Bursa Malaysia sees worse plunge since March 2020

Bursa Malaysia has suffered its worst drop in four years, attributed to fears of a US recession that have sent investors rushing away from risk.– The Malaysian Insight file pic, August 5, 2024.

BURSA Malaysia suffered a major drop today, charting its worst day since March 13, 2020 during the Covid-19 pandemic.

The FBM KLCI fell to as low as 1,532.24 points from last Friday’s close of 1,611.05 before rebounding slightly at market close to end the day at 1,536.48, still down 4.63%, reported The Edge Daily.

The plunge has been attributed to fears of a US recession that have sent investors rushing away from risk.

The weak July US jobs data report last Friday also sparked continued selling pressure in global equities.

Regional markets were in the red, led by a 12.4% rout in the Nikkei 225, followed by South Korea’s Kospi (8.77% decline), and Taiwan’s Taiex Index (8.35% decline). Investors were already disposing of risk assets in the past week, following the Bank of Japan’s surprise monetary tightening on Wednesday.

Meanwhile, The Edge also quoted Malaysian Industrial Development Finance Bhd head of research Imran Yassin Md Yusof as saying the weak market performance was a knee-jerk reaction to resurfaced fears that the US economy was heading for a recession.

This is in tandem with global markets and follows the weaker-than-expected non-farm payroll (NFP) released last Friday, Imran said.

“We opine that the fears may be overblown at this juncture whereby NFP is still above 100,000, which denotes that the economy is still somewhat healthy. We believe that it is a knee-jerk reaction,” said Imran

Imran also advised investors to exercise caution for now and adopt a wait-and-see approach until the dust settled on this current episode.

On a positive note, the ringgit has strengthened to RM4.42 against the US dollar, its highest since the first quarter of 2023. – August 5, 2024.