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Domestic market expected to regain traction on investors' optimistic outlook
KUALA LUMPUR, Nov 5 -- The domestic equity market is expected to regain traction following investors' optimistic outlook on the pace of global market recovery and domestic economic growth, supported by various strategic projects, said Ministry of Finance (MoF).
In its Economic Outlook 2021 report released today, MoF said there has been a significant improvement in trading activities in the first nine months of 2020.
Total volume and total market value rose by 162.2 per cent to 1.27 trillion units and 90 per cent to RM749 billion, respectively.
Market velocity was sustained at 62.4 per cent, while market volatility stood at 36.3 per cent.
Foreign holdings (based on market capitalisation) in the local bourse remained stable at 12.6 per cent as at end-September 2020.
However, the total market capitalisation declined by 2.1 per cent to RM1.63 trillion as at end-September 2020.
Early this year, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) and other regional indices fell into bearish territory.
The local bourse fell below 1,600 points in the second week of January 2020 due to rising geopolitical tensions between the United States (US) and Iran.
Despite the positive news on the US and China trade deal on Jan 15, 2020, the FBM KLCI, along with major and regional bourses remained soft.
The MoF said FBM KLCI was subdued on the back of global economic uncertainties, rising geopolitical tensions, low commodity prices and the COVID-19 pandemic, which dampened investors' risk appetite.
The enforcement of the Movement Control Order (MCO) beginning March 18 led to panic selling in the equities market, resulting in the local bourse hitting a decade-low of 1,219.72 points on March 19.
Nevertheless, the subsequent relaxation of lockdown measures and gradual resumption of economic activities supported the recovery of the local bourse.
The FBM KLCI rebounded to 1,575.27 points on June 10 on the back of regional markets' optimism amidst the upward performance of the Wall Street, and the launch of various stimulus packages announced by the government to mitigate the COVID-19 pandemic’s impact on the economy.
The FBM KLCI started to decline again to 1,488.14 points on June 26 following the US Federal Reserve (Fed), International Monetary Fund (IMF) and World Bank’s statements on downside risks to global and domestic growth following mounting concerns over the second wave of COVID-19 pandemic.
However, the local bourse rose to 1,504.82 points at end-September 2020 due to investors' positive sentiment towards the government's efforts to contain the pandemic.
-- BERNAMA
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