KUALA LUMPUR (July 9): The FBM KLCI settled up 3.31 points or 0.21% at 1,586.81 at Bursa Malaysia’s afternoon break today as Asian equity indices tracked US stock gauges’ overnight rise. AirAsia Group Bhd’s share price rebounded.
At 12.30pm today, 7.07 billion securities had been traded across Bursa for RM2.41 billion.
Globally, It was reported that Asian equity markets climbed as investors tried to look past gathering Sino-US tension and renewed Covid-19 lockdowns to upcoming company earnings reports, hoping that global stimulus efforts will yield an upbeat outlook. "MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6% and touched a 20-week high as Chinese stocks extended their extraordinary rally,” Reuters reported.
It was reported that US stocks rose yesterday and the Nasdaq hit a record closing high, supported by technology shares as early signs of an economic rebound offset concerns about further lockdowns due to a jump in Covid-19 cases across the country. It was reported that Apple Inc and Microsoft Corp provided the biggest boosts to the Dow and S&P 500, with the S&P 500 Technology Index up 1.6% and leading sector gains.
Across Bursa today, top gainers included Public Bank Bhd and Bursa Malaysia Bhd. Most active stocks included AirAsia Group Bhd.
AirAsia Group’s share price settled up 4.5 sen or 6.38% at 75 sen with some 153 million units traded. The stock’s price rebounded after falling to its intraday low of 66 sen so far today as investors weighed the budget airline’s outlook against the Covid-19 pandemic.
Yesterday, the company said it had triggered the prescribed criteria under Bursa’s Practice Note 17 (PN17) classification after the airline’s external auditor, Messrs Ernst & Young PLT, issued an unqualified audit opinion with emphasis of matter on material uncertainty relating to AirAsia Group as a going concern.
Ernst & Young also said AirAsia Group shareholders’ equity on a consolidated basis is 50% or less of its share capital, according to AirAsia Group’s Bursa filing yesterday. "For avoidance of doubt, AirAsia Group will not be classified as a PN17 listed issuer and will not be required to comply with the obligations pursuant to Paragraph 8.04 and PN17 of the Main LR (Main Market Listing Requirements) for a period of 12 months from the date of this announcement. AirAsia Group will reassess its condition and announce whether it continues to trigger any of the criteria in PN17 of the Main LR upon the expiry of 12 months from the date of this announcement,” the airline said.
Today, CGS-CIMB Securities Sdn Bhd analyst Raymond Yap said the audit’emphasis of matter is recognition that AirAsia Group is at the cliff’s edge and that urgent liquidity is needed.
"Nothing new here. We are reasonably confident that AirAsia Group will survive Covid-19. While we believe AirAsia Group will survive, we are concerned about the direction of the share price. A potential equity issue of up to RM1.4 billion (which may not be issued all at once) at, say, 50 sen will result in the issue of 2.8 billion new shares, increasing the share base by 84% to 6.1 billion shares, diluting existing shareholders'," Yap said.