By Ranjit Singh
REGIONAL stocks fell sharply after central banks’ move to shore up economic growth failed to dispel investor fears over the Covid-19 outbreak that is shutting down global business and travel.
The pandemic has infected more than 170,000 people globally and claimed in excess of 7,000 lives.
Many nations have adopted lockdowns to quell the spread of the deadly virus. The Malaysian government has imposed a temporary restriction of movement from March 18 to 31 in a move to mitigate the spread of the virus as the number of people infected spiked to 673 after 120 people tested positive today (March 17). Two deaths were reported.
Many markets in the region have taken the cue from the Dow Jones which plunged nearly 3,000 points or 12% on March 16 after the US Federal Reserve cut interest rates to near-zero and introduced a quantitative easing programme to the tune of US$700 bil.
Bursa Malaysia which has been in selling mode continued its downward spiral on March 17. The bellwether index closed 24.05 points down or 1.88% to 1,256.58 points.
The Malaysian market has been faced with a triple whammy in the Covid-19 outbreak, crash in global oil prices and an uncertain political situation due to a change in the government of the day.
Most stocks have been battered to below their 52-week lows. Former prime minister Tun Dr Mahathir Mohamad said the economic setback from the Covid-19 pandemic was worse than that from the Asian Financial Crisis of 1997-98.
The possibility of another interest rate cut by Bank Negara Malaysia in May after two successive cuts had sent bank stocks reeling. Public Bank Bhd which was once a darling of the stock market and had traded at a high of RM24.48 was trading at RM13.90 on March 17. Maybank, the largest stock by market capitalisation, was trading at RM7.36 on March 17 in contrast to its 52-week high of RM9.49.
Japan’s central bank expanded asset purchases to inject money into the economy and promised no-interest loans to help companies cope with the crisis.
The Bank of Japan also announced plans to provide up to eight trillion yen (US$75 bil) in no-interest, one-year loans to companies that face cash crunches.
The Nikkei Index was up marginally by 9.49 points or 0.06% to 17,011. The KOSPI was down by 42 points or 2.5% to 1,672 points while Hong Kong’s Hang Seng Index was up 92 points or 0.4% to 23,155 points.
Nearer to home, Singapore’s Straits Times Index lost 18 points or 0.57% to 2,481 points.
Volatility appears to be the new normal following a dizzying week in which the Dow twice fell by more than 2,000 points and also recorded its biggest point gain ever – 1,985 points – on Friday (March 13).
The US bull market that began in 2009 in the depths of the financial crisis came to an end. Many stock indices last week suffered their biggest daily drop since the Black Monday crash of 1987 and some even logged their sharpest fall ever.
Brent crude lost US$3.80, or 11%, to US$30.05 per barrel in London on March 16 while the ringgit was at RM4.33 against the US dollar. – March 17, 2020
