Trading still active despite pandemic volatility

INTERNATIONAL investors are still actively trading on Bursa despite the lingering political jitters based on the average daily traded value (ADTV) on a four-day basis from Monday to Thursday (Oct 19-22, 2020) which remained at a commendable at RM1.5 bil.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said it was worthwhile to note that the ADTV of foreign investors had stayed above the RM1 bil mark for the past 17 consecutive weeks.

However, the volatile trading throughout the week, has led international investors to dispose of RM177 mil net of total equities from Monday to Thursday, more than double the net outflow of RM86 mil recorded in the same period last week.

Adam said this brought the year-to-date foreign net outflow from Malaysia to RM22.75 bil.

“The week began with a positive mood as international investors snapped up RM101.6 mil net of local equities on Monday.

“The risk-on sentiment on Monday was mainly fuelled by (news of) China’s Gross Domestic Product which expanded 4.9% in the third quarter of 2020 from a year ago, keeping the economy on track to be the world’s only major growth engine and validating Beijing’s aggressive approach to controlling the pandemic,” he told Bernama.

Aside from that, he said, the recent spike in COVID-19 cases especially in Malaysia had led to some buying interest in healthcare-related stocks, particularly Hartalega and Top Glove which advanced by more than 3% on Oct 19.

“International funds, however, turned sellers on Tuesday at a tune of RM134.8 mil amid fears of oversupply in the oil market.

“This followed Libya’s plan to ramp up its oil production from just more than 100,000 barrels per day (bpd) in early September to around 300,000 bpd currently due to the lifting of the blockade from General Khalifa Haftar,” he added.

The governor of Libya’s central bank, Sadiq Al-Kabir, stated that it needed to raise oil production to 1.7 million bpd to compensate for current levels as the shutdown of the country’s oil production and exportation since 2013 had cost Libya around US$180 bil in losses.

Adam said that the foreign net selling continued on Wednesday at a slightly higher pace of RM162.7 mil net with rubber glove counters taking a hit.

“Top Glove and Hartalega both dropped by more than six per cent on Wednesday as investors took profit following the recent rally and fresh progress in the development of the COVID-19 vaccine.

“Therefore, it was no surprise that the Bursa Malaysia Healthcare Index led laggards with a 3.7% decline on Wednesday,” he said.

Later, on Thursday, offshore investors made a modest comeback to Bursa by acquiring RM18.9 mil net of local equities, he noted.

“This was despite US President Donald Trump’s accusation that Democrats were unwilling to craft an acceptable compromise on the stimulus package.

“It remains unclear whether stimulus negotiations would continue ahead of the US presidential and congressional elections on Nov 3,” he said.

For the week just ended, the local bourse mostly moved in the red zone influenced by Wall Street’s performance which was driven by unclear stimulus package as well as due to the rising political unease and global resurgence of COVID-19 cases.

On next week’s forecast, Adam said the foreign net outflow was expected to persist in light of the uncertainty on Malaysia’s political front and also external pressures such as the upcoming US presidential election.

Among major developments hogging the limelight during the past week were a possible Cabinet reshuffle and a potential declaration of state of emergency ahead of the Budget 2021 announcement.

On the corporate front, the Malaysia Aviation Group has offered an early retirement plan to employees aged 45 and above who have served the company continuously for a minimum of 10 years, including years of serving in the Malaysia Airlines group. – Oct 24, 2020

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