KUALA LUMPUR (July 4): Bursa Malaysia's Small Cap index had on Monday (July 4) fell below 14,000 points for the first time in about 20 months after the gauge dropped more than 1% amid broader market weakness, as the prospect of interest rate hikes globally to fight jumping inflation triggered concerns about slower economic growth.
The small-cap gauge, which opened on Monday at 14,180.73, fell as much as 1.4% to a low of 13,978.04, before paring losses to settle at 14,019.45 — still down 157.81 points or 1.12% from Friday's close of 14,177.26.
The last time the small-cap index fell below 14,000 was on Nov 11, 2020, when it closed at 13,950.24 points.
Meanwhile, the benchmark FBM KLCI dipped 12.22 points or 0.84% to settle at 1,437.52.
Hong Leong Investment Bank (HLIB) Research analyst Ng Jun Sheng, in a note on Monday, expects the KLCI to stay in a choppy mode this month due to a lack of conviction among investors, underpinned by a 24% slide in trading value from May's RM2.39 billion to June's RM1.81 billion, amid prevalent headwinds.
However, Ng said the KLCI’s battered valuation of 13.8 times CY23 price earning (P/E) has reflected a reasonable degree of the negatives and provided a good opportunity to nibble after plunging 171 points from the index's year-to-date (YTD) high of 1,620.
The research house's third quarter top picks are a combination of interest rate upcycle (RHB Bank Bhd, Affin Bank Bhd), commodity plays (Press Metal Aluminium Holdings Bhd, Kuala Lumpur Kepong Bhd, Dagang NeXchange Bhd), reopening (Sunway Bhd, Evergreen Fibreboard Bhd, Focus Point Holdings Bhd) and value/sold down stocks (Tenaga Nasional Bhd, Dialog Group Bhd, Bumi Armada Bhd, Kobay Technology Bhd).
Elsewhere, global share markets started the week in a haphazard fashion on Monday as soft US data suggested downside risks for this week's June payrolls report, while the hubbub over possible recession was still driving a relief rally in government bonds, according to Reuters.