KLCI jumps 2.17% on economic stimulus announcement

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KUALA LUMPUR (Sept 14): The FBM KLCI jumped 2.17% today, bucking the dampened regional trend, after the government announced special measures to curb the decline in the local market.

As at 5pm, the benchmark index rose 36.03 points to settle at 1,693.63.

Earlier today, Prime Minister Datuk Seri Najib Razak announced measures to boost Malaysia’s economy, including a RM20 billion allocation to ValueCap Sdn Bhd to prop up the local stock market, and other measures such as the exemption of import duties for the factory sector.

JF Apex Securities senior analyst Lee Cherng Wee said the rise in the local market today was mostly due to the economic stimulus announced by Najib.

“The prime minister has allocated RM20 billion for investment in undervalued stocks, which is positive news for the market. However, the reaction by the local market is a bit overdone,” he told theedgemarkets.com.

He added that the gains were mostly on select blue chip stocks, while small- to medium-capitalisation stocks did not see much impact from the announcement.

The FBM Small Cap Index gained 53.82 points or 0.37% to close at 14,439.81 today, underperforming the KLCI’s 2.17% gain.

“The market would probably retreat in the near-term, as the gains made by the KLCI today was overdone,” said Lee.

Meanwhile, markets in the Asian region were mostly down, which Lee attributed to uncertainties surrounding the US Federal Open Market Committee’s (FOMC) meeting on interest rates on Thursday, and also the not-so-encouraging economic data by China.

Across the board, the exchange saw some 2.2 billion shares, worth RM2.23 billion, traded. Market breadth was bullish, as gainers outnumbered decliners at 470 against 342, while 303 counters were unchanged.

The gainers were led by index-linked stocks, namely Kuala Lumpur Kepong Bhd, Tenaga Nasional Bhd and Sime Darby Bhd; while the decliners were headed by British American Tobacco (Malaysia) Bhd. The most active counter was KLCI warrant FBMKLCI-C12.

Across the region, Asian equities were mixed as Japan’s Nikkei 225 fell 1.63%, South Korea’s Kospi declined 0.51%, while Hong Kong’s Hang Seng gained 0.27%.

Reuters reported Asian shares came under pressure on Monday, after Chinese markets were hit by soft economic data, while the dollar sagged as investors questioned whether the US Federal Reserve will be confident enough to raise rates for the first time in almost a decade.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was wavering between positive and negative territory.

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