Sell-off widens with more counters hit

KUALA LUMPUR (Jan 19): Selling waves continued hitting more small-cap counters and penny stocks on Bursa Malaysia on Thursday while some stockbroking houses are demanding upfront cash payments for a list of stocks that have been on the downward spiral.

Four stocks hit the limit down — Silver Ridge Holdings Bhd, Jentayu Sustainables Bhd (JSB), Widad Bhd and Artroniq Bhd.

Tanco Holdings Bhd also succumbed to heavy sell-off, its shares tumbled by 17.5 sen or 26.72% shortly after the opening bell.

The selling pressure on Sarawak Consolidated Industries Bhd, YNH Property Bhd and Rapid Synergy Bhd, the first batch of stocks that had been bogged down by the sell-off, appeared to have eased after Bursa Malaysia’s freeze on the lower limit share prices. The three companies' share prices were unchanged on Thursday.

Cumulatively, YNH Property sagged RM2.88 or 70.2% to RM1.22, Sarawak Consolidated Industries Bhd tumbled 65.5 sen or 55% to 53.5 sen), Rapid Synergy plunged RM21.96 or 84.72% to RM3.96.

The persistent selling has jittered market sentiment, sending the FBM ACE Market Index down 5.19% or 261.83 points — the biggest single-day drop in 18 months. The index has plunged 11.1% over the past four days to 4,785.94 points.

In contrast, Rexit Bhd hit a limit-up to RM1.20 per share in the morning session, soaring 30.4% exceeding the mandatory general offer of 85 sen per share.

Although the sell-off was mainly confined to small-cap stocks and ACE-Market listed firms, the negative sentiment has spilled across Bursa. Losers outnumbered gainers 885 to 218, while 383 counters were unchanged.

The FBM Small Cap Index (comprising Main Market companies excluding the top 100 by market capitalisation), has fallen 5.03% since Monday to 16,323.18 points, but it was down 0.18% year to date (YTD).

The benchmark FBM KLCI fell 0.81% on Thursday, but it was still up 1.69% year to date at 1,479.18 points.

Malacca Securities head of research Loui Low, however, commented that the margin calls may only have some domino effect towards small-cap companies and penny stocks whose fundamentals might not justify the share price.

"I think it may have some impact towards the big cap but at a smaller scale. I don't think the big cap counters are going to hit limit-down because they are basically quite solid in terms of their fundamentals. When there is a selling pressure, buying support will come in, bargain-hunting activities will come in," he told The Edge.

Low foresees that heavy selling pressure may persist for the next three to five trading days. "Unless another few counters hit limit-down again then it probably needs another five to seven days to settle," he added.

TA Securities head of research Kaladher Govindan concurred with the view that blue chips are unlikely selling targets. He cited that the drop in share prices of YTL Corp Bhd and YTL Power Bhd was due to profit taking given the big leap on the two stocks in 2023.

YTL Corp shed 19 sen or 8.2% to RM2.13, and YTL Power slid 5.6% or 21 sen to RM3.57. These were the biggest losers among the 30 component stocks of the FBM KLCI.

"Other factors like slower-than-expected China economic growth, hawkish data from the US and Iran's attacks on Iraq, Syria and Pakistan, and Pakistan's retaliation also affected sentiment," he told The Edge.

Kaladher noted that the current selldown may undermine market sentiment in the immediate term. However, it should not have bearing on fundamentally solid but undervalued blue chips.

"Thus, the FBM KLCI may stagnate for a while, but I am still cautiously optimistic about the local market this year," he added.

Widad Group Bhd, which is involved in construction activities and integrated facilities management services, plummeted 30 sen or 61.2% to a low of 19 sen — its lowest since 2015. Widad was the second most active stock on Bursa, with 190.34 million shares changing hands.

The company also received an unusual market activity (UMA) query from Bursa Malaysia following the sharp decline.

Telecommunication services provider Silver Ridge also fell victim to the selling pressure as its share price plunged 30% to hit its limit-down at 84 sen. It closed as the third biggest loser on Thursday.

Meanwhile, shares of JSB and Artroniq Bhd dived lower on Thursday.

JSB’s share price hit the limit down twice, falling 38.46% in two trading days from RM1.30 to 80 sen on Thursday.

Artroniq was the most traded stock on Bursa with 313.5 million shares traded, which is equivalent to nearly 77% of its issue share capital of 408 million shares.