KUALA LUMPUR, April 1 (Bernama) -- Bursa Malaysia closed higher on Wednesday, with the key index rising 1.10 per cent, in line with firm gains across regional markets following a strong rally on Wall Street overnight, said an analyst. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the improvement in sentiment was underpinned by easing geopolitical concerns and a decline in oil prices. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) increase 18.54 points or 1.10 per cent to 1,708.90 from Tuesday’s close of 1,690.36. The benchmark index opened 25.58 points higher at 1,715.94, marking its intraday high, and hit a low of 1,700.20 during the mid-morning session. The broader market was positive, with gainers leading decliners 780 to 444. A total of 475 counters were unchanged, 926 untraded and 11 suspended.
Earnings Slump Due to Market Oversupply
- Lynas Rare Earths Ltd reported a net income of A$5.9 million (US$3.7 million) for the six months ending Dec 31, far below analyst expectations of A$32.2 million.
- Shares fell as much as 5.8% in Sydney following the disappointing results.
- No interim dividend declared as the company navigates weak market conditions.
Why Did Profits Drop?
- Rare earth prices have fallen nearly 70% since their 2022 peak, due to China’s strong output and economic slowdown.
- Despite a 30% recovery since March 2024, prices remain volatile.
- Lynas faces cost pressures as it expands operations in Australia, Malaysia, and the U.S.
Market Outlook & Strategic Positioning
- CEO Amanda Lacaze sees current market challenges as short-term but acknowledges price weakness.
- Jefferies analysts highlight Lynas’ strategic positioning to benefit from any future price rebounds.
- The U.S. and Australia continue efforts to reduce reliance on China, but price declines have slowed new project development.
Summary:
- Lynas' profit collapsed 85% to A$5.9M due to weak rare earth prices.
- Stock fell 5.8% as market oversupply and China’s dominance weigh on earnings.
- Despite challenges, Lynas is expanding operations in Australia, Malaysia, and the U.S.
- Future success depends on price recovery and disciplined financial management.
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