Bursa records steepest fall since 2008

PETALING JAYA: The local stock exchange was battered, along with global stock markets, following an overnight plunge on Wall Street.

Bursa Malaysia’s benchmark FBM KLCI closed 74.68 points or 5.26% lower at 1,344.75, representing the stock exchange’s biggest decline in over a decade, since the subprime mortgage crisis of 2008. It was only during the Asian financial crisis more than 20 years ago that swings of such a large magnitude were last seen.

The plunge on Wall Street had come after the World Health Organisation (WHO) declared the Covid-19 outbreak a pandemic, resulting in panic selling as investors feared the possibility of an impending recession. This was following an earlier plunge on Thursday, when the highly-anticipated economic stimulus package announcement by US President Donald Trump appeared to fall short of investors’ expectations.

Nerves were frayed after the world’s largest market and index – the Dow Jones Industrial Average, sank 10% while the broader S&P 500 fell a smidgen less – the steepest daily falls since 1987.

That set off a wave of selling in Asia which saw heavyweight markets crushed under the uncertainty and falls on Wall Street. Japan’s market fell to its lowest since 2013.According to an analyst, a combination of the plunge on Wall Street, fears about the Covid-19 outbreak, as well as the recent crash in crude oil prices have spooked investors. With no one knowing what to expect, the sell-off on Bursa Malaysia and in the region ensued.

Losers outnumbered gainers but at a smaller ratio than in the past few days, aided by the fact the market clawed back from a near 100-point drop during the trading day.

Rakuten Trade Sdn Bhd vice-president of research Vincent Lau told The Star that the steep decline in the local market was expected, given the overnight plunge on Wall Street.

He added that Bursa Malaysia was not as badly hit as some of the other markets in the region.

“Investors are unwilling to take risks due to the escalation of the Covid-19 outbreak, and are taking a wait-and-see approach, ” he said.

Looking ahead to next week, he said much depended on whether there is any improvement on Wall Street in the next trading session.

“We believe there will still be volatility in the markets next week, as there is still a lot of uncertainty among investors, especially relating to the potential impact of Covid-19 on the economy, here in Malaysia and globally as well, ” he said.

On Thursday, China, where the outbreak of Covid-19 originated, said the peak of the current outbreak in the country was over.

Elsewhere, including in Malaysia, the number of cases continues to rise. - Star