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Inter-Pacific Research: Rise in government bond yield, the weakness in ringgit and the Fitch negative rating resulted in the weaker performance of the Malaysian market.
Monday August 19, 2013 MYT 6:31:21 PM
BY JOSEPH CHIN, NADYA NGUI
KUALA LUMPUR: Malaysian equities closed lower on Monday in very volatile trade, tracking the weaker regional markets, while volume surged past the three billion units traded and the ringgit weakened to the lowest since June 2010.
At 5pm, the FBM KLCI was down 9.88 points or 0.55% to 1,778.36. Turnover was 3.16 billion shares valued at RM2.44bil. The broader market weakened to see decliners beating advancers 515 to 339 while 279 counters were unchanged.
Reuters reported rising expectations the Federal Reserve will soon scale back its stimulus drove German and US bond yields to multi-month highs on Monday and dealt a blow to emerging markets, with India's rupee cartwheeling to historic lows.
It reported Wednesday's minutes from the last Fed meeting could offer hints on when the U.S. central bank will taper its bond-buying and up-to-date sentiment indicators will help track momentum in the reviving euro zone.
Inter-Pacific Research Sdn Bhd research head Pong Teng Siew said rise in government bond yield, the weakeness in ringgit and the Fitch negative rating resulted in the weaker performance of the Malaysian market.
He said it was a rather serious drop across the region where Indonesia and India are experiencing a balance of payment problem.
"Indonesia spooked the market as foreign investors are afraid Malaysia might go down the same path.
"This negative data has been chipping away investors confidence and they are withdrawing," he told StarBiz, adding that he was concerned that the ringgit would weaken further. The ringgit was at 3.2872 against the US dollar from the previous day's 3.2770.
The Indian rupee slid as far as 62.50 per dollar, emphatically breaching the previous low of 62.03. The share market lost 1.4%, on top of a 4% drubbing last Friday.
Reports said Indonesia's rupiah shed 0.9% to four-year lows at 10,475 per dollar, with share and bond markets weakening in the wake of data showing a sharp widening in the country's current account deficit. The Jakarta Composite fell 5.58% to 4,313.52.
The weakening ringgit weighed on banking stocks on Bursa Malaysia. CIMB fell 14 sen to RM7.90 and erased 2.43 points off the KLCI. Hong Leong Bank and HLFG fell 18 sen each to RM14.18 and RM14.50 while RHB Cap was down 14 sen to RM7.91 but Public Bank gained six sen to RM17.30.
Genting Malaysia fell nine sen to RM4.21 and wiped out 0.95 of a point from the KLCI.
BAT fell the most, down 48 sen to RM62. Petronas Dagangan lost 32 sen to RM27.98 and Lafarge 18 sen to RM10.
Crude palm oil futures for third month delivery rose RM23 to RM2,332. Kluang rose 20 sen to RM3.50 and KL Kepong 14 sen to RM21.34. However, PPB lost 30 sen to RM14.36 and Genting Plantations 15 sen to RM9.53. However,
MAS was the most active with the largest trading volume ever of 744.25 million units done. It rose 3.5 sen to 36.5 but off the day's best of 40 sen.
Among the key regional markets:
Japan's Nikkei 225 rose 0.79% to 13,758.13;
Hong Kong's Hang Seng Index fell 0.24% to 22,463.70;
Shanghai's Composite Index rose 0.83% to 2,085.60;
Taiwan's Taiex fell 0.31% to 7,900.21;
South Korea's Kospi fell 0.13% to 1,917.64 and
Singapore's Straits Times Index fell 0.76% to 3,173.33.
US light crude oil fell 21 cents to US$107.25 but Brent rose 13 cents to US$110.53.