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M'sian, regional markets retreat over global economy concern

Publication Date : 06-09-2012


The Malaysian stock market and its regional peers dived into a sea of red in the face of renewed concerns over the instability of the global economy.

The FTSE Bursa Malaysia KLCI (FBM KLCI) yesterday retreated 13.01 points, or 0.79 per cent - its steepest decline in recent weeks - to close at 1,641.01.

Pulling down the markets were heavyweights like IOI Corp Bhd, which fell 15 sen to 5.04 ringgit (US$1.62); CIMB Group Holdings Bhd, which fell eight sen to 7.74 ringgit; PPB Group, which fell 58 sen to 13.28 ringgit; and PETRONAS Chemicals Group Bhd, which fell 11 sen to 6.38 ringgit.

Overall, the volume traded was moderate, with 1.35 billion shares worth 17 billion ringgit changing hands in trades that saw losers overwhelming gainers by 669 to 156, while 285 counters were unchanged.

Local analysts pointed out that the Malaysian stock market was dampened by regional weakness, following Moody's Investor Service's recent downgrade of its outlook for the European Union's economy to negative, and the release of weaker-than-expected economic data from the United States and China. They said eyes were now on how policymakers of major economies would respond to the gloominess to prop up the situation.

“Traders were withholding their buying spree, while waiting for clearer indications from the European Central Bank (ECB) and the US Federal Reserve on measures that could be taken to tackle slowing growth,” BIMB Research technical analyst Ng Keat Yung said in his report.

Ng, however, was of the view that the longer term outlook for the Malaysian market remained positive.

The ECB is set to meet tomorrow to decide on a monetary policy for the heavily indebted 17-nation euro area. Of particular focus is the region's central bank's take on a bond-buying proposal that could play a crucial in ensuring the survival of the single currency, euro.

According to TA Research, buying momentum on index heavyweights could dwindle pending a clearer market direction after the conclusion of ECB policy meeting on Thursday.

“The macro outlook is still very murky; and for this week, there's a lot of pending decisions in major economies to take shape, so investors are waiting for that,” TA Research's head Kaladher Govindan told StarBiz. “The same factors are affecting the region's market performance,” he said.

Hong Kong's Hang Seng Index was down 284.84 points, or 1.47 per cent, to 19,145.07, while Singapore's Straits Times Index fell 15.65 points, or 0.52 per cent, to 2,995.90. Shanghai's A share index was down 5.97 points, or 0.29 per cent, to 2,037.68, while Japan's Nikkei fell 95.69 points, or 1.09 per cent, to 8,679.82 and South Korea's Kospi fell 33.10 points, or 1.74 per cent, to 1,874.03.

Meanwhile, the US payroll data, which is scheduled for release tomorrow, is expected to show lacklustre growth.

Already, recent data had shown that the US manufacturing conditions had deteriorated, with the Institute for Supply Management's factor index falling to 49.6 from 49.8 in July, which had dampened outlook for the world's largest economy.

Adding to the gloom was the performance of China's economy, which had been showing increasing signs of deterioration.

Its official manufacturing purchasing managers index (PMI) in August fell to 49.2 from 50.1 in the preceding month, while a separate PMI by HSBC Holdings Plc and Markit Economics showed a decline to 47.6 from 49.3 in July.

Local analysts remain hopeful that the upcoming Budget 2013, which will be tabled by the end of this month, could provide some fresh catalysts to the Malaysian stock market.

(US$1 = 3.11 ringgit)


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