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Author: kltrader   |   Latest post: Wed, 27 May 2020, 10:00 AM


Bear Market for FBM KLCI Amid Growing COVID-19 Cases

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Malaysia has been placed on a partial lockdown starting today to 31 March 2020. With more cases reported at an alarming rate each day, the Malaysian government stressed that they would ensure the implementation of the 2020 economic stimulus package as announced previously, with additional measures to mitigate the impact of the COVID-19 (The Edge Markets, 16 March). Yesterday, the local benchmark index FBM KLCI fell for the fourth consecutive day, losing another 1.9% to close at 1,256.58 points.

Huge spike of COVID-19 cases linked to mass religious gathering

Yesterday, the Health Minister announced another 120 people were infected by the COVID-19, adding to the total number of confirmed cases of 673 as of Tuesday (17 March), the highest in Southeast Asia. More than half of the country’s 673 confirmed cases were linked to an event that ran from 27 Feb to 1 March, attended by approximately 16,000 people at a mosque in Sri Petaling, Kuala Lumpur. Neighboring countries Singapore and Brunei have also reported cases that could be traced back to the gathering (The Edge Markets, 17 March).



The sudden spike began on Sunday as the number of cases surged by 80%, resulting in the government to hold a special meeting with Islamic leaders. They agreed to call off all activities at mosques for 10 days, after which they sought the approval of the Yang di-Pertuan Agong - Wikipedia before announcing the decision the following day.

Late on Monday, the Malaysia’s Prime Minister (PM) Tan Sri Muhyiddin Yassin announced sweeping bans on large gatherings, on incoming visitors and for Malaysians to travel overseas, as well as widespread closures of shops, schools, some public services and all places of worships – except for mosques and prayer houses known as surau, which must follow the Sunday agreement of Islamic leaders, according to the same The Edge Markets article.

Malaysia’s economic stimulus package with additional measures

Before the announcement of a 2-week partial lockdown, PM Muhyiddin Yassin said that the Malaysian government will ensure the implementation of the 2020 economic stimulus package as announced previously, with additional measures to relieve the impact of the COVID-19 pandemic.

Muhyiddin also pledged to continue all projects under Malaysia’s Budget 2020 to improve investor confidence. He said these projects include the East Coast Rail Link (ECRL), Mass Rapid Transit Line 2 (MRT 2) and the National Fiberisation and Connectivity Plan (NFCP).

Additionally, there is a nationwide electricity discount of 2% for industrial, commercial and domestic users. This is in addition to the 15% discount for hotels, aviation companies and exhibition malls under the stimulus package. Meanwhile, employees with a monthly pay of below RM4,000/month that are currently on unpaid leave will be given a new monetary assistance scheme worth RM600/month for up to six months.

FBM KLCI extends decline for fourth straight day

Despite announcements on the additional measures on the economic stimulus, investors continued to worry about the Malaysian overall economy being impacted by COVID-19, sending the local benchmark index FBM KLCI falling another 1.9% on Tuesday to finish at 1,256.58 points, extending its four-day losing streak. Month-to-date, the FBM KLCI has plunged 15.2%.

Source: Macquarie Research - 18 Mar 2020

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