KUALA LUMPUR, Jan 25 — Bursa Malaysia is likely to trend lower next week due to weak market sentiment amid concerns over the coronavirus outbreak clouds the market and Bank Negara Malaysia’s (BNM) decision to cut overnight policy rate (OPR).
A dealer said the FTSE Bursa Malaysia KLCI (FBM KLCI) was anticipated to trade at the 1,551-to-1,580 level in the near term due to suppressed upward momentum.
“The coronavirus outbreak triggered volatility in the global equities market as investors became concerned over the economic impact on the second largest economy, China.
“However, glove manufacturer stocks continued to demonstrate resilience as the number of casualties from the coronavirus outbreak increased,” he told Bernama.
Kenanga Research said after 24 days, there were 18 reported deaths and 653 known/reported cases, and the World Health Organisation was yet to declare the Wuhan pneumonia outbreak as a global emergency despite the spread of the dangerous respiratory infection from China to at least nine other countries.
The research house said the main concern was that the coronavirus resembled the SARS (severe acute respiratory syndrome) virus, which originated from the Guangdong Province and was responsible for 5,327 reported cases and 349 reported deaths in China in a span of nine months (Nov 2002 to July 2003).
“The immediate concern is that the virus may spread fast, helped by the heightened travelling activities during the Lunar New Year, as SARS did in 2003,” it said.
Meanwhile, BNM’s Monetary Policy Committee (MPC) decided on Tuesday to reduce the OPR to 2.75 per cent from 3.0 per cent as a pre-emptive measure to secure improving growth trajectory amid price stability.
While BNM cited geopolitical tensions and policy uncertainties as reasons for the rate cut, Kenanga Reseach said it could also be influenced by the growing concern on the spread of the coronavirus.
It said this was reminiscent of the SARS outbreak in 2003, when BNM decided to cut the intervention rate by as much as 50 basis points to support the economy and the government pumped in RM7.3 billion to support the tourism, retail and transport services sectors.
On a Friday-to-Friday basis, the FBM KLCI lost 23 points to 1,572.81 from 1,595.81 previously, influenced by the OPR rate cut and the virus outbreak.
On the scoreboard, the FBM Emas Index was 116.89 points lower at 11,246.66, the FBMT 100 Index declined 120.40 points to 11,032.33, the FBM ACE Index rose 115.28 points to 5,680.40, the FBM Emas Shariah Index shed 51.08 points to 11,968.14 and the FBM 70 added 12.34 points to 14,222.23.
Sector-wise, the Financial Services Index erased 315.17 points to 15,103.07, the Plantation Index was 110.68 points weaker at 7,424.75 and the Industrial Products and Services Index eased 1.93 points to 151.95.
Weekly turnover declined to 12.15 billion units worth RM9.30 billion from 13.24 billion units worth RM9.27 billion in the previous week.
Main Market volume dwindled to 7.34 billion shares worth RM8.22 billion this week from 8.67 billion shares worth RM8.23 billion.
Warrants turnover widened to 1.72 billion units worth RM294.92 million from 1.41 billion units worth RM249.92 million previously.
The ACE Market volume decreased to 3.08 billion shares worth RM790.80 million from 3.16 billion shares worth RM783.04 million in the previous week. — Bernama