Bursa, ringgit firm up on budget measures
KUALA LUMPUR: Bursa Malaysia and the ringgit strengthened yesterday, reflecting investors' warm response to the government's committment to reduce fiscal deficit under the 2014 Budget.
At the close yesterday, the ringgit firmed up as much as 1.1 per cent to RM3.1 to the US dollar, its highest since June.
The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index gained 0.82 points, or 0.05 per cent, to settle at 1,818.39.
Analysts said profit-taking had an upper hand in the broader market on the first trading day after the budget announcement last Friday.
"The 2014 Budget took the limelight and gave trading cues to investors," JF Apex Securities Bhd said in a research note yesterday.
The absence of sin tax in the budget surprised investors and lifted sin and gaming stocks, the firm added.
"On the flip side, a slew of property cooling measures had dented investors' interest in property counters and resulted in a selldown of most stocks in the sector," JF Apex said.
The government moved to alleviate concerns over its fast-rising debt, announcing a goods and services tax at a higher-than-expected six per cent, abolishing subsidies on sugar and raising property taxes to stem a surge in home prices.
Analysts said the budget also prompted some capital inflows.
"The goods and services tax is seen as a fiscally responsible move and this will enhance the investment appeal of Malaysia," Bloomberg quoted Nick Verdi, a foreign-exchange strategist at Barclays Plc in Singapore, as saying.
"The budget was taken pretty favourably by markets," Verdi added.