Malaysia market wrap: Shares rise most in 2 weeks, ringgit gains

Malaysia market wrap: Shares rise most in 2 weeks, ringgit gains

KUALA LUMPUR (NewsRise) — Malaysian shares rose Monday, with the benchmark index advancing to its highest level in two weeks, as a weaker-than-expected U.S. jobs report lowered chances of a near-term interest rate increase by the U.S. Federal Reserve and boosted sentiment for risk assets globally.

     The ringgit gained for the first time in three sessions, rising 0.68%. The currency fell 0.57% last week and has dropped in the last 7 out of 8 weeks. So far this year, it has slumped 25.3% driven by slump in oil prices and political uncertainty.

     The World Bank in its latest East Asia and Pacific Economic Update said Malaysia’s economic growth is expected to moderate from 6% in 2014 to 4.7% in 2015 and 2016. Growth will improve to 5% in 2017 amid a pickup in exports, it said.

     Banks and plantation stocks led gains on the nation’s benchmark FTSE Bursa Malaysia KLCI, which ended 1.15% up at 1647.59 points, its highest since September 21. 25 of 30 constituent in the index ended higher, while overall advancing issues outnumbered declining ones 601 to 236, and 1006 closed unchanged.

     “Global equities saw a shift move higher following the release (of the U.S. jobs report), but the effect is likely to be transient as the market is still gearing up for a rate hike taking place in the near to medium term,” said Jingyi Pan, Research Analyst at financial analysis firm FORECAST.

     U.S. non-farm payrolls added 142,000 jobs in September, far lower than market consensus of 201,000 jobs addition.

     The Federal Reserve is scheduled to review its monetary policy on October 27-28 and again on December 15-16.

     Southeast Asian stock markets closed higher, led by 3.23% gain in Indonesia’s Jakarta Stock Exchange Composite Index. Singapore’s Strait Times Index and Philippine’s PSE Composite Index climbed 2.08% and 1.62% respectively. Thailand’s SET Index rose 1.22%.

     Broader Asian stocks too edged higher. Japan’s Nikkei 225 and Hong Kong’s Hang Seng rose 1.58% and 1.62% respectively. South Korea’s Kospi gained 0.44% and Taiwan’s TWSE climbed 0.57%.

     Chinese markets are shut till October 7.

     Banking stocks, the highest weighted sector in the index, rose. Malayan Banking and Public Bank, the two highest weighted stocks in the index, rose 1.78% to 8.60 ringgit and 2.13% to 18.18 ringgit respectively. Both stocks had fallen by more than 6% in the previous quarter.

     Axiata Group, Malaysia’ largest mobile operator by market value, rose by 2.93% to 5.97 ringgit. The company’s unit, edotco, is acquiring a 75% stake in Digicel Myanmar Tower for an enterprise valuation for $221 million.

     Maybank Investment Bank analyst Chi Wei Tan said in a note that the proposed acquisition gives Axiata a belated exposure into an underpenetrated Myanmar telco market. He has a buy rating on the stock with a target price of 6.70 ringgit.

     Crude palm oil (CPO) for December delivery rose 47 ringgit to 2,434 ringgit per ton. Sime Darby, Kuala Lumpur Kepong climbed 0.87% to 8.12 ringgit and 0.62% to 22.64 ringgit respectively.

     “Plantation could be a dark horse in our view. While the upside of CPO could be limited by lower crude oil prices, the weak ringgit and coupled with higher probability of El Nino occurrence, CPO prices could perform better than expected in the coming month,” said Chan Ken Yew, Head Research at Kenanga Investment Bank.

     The KLCI plantation index rose by 0.32%.

     Infrastructure conglomerate YTL Corporation, the worst performing stock in the KLCI, fell 3.14% to 1.54 ringgit.

     Foreign funds sold net 598.7 million ringgit shares ($135.1million) in the open market in the previous week, compared to $294.1 million outflow the week before, according to a MIDF Research report.

     The net aggregate foreign fund outflow from other regional economies (Thailand, Philippines, and Indonesia) slowed to $208.8 last week from $466.8 million the previous week, the report said.

     Malaysia’s foreign reserves data for September and trade balance data for August are due for release on Wednesday.

Malaysia market wrap: Shares rise most in 2 weeks, ringgit gains