KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
US Steel Corp has outperformed its industry peers in recent weeks as investors grow increasingly optimistic that political and labor opposition to its US$14.10 billion (RM62.58 billion) takeover by Nippon Steel Corp may be softening.
Key Highlights:
Stock Performance: Shares in Pittsburgh-based US Steel have risen over 6% in the past month, recovering much of the ground lost after US President Joe Biden and presidential candidate Donald Trump initially opposed the deal. In contrast, competitors like Cleveland Cliffs Inc, Nucor Corp, and Steel Dynamics Inc have seen double-digit declines.
Political Developments: The positive sentiment around US Steel’s stock coincides with Biden stepping down as a candidate in November’s election, making way for Kamala Harris and her running mate Tim Walz. Although Harris-Walz has not publicly stated their position on the Japanese firm’s planned takeover, investors speculate that the new Democratic ticket might be more open to the deal.
Analyst Insights: According to Phil Gibbs, an analyst at Keybanc Capital Markets, the recent stock price increase is driven more by the perceived likelihood of the deal closing rather than company fundamentals. He suggests that there is growing hope or optimism that the deal could potentially succeed under a Harris administration.
Union Opposition: Despite these developments, the United Steelworkers union (USW) remains firmly opposed to the deal. The USW issued a statement accusing the firms of prioritizing executives and shareholders at the expense of workers and retirees, and sees no path toward the deal closing. However, Wolfe Research analyst Timna Tanners noted that some union members might be warming to the deal, given the possibility of greater job security under a well-resourced global owner.
Nippon Steel’s Strategy: Nippon Steel, Japan’s top steelmaker, is aware that its chances of completing the purchase might improve after the elections, especially if the USW loses political leverage. The company has recently hired former US Secretary of State Mike Pompeo to assist in navigating the deal through the federal foreign investment review process.
Market Conditions: While US Steel’s shares have been influenced by political dynamics, other North American steelmakers are experiencing declines due to weakening market conditions, as highlighted by Keybanc’s Gibbs.
Investors will be closely monitoring the political landscape and labor negotiations as the fate of the Nippon Steel takeover of US Steel continues to unfold.
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