By Lawrence Yong
Malaysian stocks stayed volatile in a thinly traded market for a second day on Thursday as an election watch pushed many investors to the sidelines. Benchmark FBM KLCI shot up 15 points to 1,700 levels in early morning trade before losing steam and eased back to 1,689 levels by mid morning.
Traders said that weaker U.S. economic data outlook and regional markets may put a drag on any attempt to rally the Malaysian stocks market.
“In normal conditions the volatility would attract more trading interest, yes, but because of election uncertainty, most traders are sidelined,” one head of research at a local bank said.
“I suspect the same few people may be buying and selling.”
Despite the volatility, only about 200 million shares were exchanged. Similar to Tuesday’s trend, the KLCI index tested a new 11 week high but did not see sustained buying. The market which reached 1,692 levels on Tuesday, hit a day’s peak of 1,700 levels.
Over the last two trading days, since Prime Minister Najib Abdul Razak dissolved parliament for the 13th General Elections, the market has traded in a wide 65 point range, which was unusual, analysts said.
Except for some buying from local funds in the last two weeks, the market had previously mostly traded within 1,620-1,650 range since mid January, they said.
A technical analyst from Alliance Research said that there were less selling seen in the last week. The net selling position from 29 March to 3 April was about 41 percent of what was liquidated from 18 March to 28 March.
This may mean that many investors may have already started to take their money off the market in anticipation of the elections which Najib had hinted at since January. The 13-party Barisan Nasional coalition has ruled Malaysia for 56 years since independence from the British in 1957. In 2008, the opposition succeeded in denying the BN a two thirds majority in parliament and many now expect a similarly fierce battle to ensue.
According to analysts reports, the KLCI (then KLSE) had suffered two major down cycles during the 2008 elections when the political landscape was seen somewhat shifted.
The index fell 368 points from January to March 2008 (1,525 to 1,157 level) and again fell 504 points over six months from April to October (1,305 to 801 level) due to post election uncertainty.
You must be logged in to post a comment.