KUALA LUMPUR (Aug 5): Malaysia's benchmark index fell as much as 4.89% on Monday, charting its worst day since March 13, 2020 during the Covid-19 pandemic, as weak July US jobs data report last Friday (Aug 2) sparked continued selling pressure in global equities.

The FBM KLCI fell to as low as 1,532.24 points, from last Friday’s close of 1,611.05, before rebounding slightly at market close to end the day at 1,536.48, still down 4.63% for its worst day in over four years, tracking bigger losses in the Asian markets.

Small-cap companies saw bigger sell-offs, with the FBM Small Cap Index down 8.25% at market close, just behind FBM ACE Index's 9.42% decline.

Regional markets were in the red, led by a 12.4% rout in the Nikkei 225, followed by South Korea's Kospi (8.77% decline), and Taiwan's Taiex Index (8.35% decline). Investors were already disposing of risk assets in the past week, following the Bank of Japan's surprise monetary tightening last Wednesday (July 31).

Among sector indices, the Bursa Malaysia Property Index led losses with a 9.74% drop to erase three months of gains from April, followed by Technology (down 9.12%), Construction (down 9%), Energy (down 8.23%), and Industrial Products and Services (down 7.75%).

All 30 KLCI constituents were in red when trading ended, with Nestlé (Malaysia) Bhd (KL:NESTLE) leading the loss (by value), dropping by RM1.50 or 1.4% to close at RM109, followed by Tenaga Nasional Bhd (KL:TENAGA), which was down 80 sen or 5.7% at RM13.16; and PPB Group Bhd (KL:PPB), which fell 60 sen or 4.1% to RM14.20.

Kuala Lumpur Kepong Bhd (KL:KLK) also fell 58 sen or 2.8% to settle at RM20.50, while YTL Power International Bhd (KL:YTLPOWR) was the biggest loser by percentage with a drop of 11.4% or 51 sen to close at RM3.98.

Financial institutions were also not spared from the sell-down. Hong Leong Bank Bhd (KL:HLBANK) fell 48 sen or 2.5% to RM18.92, CIMB Group Holdings Bhd (KL:CIMB) decreased by 39 sen or 5.3% to RM7.01, Malayan Banking Bhd (KL:MAYBANK) dropped 34 sen or 3.3% to RM9.90, AMMB Holdings Bhd (KL:AMBANK) fell 33 sen or 7.3% to RM4.22, and Hong Leong Financial Group Bhd (KL:HLFG) dropped 26 sen or 1.5% to RM17.

Public Bank Bhd (KL:PBBANK) also declined by 15 sen or 3.5% to settle at RM4.13, while RHB Bank Bhd (KL:RHBBANK) dropped nine sen or 1.6% to RM5.62.

Petroliam Nasional Bhd (Petronas)-linked stocks also bled on Monday, with Petronas Chemicals Group Bhd (KL:PCHEM) closing down 42 sen or 7.3% at RM5.32. Petronas Dagangan Bhd (KL:PETDAG) closed 36 sen or 2% lower at RM17.24 and Petronas Gas Bhd (KL:PETGAS) settled 10 sen or 0.6% lower at RM17.80.

In the broader market, there were 1,659 decliners against 83 gainers, while 131 counters traded unchanged. Bursa's total volume surged to 9.26 billion units worth RM7.97 billion.

Actively traded stocks included MyEG Services Bhd (KL:MYEG), which fell 14.5 sen or 15% to 82.5 sen; Velesto Energy Bhd (KL:VELESTO), which declined two sen or 9.3% to 19.5 sen; Pegasus Heights Bhd (KL:PHB), which was unchanged at one sen; and WCT Holdings Bhd (KL:WCT), which declined 14 sen or 12.5% to 98 sen.

Among the gainers were Cloudaron Group Bhd (KL:CLOUD), which rose six sen or 42.9% to 20 sen; ABM Fujiya Bhd (KL:AFUJIYA), which was up two sen or 6.9% at 31 sen; and DKLS Industries Bhd (KL:DKLS), which gained two sen or 1.1% to RM1.92.

Meanwhile, the decliners were Malaysian Pacific Industries Bhd (KL:MPI), which fell RM2.10 or 6% to RM32.90; Allianz Malaysia Bhd (KL:ALLIANZ), which was down RM1.76 or 8.1% at RM20.02; and Nestlé.

US economic data under close watch

Commenting on market performance, MIDF head of research Imran Yassin Md Yusof said the weak market performance was a knee-jerk reaction to resurfaced fears that the US economy is heading for a recession.

This is in tandem with global markets and follows the weaker-than-expected non-farm payroll (NFP) released last Friday, Imran told The Edge.

“We opine that the fears may be overblown at this juncture whereby NFP is still above 100,000, which denotes that the economy is still somewhat healthy. We believe that it is a knee-jerk reaction,” said Imran

Nonetheless, Imran recommended investors to exercise caution for now and adopt a wait-and-see approach until the dust settles on this current episode.

Apex Securities Bhd head of research Kenneth Leong expects uncertainties to persist, with risks including softer-than-expected key economic data in the US and slower-than-expected interest rate cut in the world's biggest economy.

“At present, consensus is guiding towards a 50-basis-point rate cut in September. A weaker-than-expected data is expected to keep volatility in place, while a better-than-expected data is expected to uplift sentiment with emerging bargain-hunting activities,” he told The Edge.

In the absence of fresh leads, Leong advocated investors to remain defensive and await clearer market direction. "Still, we deem that any further pullback will present a great opportunity for investors to bargain hunt stocks that have fallen deep below their fundamental values,” he added.

Rakuten Trade Sdn Bhd vice-president of research Thong Pak Leng believes it is time to consider a “buy on weakness” approach in view that the recent sell-off on Bursa has been excessive.

“We expect the local market to be supported at current levels, especially as GLICs (government-linked investment companies) have reduced their foreign equity holdings since early this year," Thong said. “The support for the FBM KLCI is expected at 1,530 followed by 1,500," he added.

Malacca Securities head of research Loui Low Ley Yee said that while the selling pressure is just beginning, it has presented an opportunity to scoop up decent shares, especially if dividend yields head towards 6% and 7%. However, investors have to keep watch on factors like the yen reverse carry trade and developments on the geopolitical tensions happening in the Middle East, he said.