Tuesday, June 22, 2010

Investors hesitant on yuan reforms plan

KUALA LUMPUR: Profit taking activities at most key regional markets on Tuesday, June 22 reversed some of Monday's gains as investors turned hesitant about the promised reforms of China's yuan.

The initial euphoria fizzled out with renewed worries that the European debt crisis issues could linger on, as well as on less optimism that the said yuan reforms would be something implemented in the short term.

Nikkei 225 -1.05% 10,130.74 Kospi - 0.62% 1,728.89 Straits Times Index - 0.15% 2,881.24 Hang Seng Index +0.08% 20,928.04 Shanghai Composite +0.30% 2,593.98 ''

At Bursa Malaysia, the FBM KLCI lost 6.87 points at the midday break to 1,328.42, dragged by losses including at DiGi, Tenaga, PPB and Hong Leong Bank. Gainers trailed losers by 177 to 364, while 214 counters traded unchanged. Volume was 359.73 million shares valued at RM461.10 million.

Macquarie Research in a note June 22 said in its view, fears of a renewed global cyclical downturn were overdone.

"In the coming months, we would expect to see the market focus return to inflation risks across Asia in 2011.'' An impressively prudent approach by regional policymakers means we do not expect a significant inflation overshoot," it said.

The research house also said fiscal tightening across Europe and exchange rate weakness were two potential problems for Asian growth.

"However, most economies in the region are facing the need to take measures to slow demand as a result of the normalisation of activity seen over the past 18 months, so a moderate drag from Europe does not imply significant peril," said Macquarie Research.

At Bursa Malaysia, among the major losers, BAT lost'' 92 sen to RM43.40, DiGi 32 sen to RM23.13, Tenaga and PPB down 14 sen each to RM8.45 and RM16.42, while Hong Leong Bank fell 10 sen to RM8.62.

Other decliners Maybank, CIMB, Public Bank, TM, Axiata, Tan Chong and LPI Capital.

KFCH was the top gainer and added 30 sen to RM9.10, while Bintulu Port, Far East Corp, Amway and Measat rose 10 sen each to RM6.40, RM6.80, RM7.75 and RM3.13, respectively. Other gainers included C.I. Holdings, KKB Engineering and Glenealy PLANTATION []s.




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