KUALA LUMPUR, Oct 26 — Consumer-related stocks are expected to be under pressure as purchasing power has been capped due to the current hike in Covid-19 cases.
An analyst said a similar situation was seen during the early phase of the movement control order in March and April where retail statistics showed a muted trend over the duration.
“Even though the economic sector is open this time round, people are urged to stay home. And for certain states and areas, the state lines are closed for travel.
“This has led to a decline in demand for all consumer products across the board while the tourism sector, that is just about to reopen, has to deal with another wave (of Covid-19) in their operations,” she said.
On the FBM KLCI, she said the market is now on a jittery mode as economies globally continue to struggle in containing Covid-19, coupled with the local political scenario.
“Investors that are hoping that the vaccine will be available soon will have to recalibrate their outlook as scientists increasingly warn of a long and difficult road ahead,” she said.
She added that the benchmark index, which was on the track to rebound from last year’s negative performance driven by the skyrocketing demand of glove counters, has somehow fallen below the relative strength index of 50, indicating an oversold position.
“The weaken fundamentals have led the KLCI to slip below the 1,600 benchmark to between 1,480 and 1,500. With the current economic situation and absence of foreign and weak retail investors’ participation; it is forecast that the index will be placed at around 1,510 by year-end,” she said.
— Bernama
