Glove stocks drag KLCI into another negative session, closes 1.23% lower at 1,492.4

Glove stocks drag KLCI into another negative session, closes 1.23% lower at 1,492.4
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KUALA LUMPUR (Oct 21): The FBM KLCI finished in negative territory for a second straight day, dragged down by glove stocks which dominated Bursa Malaysia’s top losers.

At 5pm, the benchmark index closed 18.57 points or 1.23% lower at 1,492.4. Market breadth remained mostly negative with 754 losers versus 374 gainers. Meanwhile, trading momentum was fairly active with 8.48 billion shares traded for RM5.95 billion.

Malacca Securities Sdn Bhd head of research Loui Low told The Edge that today’s decline is likely due to a mixed bag of negative factors such as market concerns of snap elections and speculation on what is to be announced during the upcoming Budget 2021 at Parliament in two weeks’ time.

The big four glove stocks — Hartalega Holdings Bhd, Supermax Corp Bhd and its structured warrants, Top Glove Corp Bhd and Kossan Rubber Industries Bhd — dominated Bursa’s top losers' list today.

At market close, Hartalega fell RM1.20 or 6.3% to RM17.84, while Supermax closed 86 sen or 8.3% lower at RM9.50. Top Glove closed 60 sen or 6.33% lower at RM8.88 while Kossan dipped 81 sen or 9.96% to RM7.32.

Hong Leong IB Research said despite closing above the critical 200D SMA support (now at 1,497) and the major support trendline from 1,474 low, KLCI is still engaged in a tug-of-war between the bulls and bears amid rising headwinds ahead of the US presidential election and a resurgence in COVID-19 infections globally.

“Moreover, more targeted lockdowns amid spiking COVID-19 local transmissions in Malaysia may dampen our expectations for a 2H20 economic and corporate earnings recovery,” it said in a note today.

Meanwhile, Reuters said Asian shares and US stock futures rose on Wednesday as renewed hopes for a new round of US stimulus drew money into equities from government debt.

Japan’s Nikkei 225 gained 0.31%, while South Korea’s Kospi closed up 0.53%. In China, the Hang Seng rose 0.75% while the Shanghai composite index fell 0.09%.

Lam Jian Wyn