KUALA LUMPUR (July 29): The FBM KLCI erased earlier gains and sank into the red today on concerns about the latest political developments in the country.

The benchmark index closed 2.46 points or 0.16% lower at 1,512.93 after moving between 1,511.51 and 1,520.04 throughout the day.

Areca Capital Sdn Bhd chief executive officer (CEO) Danny Wong said the market pulled back in the afternoon after Yang di-Pertuan Agong issued a statement rebuking the government.

“The market in the next few days should remain volatile as political uncertainties will continue to affect market sentiment,” he told The Edge.

The King, in his statement, said he was very disappointed that the Cabinet had decided to revoke the Emergency Ordinances promulgated during the state of emergency without receiving his consent.

Meanwhile, Hong Leong Investment Bank (HLIB) Research analyst Ng Jun Sheng said in a note today that lingering concerns over the precarious local Covid-19 situation and domestic fluid politics should see the KLCI extend its consolidation (gyrating within the 1,500 to 1,534 levels) in the near term.

“Nevertheless, we expect the index to nudge higher towards the 1,545-1,556-1,580 levels in the next few weeks, underpinned by the ongoing aggressive vaccination rates to achieve the targeted 40% and 70% goals by the end of August and September respectively, as well as the government’s optimism that most states will move into Phase 4 of the National Recovery Plan by October to November,” Ng said.

Hence, he advocated a more balanced portfolio proposition with a lean towards recovery plays, which include Malayan Banking Bhd (Maybank), Tenaga Nasional Bhd (TNB), Sunway Bhd, MR DIY Group (M) Bhd, Telekom Malaysia Bhd (TM), UWC Bhd, VS Industry Bhd, Bumi Armada Bhd, MBM Resources Bhd, Sentral REIT and Focus Point Holdings Bhd.

Overall market breadth today was negative, with 636 counters closing lower, versus 350 that rose and 398 that were unchanged.

A total of 4.48 billion shares were traded at a value of RM2.86 billion, compared with 3.65 billion shares worth RM2.16 billion yesterday.

Among the top losers were Panasonic Manufacturing Malaysia Bhd (down 64 sen or 1.96% to RM32.04), Hong Leong Financial Group Bhd (down 32 sen or 1.83% to RM17.16) and Petronas Dagangan Bhd (down 22 sen or 1.19% to RM28.28).

The top gainers were Malaysian Pacific Industries Bhd (up RM1.2 or 2.88% to RM42.82), SAM Engineering & Equipment (M) Bhd (up 43 sen or 5.45% to RM8.32) and ViTrox Corp Bhd (up 34 sen or 1.83% to RM18.90).

Euro Holdings Bhd, which saw 166.66 million shares traded, was the most actively traded stock of the day.

Most regional bourses closed higher today after the US Federal Reserve (Fed) signalled that it was in no rush to taper monetary policy support.

Japan’s Nikkei 225 finished 0.73% higher at 27,782.42, while South Korea’s KOSPI rose 0.18% to 3,242.65.

In China, shares rebounded today after Beijing calmed investor nerves over mounting regulatory risks.

The Shanghai Composite index closed 1.49% higher at 3,411.72, while Hong Kong’s Hang Seng Index added 3.3% to 26,315.32.