Bursa posts largest YTD on-month drop in listed firms’ market cap

INVE$T | Market Sentiments

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According to Bursa Malaysia’s research arm Bursa Digital Research, the total market capitalisation (market cap) of companies listed on the bourse was lower at RM1.648 trillion as at end June 2022 compared to RM1.774 trillion a month earlier amid lingering concerns on a potential recession in the US and global monetary policy tightening or interest rate hikes to fight inflation. At RM1.648 trillion as at end June 2022, Bursa-listed companies’ market cap had fallen RM126 billion from RM1.774 trillion a month earlier to post the largest year-to-date (YTD) on-month drop in Bursa-listed firms’ market cap so far in 2022. Fear over recession in the US market and tightening monetary policy continued to linger over market sentiment. In June, trading on the local bourse was weaker as monthly ADV  (average daily traded value) moderated to RM1.9 billion (May: RM2.39 billion). Trading momentum was lowered across all investor segments, with the largest decline in the foreign ADV. Local institutions became net buyers of local equities in June 2022 after selling for the past five months. In June, local institutional inflow (into local equities) amounted to +658 million. Meanwhile, foreign investors were net sellers of local equities with a net outflow of RM1.28 billion in June 2022. However, they remained as net purchasers up to June (2022) with +RM6.08 billion. Research data shows that so far in 2022, Bursa-listed companies’ market cap had fallen on-month in January, March, May and June. In January 2022, the figure fell RM58 billion from a month earlier while the March figure dropped RM11 billion. In May, Bursa-listed companies’ market cap was down RM52 billion from a month earlier. At the bourse’s 12:30pm break on Tuesday, its share price settled down one sen or 0.16% at RM6.24 with 41,600 shares traded. At RM6.24, Bursa has a market cap of about RM5.05 billion based on the group’s 809.3 million outstanding shares. Bursa has scheduled to release its financial results for the second quarter ended June 30, 2022 on July 28, 2022. 

Budget 2023 to focus on sustainable subsidies, boosting country’s resilience – Tengku Zafrul 

According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, Budget 2023 will focus on a more sustainable subsidy management, strengthening the country’s resilience against future shocks and fiscal consolidation. This is in view of increasing inflationary pressures, especially on commodity and food prices. Budget 2023 will take into consideration sustainability-related initiatives as the world grapples with challenges involving geopolitical uncertainties and climate change. This was in a written parliamentary reply to Datuk Seri Saifuddin Nasution Ismail (PH-Kulim-Bandar Bharu), who wanted to know how the policies, strategies and approach in drafting Budget 2023 differ from past budgets. He continued that economic reform efforts will also be given priority to enhance business competitiveness and the value chain. In line with the post-Covid-19 economic recovery momentum, Budget 2023 will also continue to focus on the people’s well-being agenda, especially in terms of income and social protection. The inclusivity agenda, in line with the Shared Prosperity Vision 2030’s objectives, will be emphasised as well, to ensure a fair and equitable wealth distribution. Throughout the Budget 2023 preparation process, the government is committed to holding stakeholder engagement sessions especially to gain public views and feedback in line with the priorities set. The theme of Budget 2023 is “Strengthening Recovery, Facilitating Reforms Towards Sustainable Socio-Economic Resilience of Keluarga Malaysia”. 

Petrochemical industry to see faster growth – MPA 

According to the Malaysian Petrochemicals Association (MPA) president Akbar Md Thayoob, the country’s petrochemical industry is poised to grow at a faster rate in future, considering petrochemical is an important element for the world to move towards energy efficiency and net zero emission. The industry is expected to record an average compound annual growth rate of 5% to 6%, which is higher than the country’s gross domestic product (GDP), despite numerous external economic uncertainties like the Russia-Ukraine conflict. Petrochemicals will always be growing at above the GDP rate and some industries will be growing much faster than the others but on average, overall, it is an important growth engine for the country. He was speaking at the press conference on the upcoming Oil and Gas Asia 2022 conference. While noting that petrochemicals offer solutions that many are not familiar with, he dismissed the notion that the industry is on a downcycle and reiterated that it is stabilising after the Covid-19 pandemic. However, there is a lot of uncertainty still, moving forward. The cycle in today’s era is no longer the same as the last time, where every 10 years, you see a very clear trend. Now, there are blips in between and it’s no longer like before, where one can simply say that we are riding up. He observed that the petrochemical industry in Malaysia is also moving from commodities-based towards specialties, with many companies also going into merger and acquisitions to accelerate the acquisition of knowledge and capability towards offering the kind of solutions they can bring to the market. Citing Petronas’ downstream unit, Petronas Chemical Bhd, which recently purchased Swedish company Perstorp Holdining AB, he said this is very important for the state oil company to leapfrog and acquire such capability and bring that over throughout the region and replicate it. 

Eye On The Markets 

This week, on Friday (22July), the Ringgit opened at 4.4530 against the USD from 4.4460 on Monday (18July). Meanwhile, the Ringgit was 3.2016 to the Sing Dollar on Friday (22July). On Monday (18July), the FBM KLCI opened at 1420.89 As at Friday (22July) 10:00am, the FBM KLCI is up 33.08 points for the week at 1453.97. Over in US, the overnight Dow Jones Industrial Average closed up 162.06 points (+0.51%) to 32,036.90 whilst the NASDAQ added 161.96 points (+1.36%) to 12,059.61. 

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