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.
Malaysia’s automotive market is expected to maintain stable growth in the affordable car segment, while the mid-market segment may face challenges due to the rollout of e-invoicing and potential changes in fuel subsidy policies, according to Kenanga Research.
While the overall industry continues to enjoy solid demand, with a backlog of 160,000 units as of the end of August, Kenanga Research highlighted a “two-speed automotive market” through 2024. The research firm’s top pick in the sector is MBM Resources Bhd, which has significant exposure to Perodua, benefiting from a backlog of over 100,000 units and a 7% dividend yield. The firm has an outperform rating on MBM Resources with a target price of RM6.30.
The B40 segment, which is targeted by affordable car brands, is likely to be unaffected by fuel subsidy rationalization and may benefit from the progressive wage model and civil servant pay rises scheduled for December 2024. This increase will help civil servants recover from inflationary pressures, improving their spending power.
However, the M40 group may respond differently. Kenanga Research predicts that this group might hold off on purchasing new cars, consider downgrading, or switch to electric vehicles (EVs) to cut fuel costs. The introduction of e-invoicing will also impact this segment by curbing the 100% hire purchase financing practice, which has been commonly used under the Hire Purchase Act 1967.
Despite promotions, August vehicle sales saw a slight 1% decline month-on-month and a 2.3% drop year-on-year to 71,162 units. However, year-to-date sales reached 503,783 units, accounting for 65.85% of the Malaysian Automotive Association’s full-year projection of 765,000 units.
Kenanga’s full-year sales forecast is more conservative at 740,000 units, and it expects September sales to remain steady, supported by promotions and the launch of new models, such as the all-new Proton X70 with early bird rebates of approximately RM7,000.
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