PETALING JAYA: The local bourse, which ended 2018 on a weak note, tumbled as much as 24.51 points or 1.45% to 1,666.07 points on the first trading day of 2019 amid weak manufacturing activity in the region.
After failing to touch the 1,700-point level on the final trading day of 2018, the KLCI saw heavy selling pressure today and closed the day 22.47 points or 1.33% lower at 1,668.11 points.
Losers led gainers by 532 to 256. A total of 1.68 billion shares were traded valued at RM951.04 million.
The key index ended 2018 by 106.23 points or 5.91% lower to 1,690.58 points, the worst performance in the recent years due to continuous sell-off by foreign funds.
Worth noting is that the stock market began 2018 on quite an optimistic note, hitting an all-time high of 1895.18 points on April 19 ahead of the May 9 general election. Nonetheless, the buying momentum had since been slowing down after the general election, which saw the former ruling coalition Barisan Nasional being swept out of Putrajaya by Pakatan Harapan’s stunning two-third win.
The first shock from the Pakatan Harapan’s win was the cancellation and review of major construction and mega projects which sent construction stock nose dive including Gamuda Bhd, Malaysian Resources Corp Bhd and MMC Corp Bhd.
Among all indices, the construction index saw the steepest decline of 50.15% last year.
Another big hit in the local scene was the leadership reshuffle in government-linked companies.
On the international front, there was the trade war between the US and China, which caused US stocks to slump, raising concerns over another financial crisis after 10 years of bull market run. Amid global market uncertainty, the KLCI fell to a low of 1,635.31 points on Dec 18.
Inter-Pacific head of Research Pong Teng Siew told SunBiz that it is most likely to see investors holding on to investments in the wake of the current weak market.
Nonetheless, he opined that there is a chance for recovery if global developments recover as the domestic market remains stable.
Kenanga Research expects the local stock market to perform well in Q1’19 as Q4 and Q1 are normally the stronger quarters in terms of market performance in contrast to Q2 and Q3.
“Chart wise, the KLCI is still supported above its long-term (since end-1998) uptrend line. It is believed that the FBMKLCI could still swing above the 1,800-psychological resistance should the uptrend support line (1,630 and rising) and the crucial 1,600-psychological support remain intact. The index is likely to trade sideways (between 1,600 and 1,900) if no major negative surprise emerges.”
The research house said foreign outflow could become more manageable going forward on the back of the potential slower pace of US interest hike.
“Moreover, as the ringgit is relatively cheap and traded near its two-decade lows against many Asian currencies, this makes Malaysian equity market increasingly more competitive. As such, market could have bottomed at 1,626.93 points following the sell-down post the recently uninspiring corporate results season along with some rating downgrades.“
