WITH investors rotating out of Covid-19-related counters that make gloves, personal protective equipment (PPE) and masks, big-cap conventional plays — including banking and gaming stocks — that are components of the FBM KLCI are back in the limelight.
The FBM KLCI ended at 1,597.58 points last Wednesday, up 1.2% from its close a day earlier, buoyed by the overnight record closing on Wall Street amid news that the Trump administration had agreed to start the transition process for President-elect Joe Biden to move into the White House.
FBM KLCI component stocks that saw positive overnight gains included Telekom Malaysia Bhd, which closed up 5.2% to end at RM4.84; Press Metal Aluminium Holdings Bhd, which was up 4.9% to RM6.40; and CIMB Group Holdings Bhd, which rose 3.9% to RM3.78. Interestingly, none of these stocks were among those that enjoyed extraordinary price gains due to the Covid-19 pandemic.
Pankaj C Kumar, a former director of investment at KSK Group Bhd, says the market’s initial reaction can be attributed to the news flow on the more than 90% effectiveness of the vaccine jointly developed by Pfizer Inc and BioNTech SE, as well as the Moderna vaccine.
“Investors viewed this development as a solution to the Covid-19 pandemic, hence the shift from cyclical stocks to growth and value stocks. That’s where we saw a rally in banking stocks, some consumer stocks as well as gaming stocks on the expectation that things will go back to normal in 2021,” he tells The Edge.