Oil price rise spurs equity gains as corporate results trickle in

Oil price rise spurs equity gains as corporate results trickle in
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KUALA LUMPUR (April 29): The FBM KLCI closed up 8.1 points or 0.59% at 1,380.3 after broad-based buying as investors weighed factors including higher crude oil prices and Malaysia corporate financial results against the COVID-19 pandemic’s impact on the world economy.

At a glance, Malaysian shares also appeared to take cue today from International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali’s statement yesterday that realising the urgent need to tackle the current economic crisis, the Government has agreed that the economic sectors that were allowed to operate during phases one, two and three of the Movement Control Order (MCO) be allowed effective today to raise their operational capacity to the fullest and to operate without time limits.  

Across Bursa at 5pm today, a total of 4.825 billion shares valued at RM2.464 billion were traded. There were 630 gainers and 248 decliners as investors evaluated financials of companies including Sapura Energy Bhd and Lotte Chemical Titan Holding Bhd. Both companies announced their financial results earlier today.

Malaysia’s corporate financial reporting season for the January to March quarter starts as early as April although most companies announce their results in May.

"Oil prices will likely remain low. We expect the Brent spot price to average US$35 per barrel and West Texas Intermediate (WTI) spot to average US$30 per barrel for this year. Oil prices will likely move up in 2021 as demand recovers along with economic growth. For 2021, we forecast Brent to average US$45 per barrel and WTI to average US$40 per barrel,” Moody’s Investors Service analysts wrote in a note.

"Global integration within the world economy will likely shift. For example, the coronavirus shock has created supply chain disruptions and could also fundamentally change consumption patterns, which could lead to a large-scale reorganisation of economies over time,” they said.

Across Bursa today, top gainers included KLCI stocks Hong Leong Financial Group Bhd and Kuala Lumpur Kepong Bhd.

Most active stocks included Sapura Energy and Notion VTec Bhd.

Notion VTec, which registered a volume of some 112 million shares, closed up 24.5 sen or 29.34% at RM1.08.

Notion VTec's share price rose today after the hard disk drive manufacturer said yesterday its wholly-owned subsidiaries Notion Venture Sdn Bhd and Notion International (M) Sdn Bhd, which had previously received approval letters from the Ministry of International Trade and Industry (MITI) to operate during the MCO, will ramp up  operations to full capacity effective today.

"Subsequent to the meeting of the National Security Council, those economic sectors which were previously approved by MITI to operate during the MCO period is now allowed to ramp up their operations to full capacity starting 29 April 2020. The company will ensure that the established standard of operating procedure is being complied,” Notion VTec said.

Globally, it was reported that Asian shares climbed to a near two-month peak on Wednesday as investors took heart from easing coronavirus lockdowns in some parts of the world, better-than-expected corporate earnings and a welcome rebound in oil prices.

It was reported that US oil prices gained on Wednesday, trimming some of this week's losses, after US stockpiles rose less than expected and on expectations demand will improve as some European countries and US cities moved to ease coronavirus lockdowns.

"US WTI crude futures were up 12.6%, or US$1.56, at US$13.91 at 0643 GMT, paring a 27% plunge over the first two days of this week. Earlier in the session, WTI futures jumped by more than 15% to a session high of US$14.40. Brent crude futures rose 3.1%, or 64 cents, to US$21.10 a barrel, adding to a 2.3% gain on Tuesday.

"US crude inventories rose by 10 million barrels to 510 million barrels in the week to April 24, data from industry group the American Petroleum Institute showed on Tuesday, compared with analysts' expectations for a build of 10.6 million barrels,” Reuters reported.