The rotational play and buoyant mood continued on Bursa Malaysia as investors reacted to selected positive earnings results and traders swapped sectors from construction back to technology and healthcare.
Ahead of a short trading week next week for the Hari Raya holidays, some caution has entered the market although the appetite for trading remained.
Plantation stocks, which had been slumbering for months, stirred on Tuesday and cheered slightly on the back of India resuming purchases of Malaysian palm oil. This ends the diplomatic row between the two countries.
Meanwhile, the healthcare and rubber glove stocks, which had taken a breather in the last two days, once again attracted interest, perhaps taking its lead from Pharmaniaga Bhd which recorded strong first-quarter results.
The stock was up in early trade yesterday, and with it, the other healthcare stocks started moving on anticipation of similar results for other health-related companies.
Trading volumes on Bursa have reduced though, with some 6.73 billion shares done on value of RM3.64bil yesterday. Trading volumes were at a record of 11.2 billion on Monday. The FBM KLCI closed 11 points higher at 1,435.
“For now, the mood for trading is still there. Investors are looking for ideas, ” said Rakuten vice-president of Equity Research Vincent Lau.
He expects the market to trade in a range-bound fashion as there is still no clear signal on the economy’s direction.
“We all know the economy is expected to contract. However, the market, which looks ahead, is acting very differently.”
Lau said the actions of central banks worldwide to defend against the global economic recession could be one of the reasons why markets continue to rally.
Most central banks are compelled to maintain low or even negative interest rates for the mid term.
“Governments are also increasing their fiscal stimulus packages, and while the results and consequences of these measures are uncertain, it is giving the markets a boost.
“My advice would be to hold off on the trading stocks, as the musical chairs will end. Use this time instead to buy good stocks to keep, ” said Lau.
Moody’s Singapore said the Covid-19 outbreak would be a powerful catalyst for an accelerated migration to digital processes and services by both consumers and businesses.
“The pandemic is accelerating a shift away from shareholder primacy towards addressing multiple stakeholders such as clients, employees and the wider society, and driving an acceptance of a stronger social aspect to corporate strategy, ” it added.
Schroders, in its note on sustainable companies and how they fare during the Covid-19 crisis, believed that companies who treat their stakeholders fairly would see better share price performance than those who did not.
“Companies who treat their stakeholders fairly now may find themselves better placed to face the post-crisis future, ” it added.