Stocks, ringgit dive on Trump's shock win

PETALING JAYA: Donald Trump’s victory in the US presidential election jolted global as well as the Malaysian markets yesterday, with Bursa Malaysia’s FBM KLCI nosediving as much as 23.48 points or 1.41%, to 1,640.34 points at one point.
At the close, the local stock market barometer was down 16.20 points or 0.97% to 1,647.62. Overall, losers led gainers by 807 to 165. Total volume was 2.51 billion shares worth RM2.39 billion.
On the currency front, the ringgit weakened 0.94% to an intra-day low of 4.2410 against the US dollar. As at 5pm yesterday, it traded at 4.2330, Bloomberg data showed.
In view of the volatility, Bank Negara Malaysia issued a statement yesterday saying that it is closely monitoring the situation and will ensure liquidity remains ample to support an orderly market.
“The Financial Markets Committee is also in communication with its members and will ensure that all business and transaction needs are to be met by the financial markets as required,” the central bank noted.
Economists believe the weakening of the ringgit is just a knee-jerk reaction and it is expected to hover around the current level of 4.20.
“Unless there is positive news from the government, then it can push up the ringgit. At the moment, we see the ringgit will remain at the current level and it won’t fall to 4.3 or 4.4,” said AllianceDBS Research economist Manokaran Mottain.
In the worst-case scenario, RHB Research economist Peck Boon Soon expects the ringgit will weaken to only 4.3 despite having downside risk.
The market uncertainty, however, prompted investors to look for safe-haven gold, which saw its biggest rally since Brexit. Its price surged nearly 5% to US$1,337.4 per ounce.
Schroder Investment Management (Singapore) Ltd chief economist and strategist Keith Wade said the best bet is that safe-haven currencies such as the yen and Swiss franc are likely to be in demand and investors are also likely to favour gold.