KUALA LUMPUR (March 13): The FBM KLCI closed down 74.68 points or 5.26% at 1,344.75 today after broad-based selling across Bursa Malaysia erased RM73.23 billion worth of market capitalisation from stocks traded on the exchange as concerns over the Covid-19 pandemic and Russia-Saudi Arabia crude oil price war led to a substantial drop in world markets.

Such sentiment hit world equity and crude oil markets as investors weighed the economic impact of the Covid-19 outbreak and as the crude oil price war led to concerns of additional supply of the commodity. 

At Bursa today, stocks listed on the exchange ended with a combined market capitalisation of RM1.39 trillion (RM1,385.71 billion) versus RM1.46 trillion (RM1,458.94 billion) yesterday, according to calculations by theedgemarkets.com.

Within the KLCI’s 30 stocks today, the sell-off had erased RM47.61 billion from the combined market capitalisation of these companies. 

The KLCI stocks ended today with a combined market value of RM865.42 billion compared with RM913.03 billion yesterday, as investors evaluated global policymakers’ response to the Covid-19 pandemic and crude oil price war.

Today, UOB senior economist Alvin Liew and rates strategist Victor Young wrote in a note that global policymakers are expected to respond to the challenge amid uncertainties over both the magnitude and duration of the growth shock.

"Therefore, monetary policy settings will be highly accommodative for the rest of 2020 in order to stave off liquidity breakdowns during periods of elevated market stress as well as to provide a base for the eventual recovery,” Liew and Young said.

The KLCI closed down at 1,344.75 at 5pm after falling as much as 98.47 points or 6.94% to 1,320.96 earlier today. 

All Bursa indices closed lower. Major decliners included the index for small market capitalisation stocks after the gauge fell 628.85 points or 5.86% to 10,103.74.

Across Bursa at 5pm, 5.68 billion shares worth RM4.9 billion were traded. There were 158 gainers and 986 decliners.

Top decliners included KLCI stocks PPB Group Bhd, Hong Leong Bank Bhd and Petronas Dagangan Bhd.

Top gainers included put warrants linked to Malaysia’s KLCI, Hong Kong’s Hang Seng and the US' S&P 500 as investors bought the warrants to hedge against broader market losses.

In currency markets, the ringgit depreciated to its weakest level against the US dollar at 4.2957 today after the US dollar strengthened on demand for haven currencies at a time when the Covid-19 pandemic and lower crude oil prices have resulted in world economic uncertainties.

The ringgit has also weakened in tandem with lower crude oil prices at about US$30 a barrel now because Malaysia is a net oil exporter. At the time of writing, the ringgit was traded at 4.2815 against the US dollar after changing hands between 4.2788 and 4.2957 today.

Across global equity markets, it was reported that stocks plunged on Friday with coronavirus panic selling hitting nearly every asset class — before finding some kind of floor as hopes turned to a US stimulus package. 

It was reported that European and US stock futures traded in positive territory and some of Asia’s deepest losses were recovered by the end of a session, in which tight liquidity exaggerated moves. 
"Japan’s Nikkei fell 10% before paring the drop to close 6% lower. Australia’s S&P/ASX200 had its wildest trading day on record, falling past 8% before surging in the last minutes of trade to settle 4.4% higher after the close,” Reuters said.

It was reported that the turnaround came as central banks from the US to Australia pumped liquidity into their financial systems and as hopes grew that US Democrats and Republicans could pass a stimulus package on Friday. 

Crude oil prices were set for their worst weekly drubbing since the 2008 financial crisis, despite rising over 3% on Friday, as investors fretted over evaporating demand from the coronavirus pandemic and a production ramp-up by top producers.

It was reported that Brent crude was up US$1.12, or 3.4%, at US$34.33 a barrel by 0728 GMT after falling more than 7% on Thursday. For the week, it was reported that Brent is set to fall around 24%, the biggest weekly decline since December 2008, when it fell nearly 26%.