Bursa Malaysia slides ahead of earnings season

[MALAYSIA] Bursa Malaysia, the country's key stock market, has experienced a notable slide as it heads into the next corporate earnings season. On February 18, 2025, the benchmark FBM KLCI index dropped by 2.54 points to 1,580.22, marking a period of investor caution as they await fresh earnings reports from major corporations. This decline follows a rally, and with Wall Street closed for the President's Day holiday, the market lacked immediate leads, leaving many investors in a wait-and-see mode.

"As we enter into a fresh earnings period over the next two weeks, investors may wait for the results before committing themselves," Rakuten Trade noted in its morning commentary. This sentiment reflects the uncertainty in the market as investors remain cautious, hoping that upcoming earnings reports will provide clearer insights into the financial health of Corporate Malaysia.

What to Expect from Earnings Reports

Investors are looking towards the corporate earnings reports due in the coming weeks, with the expectation of robust growth. Rakuten Trade forecasts a 16.9% improvement in earnings for the fourth quarter of 2024 (4Q24), signaling a positive outlook for the Malaysian economy. The firm suggested that the relatively muted performance of the market in recent days could present opportunities for bargain hunting, with the index expected to hover within the 1,580-1,590 range.

In this context, the earnings period is expected to offer a clearer picture of the country's financial stability and potential growth in the face of global economic challenges. The anticipation of these results is likely to influence the market’s movements, as investors weigh the prospects of both local and international factors impacting their decisions.

Factors Impacting Bursa Malaysia’s Performance

Several external and internal factors are contributing to Bursa Malaysia’s current performance. Internationally, global markets are looking to developments such as peace talks between the United States and Russia regarding the ongoing war in Ukraine. This event, scheduled to take place in Saudi Arabia, has the potential to influence global investor sentiment.

In addition, major global retailers and tech companies, including Walmart and Alibaba, are set to announce their earnings in the coming week, which could also impact global market sentiment. These developments are likely to play a significant role in shaping the outlook for Bursa Malaysia as investors monitor both local and international news.

Locally, Bursa Malaysia’s blue-chip stocks are also showing mixed performance. For instance, Maybank, one of the largest companies listed on the exchange, dropped eight sen to RM10.48, while Genting fell five sen to RM3.86, and Nestle lost 10 sen to RM91.02. PETRONAS Chemicals also saw a decline, shedding four sen to RM3.97, and QL Resources slipped by four sen to RM4.67.

Despite these losses, there have been gains in certain sectors. For example, Techstore, a company providing IT security and automation solutions, rose six sen to 26 sen on its trading debut. This highlights the potential for specific sectors or companies to outperform amid broader market trends.

The Outlook for Bursa Malaysia

Looking forward, analysts remain cautiously optimistic about Bursa Malaysia’s future performance. While the market faces some short-term challenges, the expected positive earnings growth could provide a much-needed boost. As corporate results roll in, investors are likely to gain a better understanding of how businesses are adapting to economic conditions both locally and globally.

As Malacca Securities Research pointed out, global events, including the peace talks between the US and Russia and earnings results from key global companies, will provide important leads for market participants. This means that while Bursa Malaysia may be experiencing a temporary slump, the upcoming earnings season could prove pivotal in determining the market’s trajectory.

Bursa Malaysia's current slide ahead of the corporate earnings season is a reflection of investor caution as they await fresh data to guide their decisions. With expectations for positive earnings growth in 4Q24 and the influence of global developments, there is a sense of cautious optimism for the near future. Investors are advised to stay informed and monitor the upcoming earnings reports closely, as these will provide valuable insights into the health of Corporate Malaysia and broader market trends.