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Malaysian equities market cap hits RM2 trillion, FBM KLCI at more than two-year-high

Malaysian equities market cap hits RM2 trillion, FBM KLCI at more than two-year-high

Bursa Malaysia's main index broke the 1,600 points today as market capitalisation of the local stocks breezed past the RM2 trillion mark for the first time in history.

Analysts said the local bourse was fuelled by optimism that the US Federal Reserve's planned rate cuts will come sooner than later this year.

The benchmark FBM KLCI breached the 1,600 points at opening and was up 4.28 points to 1,601.67 at 9.44am from yesterday's close of 1,597.39, before settling nearly 12 points to 1,609.36 at midday.

The index ended the day at 1,605.68, its highest close since April 8, 2022,  from Monday's close of 1,597.39. Turnover expanded to 5.42 billion units worth RM3.79 billion compared to 4.48 billion units worth RM3.12 billion on Monday.

SPI Asset Management managing director Stephen Innes highlighted the global optimism among traders and investors, fuelled by heightened expectations of the US Federal Reserve (Fed) rate cuts. 

He noted that the recent less-hawkish Fed narrative had injected fresh life into the rate cut narrative.

"As market participants digested the news that rate hikes were off the table, global stock markets began to appear more attractively priced, and low valuations in Malaysia look increasingly more so, driving capital inflows which are adding to the bounce.

"Additionally, support for the property sector in China is contributing to this year's commodity boom, which is benefiting Malaysia's key tertiary sectors," Innes told Business Times. 

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the expectations of the Fed rate cuts still looks feasible especially after the US jobs report last Friday.

Afzanizam said this saw the non-farm payroll (NFP) come in lower than market expectation. 

"Additionally, the US corporate earnings have been resillient with more companies reported above consensus estimates in the first quarter result," he said. 

Afzanizam said banking, energy, consumer and plantation stocks were the main drivers for higher FBM KLCI. 

Generally, he said the price earning (PE) multiples for the FBM KLCI is trading around 15 times which is lower than its average level of 17 times. 

"Hence, the potential upside is quite visible should the PE revert to its mean level which could push the FBM KLCI to around 1,680 to 1,700 points. 

"Also, foreign investors have been net buyers for several days, suggesting buying interest is building for local equities," he added. 

Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the FBM KLCI finished higher for the fourth consecutive day, with buying observed across the board. 

Thong remains optimistic about the local bourse' outlook, supported by appealing valuations and ongoing foreign investment, alhough he acknowledged the potential for profit-taking. 

"We believe that if the benchmark index is able to stay above the 1,600 level over an extended period, there will be further upside potential. 

"As such, we raise our weekly FBM KLCI target to 1,600-1,620, with immediate resistance at 1,620 and support at 1,600, followed by 1,570," he said.

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