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PETALING JAYA: The sharp drop in the FBM KLCI just before the market close yesterday could be due to investors realigning their portfolio ahead of the upcoming changes to the index components and the MSCI Malaysia index, according to fund managers.
The benchmark FBM KLCI index closed 44.88 points lower at 1,562.71 points after it plunged in the last hour of trading with a volume increase of approximately 50%.
“The drop in the FBM KLCI yesterday is likely to be driven by the rebalancing of MSCI as well as the upcoming reorganization in the components of FBM KLCI. Some funds were selling their positions from the recent stock market rally and holding cash to make new positions for 2021, ”a fund manager told StarBiz.
A remisier said that some funds were making adjustments with the rebalancing of MSCI and the value of the shares traded jumped from RM4.99bil to RM7.67bil at 4.45pm yesterday.
Those who declined the most were Petronas Dagangan Bhd
, Public Bank Bhd, Tenaga Nasional Bhd, Petronas Chemicals Group Bhd and Malaysian banking Bhd.
Meanwhile, top winners include Supermax Corp Bhd, Petronas Gas Bhd and Fraser & Neave Holdings Bhd. “Supermax is likely to be added to the KLCI constituents, while KLCC Property Holdings Bhd could be removed from the 30-component index,” a fund manager said.
In August, it was reported that Supermax and Kossan Rubber Industries Bhd they were established to aggregate as components of the MSCI global standard indexes.
“The market fell 44 points as some funds shortened key stocks to ensure they were not caught in futures. Yesterday was the last day of the month for the settlement of futures, ”said a remisier.
Rakuten Trade Sdn Bhd Research Vice President Vincent Lau (pictured below) told StarBiz that the drop in the KLCI could be due to profit-taking activity and funds adjusting their portfolio for next year.
“The market should improve in December, and our goal is for the KLCI to close above 1,600 points by the end of the year. The topic will be about the economic recovery driven by the 2021 Budget and depending on the news about vaccines, “he said.
Areca Capital Sdn Bhd CEO Danny Wong Teck Meng has an optimistic view on the local stock market, especially with uncertainties such as the 2021 budget and the US presidential elections. “Moving forward, the theme for 2021 will be economic recovery and positive vaccine news. There will be an adjustment in the portfolio of funds in December and we are seeing that the stocks that are substitutes for the economy are back in favor, “he said.
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