wider fiscal deficit com- pared with 2018.

AmBank Research, for one, expects the fiscal deficit-to-gross domestic product (GDP) to jump to between 3.7% and 4.9% in 2019 from the targeted 2.8% for 2018 due largely to the RM35bil refund for the goods and services tax and income tax.

In its note earlier, the brokerage said Budget 2019 would unlikely contain short-term populist measures such as providing subsidies, grants and easy government-led financing.

An analyst pointed out that Budget 2019 would unlikely going to provide much stimulus for the economy.

“Investors would most likely adopt a wait-and-see attitude. Fiscal consolidation means there is unlikely going to be much stimulus for the country’s economy, which is expected to grow slower this year and next year, compared with 2017,” he explained.

Survey data released yesterday showed Malaysia’s manufacturing sector had started to deteriorate at the start of the fourth quarter of 2018.

The Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) declined to 49.2 in October from 51.5.

(Readings above 50 indicate an expansion while those below 50 indicate a contraction.)

According to IHS Markit, which compiles the survey, the PMI deterioration in October was an indication of the initial impact of the sales and service tax (SST) implementation on the real economy.

Its economist Joe Hayes said: “At a time when global raw material prices are rising and the domestic currency is weakening, the SST introduction has fuelled a further month of sharp input cost inflation in Malaysia’s manufacturing sector.”

Among the heavyweights, decliners were led by Digi.Com Bhd, Press Metal Aluminium Holdings Bhd, PPB Group Bhd and Dialog Group Bhd, while gainers were led by MISC Bhd, Sime Darby Bhd, RHB Bank Bhd and Genting Malaysia Bhd.

The top active counters included Seacera Group Bhd, Datasonic Group Bhd, Prestariang Bhd and Orion IXL Bhd.