Malaysian Equity Market

During the week Nov 20–26, the FBM KLCI surged 28.43 points (pts) or 1.80% to 1,612.11 pts, in step with the uptrend in the Dow Jones Industrial Average (+1.32%) and MSCI Emerging Markets Index (+2.43%). Globally, investors cheered positive trial results of yet another Covid-19 vaccine candidate, i.e. the one jointly developed by Astrazeneca and Oxford University, President Trump warming up to the transfer of power to President-elect Biden and the news on Biden’s nomination of Yellen who was considered a dovish/pro-growth policymaker during her tenure at the Fed. Locally, market sentiment was boosted by the Parliament’s green light for Budget 2021.

Foreign investors turned net buyers in the local market, snapping up Rm73.4mil worth of Malaysian equities but was insignificant to reverse the year-to-date net outflow of Rm23.3bil. Local institutional and retail investors continued to dominate the market with participation rates of 45.9% and 39.3% in November respectively (comparable with 45.7% and 39.9% in October). As foreign investors stayed passive, their participation rate remained low at 14.8% in November (relatively unchanged compared with 14.4% in October).

Meanwhile, foreign investors piled into Malaysia Government Securities (MGS) for a sixth straight month with a net inflow of Rm3.9bil in October 2020 (vs Rm1.4bil in September). Year-to-date, foreign investors have been net buyers of MGS with a total net inflow of Rm9.3bil.

Equity trading activities improved with the average daily value traded (ADVT) rising to Rm5bil in November (vs Rm4.3bil in October), while turnover velocity increased to 72.0% in November (vs 64.6% in October).

During the week, 11 out of 13 sectors in Bursa Malaysia ended in the positive territory. The best performing sector was energy (+7.6%), driven by higher crude oil price on optimism on global economic recovery. The worst performing sector was REIT (-1.9%) as investors switched out of the defensive sector as their risk appetite improved.

In the coming week, investors will keep a close eye on:

> China manufacturing PMI (Nov) on Nov 29;

> Malaysia PPI (October) on Nov 30;

> Eurozone CPI (y-o-y) on Dec 1; > US unemployment rate (November) on Dec 4;

> US trade balance (October) on Dec 4.