KUALA LUMPUR, 14 JULY: Despite short-term volatility as political and Covid-19 troubles weigh on mood, the local bourse’s value seems attractive compared to its rivals, according to Bursa Malaysia, and will improve as the economy picks up pace on the back of improving immunization rates. The FBM KLCI has fluctuated between 1,508.71 and 1,589.05. in the last month. On July 13, it fell nearly 4%, or 62.9 points, to 1,519.56 from 1,582.46 on June 14.
In comparison, the benchmark index decreased 2.68 percent or 43.66 points in the first five months of 2021, from 1,627.21 on December 31, 2020, to 1,583.55 on May 31, 2021.
When contacted, Bursa Malaysia stated that recent political developments as well as the continued rise in Covid-19 infections have caused some weakness in the FBM KLCI, resulting in “short-term volatility.”
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The gradual reopening of the domestic and global economies should be favorable to the market as the vaccination roll-out advances and targeted nationwide herd immunity [is] attained by the fourth quarter of 2021.
In an email response to theedgemarkets.com, the local exchange regulator said, “Recovery is envisaged as firms return on pent-up demand post-pandemic, and the reopening of borders will promote consumer spending.”
Furthermore, Bursa Malaysia stated that the Malaysian stock market is well-diversified, with some publicly traded firms being less affected by Covid-19 due to strong profit gains, particularly in the healthcare, technology, plantation, and non-bank finance sectors.
“We’ve also witnessed durability in areas including technology (up 13% year-to-date), transportation and logistics (up 9%), and industrial products and services (up 5%),” it continued.
Bursa Malaysia’s forward price-earnings (ratio) of 13.3 times is now the lowest in the region, according to the bourse regulator, with other surrounding peers’ ratios ranging from 14.8 to 19.2 times.
This makes Malaysia’s market more appealing, especially if the economy improves and improvements permeate across the industry, according to the report.
“Continued efforts to digitalize our services, liberalize the regulatory framework (where applicable), and expand our products and services have enabled us to capitalize on new opportunities and encourage long-term interest in our markets,” the company stated.
Bursa Malaysia also stated that it continues to work closely with authorities to promote market efficiency and increase market accessibility and liquidity in order to assist participants during these difficult times./n
