Asian, M'sian bourses get respite from Trump's victory

Bursa Malaysia got a reprieve late today as investors digest the results of the US Presidential election which saw Republican candidate, Donald Trump, win the most powerful chair in the world.

Despite the positive opening this morning supported by the overnight gains on Wall Street, Asian stocks retreated into negative territory thereafter.

In tandem with the downtrend in global bourses, the local equity market closed in the red with the Composite Index (CI) falling 16.2 points or 0.97 per cent to 1,647.62.

The CI touched an intraday low of 1,640.34, down 23.48 points, earlier.

Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew said despite the decline, the losses in Bursa were relatively thin compared to its regional peers, thanks to the high domination of local fund managers in the market.

"It (selling pressure) will continue....most of other markets dropped between two and three per cent (but) Bursa dropped less than that as our exposure to foreign fund is less compared to the others," he told Bernama.

Malaysia's exposure of foreign funds in the equity market was between 20 and 25 per cent.

Regionally, Japan's Nikkei 225 plunged 5.36 per cent to 16,251.54, Hong Kong's Hang Seng fell 2.47 per cent to 22,343.04, and Singapore's Straits Times erased 1.07 per cent to 2,790.09.

Pong believed the pressure would continue in the medium-term, especially in Asia as Trump was often seen as not being in favour of the region, particularly China.

Trump has been quoted as saying he would impose a 45 per cent tariff on Chinese imports and to label the country as a currency manipulator.

However, in his victory speech, the 49th US President did not touch on America's foreign policies except saying that he aimed to double the country's growth.

Etiqa Insurance and Takaful Bhd Head of Research Chris Eng said as the votes for Trump gained momentum during the trading session, the selling pressure continued to dominate the environment.

Eng pointed out that the possible death of the Trans-Pacific Partnership (TPP) trade deal that consists of 12 countries including the US and Malaysia, was among the reasons global markets took a blood bath.

"Trump already said he won't sign the TPP, I think that probably will happen. So, we are not going to get the benefits from the agreement," he said.

When contacted, an official with the Ministry of International Trade and Industry said the ministry had no plan to issue any statement on it so far.

Besides this, Trump's unfavourable policies towards the equity market and planned to close America's economic borders to global trade had somewhat pushed global sentiment to the weaker side, Eng said.

Nevertheless, he expected global bourses to rebound in the next two to three days as investors slowly factored in the situation in their equity strategy going forward.

"We have to wait until the US market stabilises, and when that happens, then there will be a rebound.

"Of course, it will not take you to the earlier level, but there will still be a significant rebound," he said, adding now is the best time for investors to put 'buy-on-weakness' position.

However, he said the selldown in the local bourse would not break the CI's 1,600 psychological level.

On trade with Malaysia, MIDF Amanah Investment Bank Bhd Chief Economist Dr Kamarudin Mohd Nor said although Trump's fight on terrorism and immigration could cause a negative impact on Muslim nations, he did not foresee the implications between Putrajaya and Washington.

In a nutshell, the outcome and impact of the election was something not only Malaysia but the whole world have to wait and see, he said.

Meanwhile, HSBC Global Research, in a note, said the 'clean sweep' by Trump was not predicted in voter preference polls, and his proposed economic and trade policies, if enacted, would represent a sharp departure from the status quo.

These include sharp cuts in income and business taxes, renegotiation of key trade agreements and potential tariffs on goods imported from China and Mexico, and the large-scale deportation of illegal immigrants.

"In our view, the full implementation of Trump's policy proposals would increase the volatility of aggregate economic activity, with potential repercussions for the volatility of financial markets as well, and lead to tighter monetary policy," it added. -- BERNAMA