KUALA LUMPUR (Sept 29): The FBM KLCI stayed lacklustre at the midday break Tuesday as the regional rally lost steam and the World Bank lowered Malaysia’s 2020 gross domestic product (GDP) growth outlook.

The World bank in its Macroeconomic Policy Outlook specific to Malaysia said following a sharper-than-expected GDP contraction in the second quarter of this year (2Q20), Malaysia’s 2020 growth forecast has been lowered to a real GDP contraction of 4.9% (down from -3.1%).

It said this change in the forecast reflects the heightened uncertainty surrounding the start and speed of the global recovery, which would weigh on investment decisions and external demand.

At 12.30pm, the FBM KLCI dipped 1.32 points to 1,510.34. The index had earlier risen to a high of 1,517.33.

Losers outpaced gainers by 328 to 293, while 694 counters traded unchanged. Trading volume was 2.74 billion shares valued at RM1.70 billion.

The top losers included Nestle (M) Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd, Top Glove Corp Bhd, Kossan Rubber Industries Bhd, PPB Group Bhd, SCGM Bhd, Comfort Gloves Bhd, Rubberex Corp Bhd and New Hoong Fatt Holdings Bhd.

The actively traded stocks included XOX Bhd, Kanger International Bhd, Dynaciate Group Bhd, Ihkmas Jaya Group Bhd, Pintaras Jaya Bhd, Priceworth International Bhd and VS Industry Bhd.

The gainers included Scientex Bhd, Malaysian Pacific Industries Bhd, Kuala Lumpur Kepong Bhd, Khind Bhd, Public Bank Bhd, G3 Global Bhd, Greatec Technology Bhd, Poh Huat Resources Bhd, Mi Technovation Bhd and MCE Holdings Bhd.

Bloomberg said a global equity rally ran out of steam in Asia as investors assessed the latest efforts towards US fiscal stimulus and the rising toll of the pandemic.

The US dollar held losses, it said.

Hong Leong IB Research said tracking further relief rally on Wall Street and expectation of further 3Q20 window dressing coupled with easing political uncertainties in Sabah following the victory of GRS in the state election on Sept 26 and the appointment of Datuk Hajiji Noor as the 16th chief minister, the KLCI is expected to advance higher towards 1,525-1,541 zones.

“Nevertheless, further gains are likely to be capped due to lingering uncertainties such as 1) liquidity squeeze on the stock market amid the expiry of the six-month grace period for loan repayments on Sept 30, 2) the Datuk Seri Anwar Ibrahim factor after he claimed to have 'formidable and convincing' support to form a new government on Sept 23, and 3) surging Covid-19 cases and clusters in Malaysia (Putrajaya had announced that Lahad Datu, Tawau, Kunak and Semporna in Sabah will be placed under a targeted enhanced movement control order, or TEMCO, from Sept 29 to 12 Oct) and globally (WHO said the world will have to live with Covid-19 for a while and the official death toll is likely an underestimate of the true total).

“Major supports are pegged at 1,500-1,490-1,470 zones,” it said.