KUALA LUMPUR, May 25 — The market barometer FBM KLCI today staged a rebound after 12 days of decline when it closed 21.7 points higher  at 1,797 points.

There were 506 counters up and 397 down, with the value of shares traded valued at RM2.9 billion.

The market had been on a downward spiral post-GE14 after BN was defeated by Pakatan Harapan (PH).

Foreign investors sold some RM2.48 billion of their holdings in Malaysian shares after GE14, causing the market to nosedive.

This was exacerbated by heightened geopolitical risks, namely the aborted US- North Korea summit  which saw funds exiting emerging markets.

The continuing strength of the greenback also contributed to funds leaving emerging markets including Malaysia.

“I think sentiments are in the process of stabilising, foreign selling is approaching its tail end and local funds have dominated the market,” Pong Teng Siew, head of research at Inter Pacific Securities, told Malay Mail.

The market was also jolted by the announcement by Prime Minister Tun Dr. Mahathir Mohamad and Finance Minister Lim Guan Eng that Malaysia’s debt has breached the RM1 trillion mark.

The previous administration had declared that the government’s debt was only around RM680 billion, with the new revelation spooking the market further.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the market gyrations were only to be expected as there was a change of government post-GE14 and investors were jittery when it came to their investments.

“There have been multiple factors affecting the market. Renewed concerns on geopolitics in the North Korea as well as in Middle East have caused market participants to stay light and prefer to hold more cash-like instruments as they’ve become increasingly risk averse. Meanwhile, anxiety over the state of government indebtedness following the revelation by MoF also caused markets to be wary,” he told Malay Mail..

All said, the reassurance by MoF that it will honour the debt obligation should ease such concerns.

Additionally, the MoF has also acknowledged that the Malaysian economy is in good health and there is plenty of liquidity as well as the presence of a robust banking system.

“This will set the stage for continued economic growth as it will improve the confidence among the Malaysians. Furthermore, the pursuit of institutional reforms and the fight against corruption should promise a better outlook going forward. In the meantime, financial markets would remain edgy, at least in the first 100 days as market participants are awaiting for more policy announcements and we believe the markets will normalise once the dust has settled,” added Afzanizam.

Among the active stocks today were Bursa Malaysia which rose 26 sen to close at RM7.84. Air Asia declined by 1 sen to close at RM3.22 in heavy trade. Maybank was unchanged at RM10.26 while CIMB inched up by 7 sen to close at RM6.12.