KUALA LUMPUR, Feb 9 — The 2019 novel coronavirus and the development of the United States (US)-China trade relations continued to weigh on Bursa Malaysia’s sentiments this week.
On Monday, the FBM KLCI slipped to a nine-year low as investors turned cautious while assessing the possible impact of the virus outbreak.
Foreign investors continued to exit Bursa Malaysia in the first four days of the week, although the selling tapered down to RM284.9 million from a net outflow of RM409.1 million in the same period a week earlier.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the equities market seemed to be at a crossroads, between the good numbers coming out from the US and the coronavirus outbreak.
“The phase one deal is gaining traction as China has announced that it will halve additional tariffs on US$75 billion worth of US imports,” he told Bernama.
The average participation rate for foreign institutions stood at 26.06 per cent compared with 19.45 per cent in the same period last week.
Meanwhile, local institutions recorded RM160.49 million worth of net buying during the Feb 3-6 period, compared with RM143.81 million during the Jan 28-30 period.
Moving on, Afzanizam said markets’ focus will be on the 2019 fourth quarter gross domestic product report, which will be announced on Feb 12.
“There is also talk of fiscal stimulus as the government may launch it in the face of global uncertainties brought by the coronavirus outbreak which is likely to have a material impact on China’s economy.
“As such, the equities market should trade rangebound next week,” he added.
On Friday, the FBM KLCI ended 0.11 per cent higher, or 1.72 points, to 1,554.49 from Thursday’s close of 1,552.77.
Meanwhile, Netherlands-based ABN AMRO Bank N.V expects regional growth in Asia to stabilise at 5.3 per cent in 2020, following a material slowdown in 2019.
Senior economist Arjen van Dijkhuizen said assuming a transient SARS-like shock, growth in China and emerging Asian economies would likely to be weaker in the first half of the year, particularly in the first quarter, while the second half of 2020 could be stronger.
“That said, downside risks stem from a longer duration of the coronavirus crisis which could lead to a sharper-than-expected slowdown in China, with contagion effects to the rest of the region.
“Other risks stem from a possible re-escalation of the US-China tension or new US tariffs/sanctions directed at other Asian countries and from other geopolitical risks
As of Feb 8, 722 people have died in mainland China from the coronavirus, the Chinese government said.
Meanwhile, the People’s Bank of China has cut its seven- and fourteen-day reverse repo rates by 10 basis points to 2.4 per cent and 2.55 per cent, respectively, while adding around US$175 billion of fresh liquidity into China’s banking system.
Beijing also announced various targeted fiscal measures such as tax breaks and subsidies to support corporates and households affected by the coronavirus crisis.
“We expect Beijing to frontload further monetary and fiscal easing measures, including further interest rate and reserve requirements ratio cuts,” said van Dijkhuizen.
Bursa Malaysia rose on Thursday in line with stronger Wall Street overnight performance after China said it would halve tariffs on US$75 billion of US imports. — Bernama
