RM44b in market value wiped out on political shock
O It will take a few days for the dust to settle and things become clearer
PETALING JAYA: The last 48 hours have been some of the most exciting in Malaysia’s political history, to say the least, but the political turmoil has shaken the market as investors are badly spooked over the future and direction of the nation.
The FBM KLCI tumbled close to 30 points after the opening bell on heavy selling pressure across the board, plunging as much as 44.49 points or 2.9% to 1,486.71 points, the biggest daily drop since May 2018.
On Bursa close, the key index was 41.14 points or 2.69% lower at 1,490.06 points, the lowest in more than eight years, with some RM44.23 billion market capitalisation shaved off.
Market breadth was extremely negative with 1,015 losers against 138 gainers. Turnover spiked to 4.033 billion shares valued at RM3.905 billion.
The construction index saw the biggest fall, skidding 6.07%, followed by energy (-4.06%) and transportation & logistics (-4.03%).
Carlsberg Brewery Malaysia Bhd, Heineken Malaysia Bhd and Dutch Lady Milk Industries Bhd were the top losers, contracting RM3.98, RM2.68 and RM1.30 to RM34.96, RM28.36 and RM44.48, respectively.
Meanwhile, glove makers were least affected by the selloff, with Top Glove Corp Bhd recording a gain of 15 sen to RM5.44.
Interpacific Securities Sdn Bhd head of research Victor Wan told SunBiz the market’s reaction was not unwarranted, given that the situation the country now faces is unprecedented.
“No one likes uncertainty, so as long as that remains, then the market will react accordingly. There’s still a lot of unknowns, so it’s better to stay on the sidelines,” he said.
Wan added because there is still a lot of speculation over what the next move will be, it would likely take a few days for answers to emerge and for the market to settle.
“We technically have no government right now. We also don’t know what will happen with the stimulus package that was due to be announced on Feb 27, so there are a lot of things that are up in the air and no one knows what to expect,” he said.
BIMB Securities said the political change in Malaysia remains a risk, albeit shortterm, as the KLCI has already been underperforming regional stocks the past 20 months.
It said it continues to favour high-yield, consumer staples and possible domestic/fiscal-oriented sectors such as construction and selected oil & gas, and expects investors to remain risk averse on local stocks.
CGS-CIMB Research said in terms of investment strategy, defensive and export oriented sectors will be less affected by political uncertainty.
“Stocks with high foreign shareholding like Malaysia Airports Holdings Bhd, Genting Bhd and Public Bank Bhd could see foreign selling. The ringgit is likely to weaken due to political uncertainties.
“Also, there could be some concerns on sin sectors like brewers and gaming under the new coalition government Pakatan Nasional. If there are changes at state level, it could affect the property sector. On construction, we could see a delayed rollout of some large projects and highway transactions,” it said.
Yesterday, the nation was taken aback by the resignation of Tun Dr Mahathir Mohamed as Prime Minister and as Parti Pribumi Bersatu Malaysia (PPBM) chairman.
News also broke that PPBM had departed from Pakatan Harapan, with all PPBM MPs to also similarly leave the ruling coalition.
This followed unforeseen meetings held separately by PPBM, Parti Keadilan Rakyat, Umno, PAS, Gabungan Parti Sarawak, and Warisan on Sunday, giving rise to speculation that the meetings were related to a possible realignment in the Pakatan Harapan coalition.