According to the news report by Bloomberg, the Malaysian stock market has been performing tremendously well. This is due to the up-coming presidential elections as well as the fact that the Malaysian Ringgit has been growing stronger.
Last year in December, the country’s benchmark stock index, the FTSE Bursa Malaysia KLCI chalked up its biggest gains since 2012. This upswing in the Malaysian stock market did not stop with the end of 2017. The first week of January 2018 has also started with more gains. The FTSE Bursa gained some more by going up 1.2% last week.
This week, the Nasdaq reported, the Malaysian stock market has climbed for three straight trading days. The FTSE Bursa gained more than 35 points and went up by 1.9%. The Kuala Lumpur Composite Index – KLCI – also rose again on Monday’s trading.
According to the CEO of Areca Capital, Danny Wong, the reason for this euphoria is the expectation that the companies linked to the government are going to do well from the elections.
Companies that are linked to the government have performed well. Axiata stocks jumped up by 4.21%. Sime Darby Bhd. shot up by 3.6%. YTL Corp went up by 2.99% and Genting Malaysia gained 2.65%. CIMB group rose by 2.29%, while Astro Malaysia Holdings went up by 1.12%. UMW Holdings Bhd. as well as Felda Global Ventures Bhd. gained more than 11% each last week. Tenaga Nasional went up by 0.13%.
Stock prices of IHH Healthcare dropped by 1.36%. Petronas Chemicals lost 0.49% and RHB Capital also lost about 0.38%. Telekom Malaysia also dropped by 0.17%.
The Malaysian elections are due to be held in August this year. Historical data shows that the stock market in Malaysia starts to boom in the year before elections, as investors start putting their money into government-linked companies. In the year before the November 1999 elections, there were as much as 49% gains recorded by some of the government-linked companies. In the last elections, held in 2013, stocks gained by 6.5%.
Malaysia also recorded the highest inflows of foreign currencies in South Asia last week. Foreign investors were buying up huge numbers of Malaysian shares.
Another factor that impacted the rise of the FTSE Bursa is the fact that the Ringgit broke through the psychological barrier of 4 Ringgit to the US Dollar for the first time since August 2016.
According to the New Straits Times, stocks related to oil and gas also did well thanks to an improvement in oil prices after the number of US rigs drilling for oil reduced. According to a dealer, the Brent crude prices were at $67.77 per barrel, which was up 0.2% from the futures’ last close.
Wall Street also impacted the Asian and specifically, the Malaysian markets after it started the year on such a spectacular note.
In terms of market sectors in the country, the Finance Index jumped up 154.19 points to touch 17,240.47. That was not the only index to rise. The Malaysian Industrial Index also rose by 44.13 points to touch 3,436.31. The Plantation Index also gained by 89.63 points to end at 8,094.39.
The global forecast regarding the Asian markets is very positive and the jobs data from the US which was not as strong as expected is not impacting the growth in these markets.
The European Markets and the US Markets also climbed higher on Friday. The Asian markets did not disappoint by opening high on Monday.
Overall, the Asian markets are looking strong as foreign currency is pouring into these markets right now.