KUALA LUMPUR (April 14): The FBM KLCI closed up 15.63 points or 1.15% at 1,371.66 today, while Bursa Malaysia’s ACE Market index rose by a significantly higher quantum as investors weighed updates on China’s March 2020 exports, which fell less than expected and as global economies mitigate the impact of the Covid-19 pandemic. Crude oil price gains also appeared to support Malaysia share market sentiment.
It was reported that Asian equities extended gains on Tuesday, after China's trade data came in better than expected and as some nations tried to restart their economy by partly lifting restrictions aimed at containing the coronavirus outbreak. "Market sentiment was boosted by data showing China's exports in March fell only 6.6% from the year-ago period, smaller than the expected 14% plunge. Imports eased a modest 0.9%, compared with expectations for a 9.5% drop,” Reuters reported.
Across Bursa at 5pm , 4.79 billion shares were traded for RM2.08 billion. There were 706 gainers and 203 decliners.
Among Bursa indices, the ACE Market index closed up the most, after rising 261.12 points or 6.51% to 4,272.13, amid broad-based buying across the exchange.
On the KLCI, MIDF Amanah Investment Bank Bhd is forecasting the index to end this year at 1,400 points, from the previously-estimated 1,480, on expectation of Malaysia’s slower economic growth, as measured by gross domestic product (GDP), and after taking into account analysts’ earnings estimates for KLCI-linked companies.
In a note today, MIDF strategy head Kifni Kamaruddin said that in light of Malaysia’s movement control order (MCO) extension and the likelihood some restrictions will remain in place even after the MCO ends, MIDF revised its Malaysia GDP growth forecast for 2020 to 1%, from 2.7% previously.
"In line with (i) the downward revision (as above stated) to our GDP target for this year, and (ii) the diminution in (Bloomberg) consensus EPS20 estimate for the KLCI to 90.6 points currently (from 95.6 points at the onset of the Covid-19 crisis), we thereby cut our KLCI year-end 2020 baseline target (from 1,480 points) to 1,400 points, while maintaining our PER20 valuation target of 15.5x, which equates to -2.0SD (standard deviation) of its five-year (2014-18) historical average. As it turned out, the KLCI has since rebounded by as high as 111 points, buoyed by (i) the hope of ‘flattening curve’ (i.e. the number of active cases in Malaysia is showing sign of plateauing), and (ii) a series of stimulus announcements totalling RM260 billion,” Kifni said.
Across Bursa today, top gainers included KLCI stocks Malaysia Airports Holdings Bhd and Petronas Chemicals Group Bhd. Top active stocks included Bumi Armada Bhd and Hibiscus Petroleum Bhd, as investors took cue from crude oil price gains.
Bumi Armada registered a volume of some 81 million shares. The stock closed up 0.5 sen or 2.94% at 17.5 sen.
Across crude oil markets, it was reported oil prices rose around 1% on Tuesday, after the U.S. Energy Information Administration predicted shale output in the world's biggest crude producer would fall by a record amount in April, adding to cuts from other major producers. It was reported that Brent futures rose 40 cents or 1.3% to US$32.14 a barrel by 0638 GMT, after settling 0.8% higher on Monday. U.S. West Texas Intermediate (WTI) crude was up 15 cents or 0.7% at US$22.56, having dropped 1.5% the previous session.
"The Organization of the Petroleum Exporting Countries, along with Russia and other producing countries — known as OPEC+ — agreed over Easter to cut output by 9.7 million barrels per day (bpd) in May and June, equal to about 10% of global supply before the viral outbreak. The United States, the world's biggest producer, is reducing output as well, and other countries are taking the estimated cut in production to about 19.5 million bpd.
"But analysts, oil industry executives and others say no matter how the numbers are massaged, the reduction will not be enough to match a contraction of around a third of global oil demand, due to the outbreak,” Reuters said.
(report updated)
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