KUALA LUMPUR (Sept 9): The FBM KLCI closed down 22.6 points or 1.49% at 1,496.72 today, the first close under 1,500 since June 29 this year, as the broader market fell amid a confluence of factors including lower crude oil prices today and expectation of Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) decision tomorrow.
Fund managers said today the Malaysian stock market also took cue from anticipation of Malaysia’s Budget 2021, which is scheduled to be announced on Nov 6, and the US Presidential election, which will be held on Nov 3.
“Investors will likely adopt a wait-and-see stance as several big events will be announced in the coming months. There is the potential cut in the OPR due tomorrow, and if there is no cut, it will likely be in November.
“There is also the (Malaysia) 2021 Budget announcement in November as well, along with external factors including the US (Presidential) election,” Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng told theedgemarkets.com today.
Across Bursa Malaysia at 5pm today, 7.7 billion securities valued at RM4.89 billion were traded.
Decliners outnumbered gainers at 846 to 314 respectively.
On June 29 this year, the KLCI closed at 1,494.43 points.
Across Bursa today, the KLCI’s drop trailed the healthcare index’s 4.9% decline as investors sold shares of rubber glove manufacturers including Kossan Rubber Industries Bhd, Supermax Corp Bhd, Hartalega Holdings Bhd and Top Glove Corp Bhd.
Rubber glove manufacturers are constituents of the healthcare index, which includes hospital operators and pharmaceutical firms.
Hartalega and Top Glove are also constituents of the 30-stock KLCI.
Hartalega’s share price closed down 60 sen or 4.41% at RM13 while Top Glove fell 49 sen or 6.41% to RM7.15.
Wong said the decline in glove makers’ share prices marks a “healthy correction” and may open up some buying opportunities in these stocks.
Rubber glove manufacturers’ share prices have fallen on profit taking after rising substantially on expectation that the Covid-19 pandemic will lead to higher demand for gloves to curb the spread of the pandemic.
Meanwhile, Bursa’s leading gainer was Gets Global Bhd after it closed up 26.5 sen or 39.85% at 93 sen.
The top active stock was XOX Bhd, which saw some 467 million shares traded. XOX’s share price ended down three sen or 13.04% at 20 sen.
BNM’s OPR decision will be closely watched as investors weigh the impact of the central bank's monetary policy on the broader asset market including equity, bond, currency and real estate.
In a statement on July 7, 2020, BNM said its Monetary Policy Committee had decided to reduce the OPR by 25 basis points to 1.75%.
On Aug 31, 2020, DBS Group senior economist Irvin Seah and strategist Duncan Tan wrote in a note that BNM had cut the OPR by a total of 125 basis points year-to-date to 1.75% to complement the equally robust fiscal measures aimed at buffering the Malaysian economy from the impact of the Covid-19 pandemic.
Globally today, it was reported that Asian shares fell on Wednesday and crude oil prices hit lows not seen since June after a rout in technology shares sank Wall Street for a third consecutive day and a major drugmaker delayed testing of a coronavirus vaccine.
It was reported that oil futures fell again on Wednesday after a sharp slide in the previous session, as a rebound in Covid-19 cases in some countries undermined hopes for a steady recovery in global demand.
"Brent crude was down 19 cents, or 0.5%, at US$39.59 a barrel by 0656 GMT after dropping more than 5% on Tuesday to fall below US$40 a barrel for the first time since June. US crude was down 24 cents, or 0.7%, at US$36.52 a barrel, having fallen nearly 8% in the previous session.
"Both major oil benchmarks are trading at around three-month lows. The global health crisis continues to flare unabated with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States. The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel,” Reuters reported.