July 5, 2021

Phase Two Transition of VAT Investor Relief

 Bursa Malaysia opened slightly higher this morning with market sentiment looking better after five states in the country moved into Phase Two of the National Recovery Plan (VAT).

At 9.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) index rose 0.24 points to 1,533.59 from 1,533.35 at last Friday's close.

Bernama reported that the key index opened 0.69 points higher at 1,534.04.

On the broader market, gainers outpaced losers by 192 to 169 while 299 counters were unchanged, 1,513 untraded and nine others suspended.

Turnover was 286.43 million units worth RM124.17 billion.

On Saturday, the National Security Council announced that Kelantan, Pahang, Perak, Terengganu and Perlis have met the three VAT prerequisites and will move to Phase Two today.

Senior Minister (Security), Datuk Seri Ismail Sabri Yaakob and Finance Minister, Tengku Datuk Seri Zafrul Abdul Aziz said, the five states have managed to reduce the number of cases, have better capacity in ICU wards and have increased the percentage of population who are vaccinated according to the threshold rate set under VAT.

However, Malacca Securities said the rise of the FBM KLCI may be limited as investors continue to be cautious as the daily COVID-19 case is still above the 6,000 level.

Meanwhile, investors will monitor Bank Negara Malaysia's interest rate results this week for their direction in the stock market.

"As for commodities, the price of commodity crude palm oil increased for the fourth day in a row. The oil and gas sector is likely to be the main focus as Brent oil prices have strengthened to around US $ 76 a barrel, ”Malacca Securities said in a research note today.

In addition, the firm thinks the technology sector will also benefit from the rise on the Nasdaq.

“Given that we are still in a movement control mood with five states moving into phase two of VAT, we may monitor plastic packaging stocks amid higher demand for plastic consumption,” he explained.

Petronas Chemicals heavyweights rose two sen to RM8.09, TNB rose three sen to RM9.76, Press Metal added four sen to RM4.82, Maybank, IHH Healthcare were flat at RM8.11 and RM5.61 respectively, while Public Bank declined one sen to RM4.10 and CIMB declined two sen to RM4.62.

For active stocks, Serba Dinamik rose three sen to 41.5 sen, NWP Holdings rose one sen to 22.5 sen, Pasukhas was 3.5 sen higher at 32 sen, Sarawak Consolidated and KPower jumped 4.5 sen to 85.5 sen and 96.5 sen respectively.

On the index board, the FBM Emas Index rose 4.52 points to 11,165.43, the FBMT 100 Index added 2.55 points to 10,875.97, and the FBM Emas Syariah Index expanded 12.47 points to 12,188.58.

Meanwhile, FBM ACE was down 0.66 points to 7,210.55, but FBM 70 was up 6.52 points at 14,456.85.

By sector, the Financial Services Index fell 11.38 points to 15,116.07, the Industrial Products and Services Index rose 0.55 points higher at 187.48, and the Plantation Index added 0.82 points to 6,416.64.