COVID-19 economic consequences are compounded with the implementation of Movement Control Order (MCO) since March 18. With the unprecedented quarantining of huge subsets of the population, the disruption in economic activity is expected.
The full negative impact of the MCO has been reflected in the nation’s GDP growth.
Malaysia’s GDP contracted by 17.1% in the second quarter of 2020 (2Q20); the worst contraction since 1998.
With such great disruption, the market is expected to react vigorously to it.
As a result, Bursa KLCI dip to its lowest point of 1,219 one day after the MCO. It was the lowest point to Bursa Malaysia for the last 10 years since subprime mortgage crisis.
Additionally, the Employee Provident Fund (EPF), being one of the largest players in the market is also left to feel the burn. The company holds more than RM800 billion capital.
According to EPF annual report for year 2018, EPF invested 72.9% of its capital in the local market.
With such huge capital, every movement of EPF will certainly shake the local market.