Bursa Malaysia lags while global stock markets rally

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PETALING JAYA: An economist says the movement control order and declaration of emergency have affected the performance of the stock exchange.

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Universiti Tun Abdul Razak’s Barjoyai Bardai said that in the past month, the stock exchanges of New York, Hong Kong, Japan, Singapore, Australia, Indonesia and Thailand had been on an upward trend.

He attributed this upward trend to the rolling out of Covid-19 vaccines around the world and confirmation of the US presidential election results in Joe Biden’s favour.

“Bursa Malaysia, however, has been in an adverse trend reflected by the poor market sentiment and investor confidence.”

In the past year, he said, Bursa Malaysia had been gaining strength and performed the best in the region in 2020, but the volume of activity had declined especially in the past month.

“The MCO and emergency have affected market sentiments resulting in many short-term investors either taking their money elsewhere or adopting a wait-and-see approach.”

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The Bursa-FTSE composite index closed at 1,594.80 yesterday, down 6.74 points.

However, Barjoyai said the market rally was short term and in the longer run, issues such as profit expectation and policy clarity would affect Bursa’s performance.

“Once we have a better idea when the MCO and the emergency will end, and better clarity on policies, then we can see investors having greater confidence in the market.”

Another economist, Lee Heng Guie, said the drop in the volume of trade in January was due to several factors including the MCO 2.0, emergency, the lifting of restricted short selling and concerns that the MCO would dent corporate earnings projections.

“Last year, glove stocks had a good run but this year, with the vaccines set to be deployed, the absence of automatic loan moratoriums, and also the reduced incremental retail liquidity has led to less retail investor participation,” said Lee, the Socio-Economic Research Centre executive director.

“The current situation is likely to continue for the next one to two months,” he said, adding investor confidence was likely to improve once there was greater clarity on the Covid-19 situation as well as the MCO and emergency.- FMT

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