KLCI pares gains as investors lukewarm to Permai package

TheEdge Tue, Jan 19, 2021 01:15pm - 2 months ago

KUALA LUMPUR (Jan 19): The main index at Bursa Malaysia pared some of its gains at the midday break Tuesday as broader market sentiment appeared lukewarm to the government’s RM15 billion Perlindungan Ekonomi dan Rakyat Malaysia (Permai) assistance package.

At 12.30pm, the FBM KLCI was up 2.78 points to 1,612.30. The index had earlier climbed to a high of 1,618.41.

Declining issuers led advancers by 370 to 365, while 728 counters traded unchanged. Trading volume was 4.16 billion shares valued at RM2.50 billion.

The gainers included Nestle (M) Bhd, Toyo Ventures Holdings Bhd, Milux Corp Bhd, PMB Technology Bhd, Khind Bhd, Samaiden Group Bhd and Carlsberg Brewery Malaysia Bhd.

The actively traded stocks included VSolar Group Bhd, PNE PCB Bhd, ARB Bhd, Samaiden, Cypark Resources Bhd, KTG Bhd, Mestron Holdings Bhd and QES Group Bhd.

The decliners included KESM Industries Bhd, Frontken Corp Bhd, P.I.E. Industrial Bhd, Unisem (M) Bhd, Batu Kawan Bhd, Hong Leong Financial Group Bhd, JF Technology Bhd, Fraser & Neave Holdings Bhd and Pentamaster Corp Bhd.

Reuters said Asian shares climbed on Tuesday as investors wagered China's economic strength would help underpin growth in the region, even as pandemic lockdowns threatened to lengthen the road to recovery in the West.

Data out on Monday had confirmed the world's second-largest economy was one of the few to grow over 2020 and actually picked up speed as the year closed, it said.

Hong Leong IB Research said that overall, the RM15 billion Permai stimulus package is likely to be "neutral" to the market as the stimulus seems to be largely targeted at both the rakyat and small and medium enterprises (SMEs) that have been hit by the negative ramifications of Covid-19.

“We reiterate that KLCI to trade range bound in the near term (supports 1,562-1,573; resistances: 1,636-1,650-1,667) as investors continue to weigh on the economic impact of the MCO 2.0 (the second movement control order) and the state of emergency declaration coupled with the upcoming Bank Negara Malaysia monetary policy meeting on Jan 20 (OPR stood at the lowest level of 1.75% after four cuts of 1.25% in 2020).

“For stocks selection, the acceleration of Micro SME e-Commerce Campaign and Shop Malaysia Online campaign (RM300 million) announced in the Permai stimulus measures yesterday would trigger some trading interests for courier logistics companies (eg GD Express Carrier Bhd, Tri-Mode System (M) Bhd, Tiong Nam Logistics Bhd and Freight Management Bhd) and players that facilitate online transactions (eg Revenue Group Bhd and GHL Systems Bhd),” it said.

Meanwhile, RHB Investment Bank Bhd has revised Malaysia’s 2021 growth domestic product (GDP) forecast downward to 5.4%, from 6.3% previously, due to the re-implementation of the MCO by the government recently.

In a note today, RHB group chief economist and head of market research Dr Sailesh K Jha and RHB senior economist Nazmi Idrus said their base scenario on the downgrade of GDP assumes a four-week MCO 2.0 versus the current two-week guidance of the government.

“The revision reflects a more conservative growth outlook amid the re-tightening of the social distancing measures (MCO 2.0) as well as adjustments to our growth timeline,” they said.

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