Bursa Malaysia opens higher after Fed rate Cut

Bursa Malaysia's benchmark index began marginally higher, despite a lower Wall Street performance overnight as the US Federal Reserve cut interest rates by half a point.

At 9.23 a.m., the FTSE Bursa Malaysia KLCI (FBM KLCI) was up 0.88 point to 1,661.47 from Wednesday's closing of 1,660.59. The benchmark index opened 2.68 points higher, at 1,663.27.

The unexpected rate cut by the Federal Reserve sent ripples through global markets, with investors carefully assessing its implications. While the move was intended to bolster economic growth, it also raised questions about the underlying health of the US economy. Asian markets, including Bursa Malaysia, showed a mixed response as traders weighed the potential benefits of lower borrowing costs against concerns of economic uncertainty.

In the broader market, gainers outnumbered losers 300 to 174, with 288 counters unchanged, 1,743 untraded, and 10 suspended. Turnover totaled 413.73 million shares, valued RM233.90 million. On Wednesday, the Fed reduced interest rates by 50 basis points, the first and largest decrease since March 2020, when Covid-19 plagued the economy.

We believe this could raise concerns about a potential recession, or at the very least, that the Fed predicts weaker economic data in the future, resulting in such a substantial rate drop, Malacca Securities Sdn Bhd said in a research note today.

The rate cut decision has sparked debates among economists and market analysts. Some view it as a proactive measure to prevent economic slowdown, while others interpret it as a sign of growing vulnerabilities in the US economy. The move has also put pressure on other central banks to reassess their monetary policies, potentially leading to a wave of rate cuts globally.

The firm expects the market to shift its focus to REITs as interest rates are slashed. A stronger ringgit could also boost local industries such as consumer goods, utilities, finance, and automobiles.

Malacca Securities also expressed optimism about the building and property sectors, citing continuing data center developments and the developing impetus from the Johor-Singapore Special Economic Zone.

The Johor-Singapore Special Economic Zone has been gaining significant attention from investors and businesses alike. This cross-border initiative aims to leverage the strengths of both regions, fostering economic growth and creating new opportunities. The project is expected to attract substantial foreign direct investment, potentially transforming the economic landscape of southern Malaysia and boosting various sectors, including real estate, logistics, and technology.

Maybank gained two sen to RM10.70, CIMB added one sen to RM8.34, IHH Healthcare rose seven sen to RM7.18, Hong Leong Bank grew 14 sen to RM21.34, Public Bank remained steady at RM4.71, TNB fell six sen to RM14.68, and Petronas Chemicals relaxed one sen to RM5.51.

Among the active counters, ACE market debutant Solar District Cooling jumped 14.5 sen to 52.5 sen, Cape EMS increased half-a-sen to 37 sen, Leong Hup increased 2.5 sen to 68.5 sen, Capital A gained four sen to 82 sen, Luster Industries and PUC were flat at 6.5 sen and four sen, respectively, while AHB eased half-a-sen to 4.5 sen.

The strong performance of Solar District Cooling on its debut reflects growing investor interest in sustainable energy solutions. As Malaysia continues to push for greener technologies and reduce its carbon footprint, companies in the renewable energy sector are likely to see increased attention from both retail and institutional investors. This trend aligns with global shifts towards more environmentally friendly practices and could signal a broader transformation in Malaysia's energy landscape.

On the index board, the FBM Emas Index rose 20.94 points to 12,424.92, the FBM Emas Shariah Index gained 19.21 points to 12,277.85, and the FBMT 100 Index rose 17.99 points to 12,133.79. The FBM 70 Index rose 69.12 points to 17,637.08, while the FBM ACE Index increased 4.23 points to 5,091.04.

The Financial Services Index rose 43.32 points to 19,703.41, the Plantation Index fell 12.09 points to 7,152.11, the Industrial Products and Services Index rose 0.64 point to 176.72, and the Energy Index rose 2.96 points to 865.23.