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Market Daily Report: Bursa Malaysia Closes Higher On BNM’s OPR Decision, Wall Street Gains

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.
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Weaker Q3 Results for Malaysian Consumer Stocks Amid Persisting Weak Sentiment

CIMB Securities has maintained a "neutral" outlook on the consumer sector, predicting softer quarter-on-quarter results for Q3 2024, following weak consumer sentiment seen in Q2 2024. The lack of festive seasons in the July-September period is also expected to contribute to the sector's seasonal weakness.

Key Takeaways:

  1. Persisting Weak Sentiment and Limited Price Hikes: CIMB Securities notes that consumer companies face limited room for price hikes due to weak consumer spending patterns, with any adjustments aimed at covering higher input costs. In the recently concluded Q2 2024 results, sales were weaker than expected due to low sentiment and boycotts, with earnings exceeding forecasts primarily due to better margins.

  2. Medium-Term Catalysts for Recovery: A civil service salary hike starting in December is expected to boost purchasing power, potentially leading to an increase in private sector minimum wages. Higher consumer spending power could shift the sales mix towards more premium products, enhancing profitability for consumer companies.

  3. Impact of a Stronger Ringgit: A stronger ringgit could benefit companies that rely on imported feedstocks and goods, though the impact may be delayed due to hedging and inventory management practices.

  4. Top Picks in the Consumer Sector: CIMB Securities favors Farm Fresh Bhd (TP: RM1.95), Mr DIY Group (TP: RM2.45), and Aeon Co (TP: RM1.57) as its top picks. Farm Fresh is expected to benefit from margin improvements and product diversification, Mr DIY from consumer downtrading, and Aeon from the rejuvenation of existing malls and the opening of new malls.

At the time of writing, Farm Fresh shares remained unchanged at RM1.69, Mr DIY shares rose by 1.01% to RM2.01, and Aeon shares fell by 0.7% to RM1.41.

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