KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Chinese stocks experienced their most significant decline since the beginning of the year, raising concerns about a potential market freefall despite existing policy measures.
Key Highlights
Market Performance:
- The CSI 300 Index dropped 0.6% on Wednesday, extending its three-day loss to over 3%, the largest since January 31.
- The Shanghai Composite Index briefly fell below the crucial 2,900 level.
Investor Sentiment:
- Hopes that the Third Plenum would introduce new market catalysts were unmet, fueling pessimism.
- Expectations for substantial stock market boosts from the upcoming Politburo meeting are low.
- Equity purchases by the "national team" have slowed compared to last week.
Economic Challenges:
- China’s economy is struggling, with the property market in crisis and consumer spending subdued.
- Geopolitical tensions, particularly in light of the upcoming US presidential election, add to the market's headwinds.
Fund Flows:
- There has been significant redemption from stock-focused mutual funds, one of the largest since 2005 in the second quarter.
- The recent sell-off is attributed to fund flows and mutual fund redemptions.
Role of the National Team:
- The national team has played a crucial role in stabilizing the stock market this year.
- On Wednesday, turnover in ETFs known to be targets of the national team reached 14.7 billion yuan ($2 billion), compared to last Friday’s 40 billion yuan.
Market Outlook:
- Traders fear the market is trapped in a cycle where rebounds are short-lived.
- Historically, measures from the Politburo have proven insufficient to sustain a market rebound.
- The CSI 300 Index is approximately 10% below its level following the July 2023 Politburo, despite strong endorsements and concrete policies like stamp duty cuts and short-selling restrictions.
Conclusion
Chinese stocks are facing significant challenges, with recent declines raising concerns about a potential freefall. Despite policy measures and interventions by the national team, investor sentiment remains pessimistic. The market’s performance suggests that any upcoming measures from the Politburo will need to be substantial to rejuvenate investor confidence and drive a sustainable rebound.
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