November 1, 2021

Budget 2022 Pushes KLCI Index Down 20 Points

 The presentation of Budget 2022 affected a 20-point decline in the FBM KLCI on Monday after investors took note of the implementation of special one-time tax relief on companies with annual income tax reports in excess of RM100 million.

The latest index recorded a decline of 25 points or 1.6% to the level of 1,537.3.

According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz in a presentation on the implementation of special one -time tax relief on Friday, the government imposed income tax of 24% on companies receiving RM100 million in annual income tax reports and the taxable surplus balance will be 33% tax. income.

He added that the implementation of the special one-time tax relief due to the Covid-19 pandemic introduced is important for the government to generate revenue and further ensure that the country's health system can continue in the future.

On Monday, analysts TA Securities Holding Bhd in its note got a bearish signal based on several trend indicators and technical momentum following the KLCI price correction last week.

According to TA Securities, the introduction of a one -time tax relief of 33% on corporate profits exceeding RM100 million in Budget 2022 will invite negative reactions in the market and cause an automatic decline in the blue chip index correction that will fall in Monday trading before stabilizing.

He added that it will however provide a better opportunity for investors who want to buy at a low value and want returns in the long run.

Meanwhile, Hong Leong Investment Bank Bhd analyst Ng Jun Sheng wrote on Monday on the decline in the KLCI's technical reading that the special one -time tax relief introduced and coupled with risky sentiment will cause the KLCI to automatically sell out this week.

Ng continued, the downside risk of the KLCI is likely to be stabilized by the Covid-19 vaccination rate which will lead to the reopening of more aggressive economic sectors and higher commodity prices.