Stocks tumble, ringgit slides ahead of lockdown

KUALA LUMPUR: Stocks tumbled and the ringgit weakened after the government’s announcement of a two-week nationwide lockdown from tomorrow to curb a relentless surge in Covid-19 infections.

The FTSE Bursa Malaysia KLCI Index slumped as much as 1.6% this morning, the most since March 31. The ringgit dropped 0.3% to 4.1455 per dollar, the biggest decline in Asia. Ten-year bond yield held steady at 3.23%.

Malaysia’s return to a hard lockdown comes in the wake of record daily infections that saw cases top 9,000 on Saturday.

A resurgence in virus outbreaks in Asia has spurred some countries including Vietnam and Singapore to tighten restrictions. A similar lockdown in Malaysia last year cost the country an estimated RM63 billion ringgit.

“The government is finally biting the bullet,” said Alexander Chia, an analyst at RHB Investment Bank Bhd. “Clearly, there are downside risks to FY21 earnings growth, even if it is essentially a postponement of growth to FY22.”

The Malaysian stock benchmark is down 6.5% from a December high as investor concerns about the impact of stricter curbs on movement weigh on riskier assets. — Free Malaysia Today