Market Daily Report: KLCI slides 3.05% as concerns mount over second wave of Covid-19 infections

KUALA LUMPUR (June 15): Mounting concerns over the second wave of Covid-19 infections, particularly in China, spooked the equity bears in Asian markets, including Bursa Malaysia whose benchmark index had its biggest single-day drop in three months.

A plunge of over 900 points in the Dow Jones Industrial Average futures added fuel to the selling in the afternoon.

The FBM KLCI shed 47.19 points or 3.05% to a two-week low of 1,498.93 points. The index was on a decline for the third consecutive day.

The fall in the FBM Small Cap Index, excluding only the top 100 largest stocks in terms of market capitalisation, was even bigger. It skidded 610.76 points or 5.06% to 11,457.15 points.

On the home front, the news of the unemployment rate soaring to a 30-year high of 5% in April 2020 compounded the selling on the local market.

Rakuten Trade head of research Kenny Yee described the selling today as “drastic”. He pointed out that as the market had been overbought recently, profit-taking activities were expected.

“It is the right time for the market to consolidate. There is still further downside,” Yee told theedgemarkets.com.

In the near term, Yee expects the market to take its cue from Wall Street tonight, adding that market sentiment will be cautious and jittery after the selling today.

The next immediate support level of the KLCI is around the 1,490-level and the 1,470-level next, said Yee.

Asked if the rally was over for the benchmark index, Yee did not think so, saying that the market was “due for a correction”, adding that the index was up over 300 points from the trough in late March.
Nonetheless, he advised investors to trade with caution.

Meanwhile, Malacca Securities Sdn Bhd analyst Kenneth Leong viewed that volatility in the market will be the norm in the near future unless there is further economic stimulus or any positive news of success in developing a Covid-19 vaccine.

“Unlike the previous recovery of the FBM KLCI that was mainly fuelled by glove heavyweights, the cap on margin financing for glove counters is expected to take some steam away from the glove rally,” he added.

Among the 30 component stocks of KLCI, Top Glove Corp Bhd, which is the best performing stock, shed RM1.70 or 10% to close at RM15.20, followed by Petronas Dagangan Bhd, which slid RM1.50 or 6.82% to RM20.50, and Hartalega Holdings Bhd dropped 84 sen or 6.71% to RM11.68.

The market trading volume stood at 9.07 billion shares worth RM5.32 billion traded. Losers led gainers by 1,107 to 159, while 227 counters remained unchanged.

All indices on Bursa Malaysia were in the negative territory and the worst hit was Bursa Malaysia healthcare index, which slipped 173.38 points or 7.26% to 2,215.18 points today.

Across Asia, most regional indices were in the red. South Korea's Kospi fell 4.76%, followed by Japan's Nikkei 225, which slid 3.47% while Hong Kong's Hang Seng was down 2.16%.

Reuters wrote that Asian shares and Wall Street futures fell today as growing fears of a second wave of Covid-19 infections revived economic worries, while underwhelming data from China also weighed on investor sentiment.

Today's losses follow a strong global rally since late March, fuelled by the central bank and fiscal stimulus and optimism as countries gradually lift restrictions put in place to curb the spread of Covid-19, said the newswire.

However, concerns are now swirling about a second wave with Beijing today reporting its second consecutive day of record numbers of Covid-19 cases, while new cases and hospitalisations in record numbers swept through more US states, Reuters added.



Source: The Edge