KUALA LUMPUR (April 1): The FBM KLCI closed down 28.23 points or 2.09% at 1,322.66 today, as the Covid-19 pandemic, which has killed more than 40,000 globally, gave no respite to world share markets. The spectre of a global economic slowdown and lower crude oil prices due to the outbreak, gave reasons to equity investors to take profit today, following yesterday’s gain.
Across Bursa Malaysia at 5pm today, 4.74 billion shares were traded for RM2.77 billion. There were 523 decliners and 355 gainers across the exchange.
"Profit-taking should arise to check yesterday's window-dressing gains, with downside cushioned on hopes extended social distancing and lockdowns in the US and Europe may slow the coronavirus infection rate, and relieve over China's surprise manufacturing expansion in March,” TA Securities Holdings Bhd wrote in a note earlier today.
Globally, Reuters reported Asian shares and Wall Street futures fell on Wednesday, in the first trading session of the quarter, as the coronavirus pandemic and the prospect of a global recession tore through investor confidence.
It was reported that E-Mini futures for the S&P 500 slumped 2.27%, as dire predictions of more virus casualties in the United States weighed on sentiment. It was reported that MSCI's broadest index of Asia-Pacific shares outside Japan erased gains to trade 0.33% lower.
Global crude oil prices slid further on Wednesday, following their biggest-ever quarterly and monthly losses, as a bigger-than-expected rise in U.S. inventories and a widening rift within OPEC, heightened oversupply fears.
It was reported that oil prices are near their lowest since 2002, amid the global coronavirus crisis that has brought a worldwide economic slowdown and slashed oil demand.
"Crude futures ended the quarter down nearly 70%, after record losses in March. As of 0643 GMT, Brent crude was down by US$1.02 or 3.9% at US$25.33 a barrel. U.S. West Texas Intermediate crude was down 35 cents or 1.7% at US$20.13 a barrel, after giving up an earlier gain which analysts said was driven by position building at the start of a the new quarter.
U.S. crude inventories rose by 10.5 million barrels last week, far exceeding forecasts for a 4 million barrel build-up, data from industry group the American Petroleum Institute showed,” Reuters reported.
Across Bursa today, top active counters included oil and gas-related Sapura Energy Bhd, Bumi Armada Bhd and Hibiscus Petroleum Bhd.
Top active stock Sapura Energy closed with a volume of some 201 million shares. The stock fell 0.5 sen or 6.25% to 7.5 sen, as investors weighed the company’s outlook against the current oil and gas sector environment.
"Operating cashflows may be insufficient to repay debt principal from FY22F onwards, requiring bank refinancing, rescheduling or additional loans, Substantial cut to our SOP (sum-of-the-parts)-based target price from 29 sen to 5 sen,” CGS-CIMB Securities Sdn Bhd analyst Raymond Yap wrote in a note today.
"Our target price has been cut by 24 sen, as we have aggressively cut the value of Sapura Energy’s businesses. Downgrade from Hold to Reduce. Sapura Energy has not recovered from the 2014-16 oil price crash, can it survive the second oil price crash?” Yap said.
At the time of writing this theedgemarkets.com report, Sapura Energy had not responded to emailed queries by theedgemarkets.com on the oil and gas support services provider’s outlook.
(report updated)
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