Wednesday, December 1, 2010

FBM KLCI kicks off December in the red

KUALA LUMPUR: The FBM KLCI extended its losses on Wednesday, Dec 1 in line with most of the key regional markets following the overnight dip at Wall Street amidst continuing worry that Europe's troubles will spiral out of control and signs of US economic strength and equity valuations that are below long-term averages.

Even news of China's purchasing managers' index rising to a seven-month high of 55.2 in November from 54.7 in October, indicating that factories had revved up production, was overshadowed by the worries of a contagion effect from the Euro zone debt crisis.

The euro zone's troubles showed no sign of abating after Standard and Poor's put Portugal's A-minus credit ratings on review for a possible downgrade on Tuesday, citing uncertainties related to a potential financial rescue by the EU and the IMF, according to Reuters. '' On Bursa Malaysia, the FBM KLCI fell 4.47 points to 1,480.76 at 10am, weighed by losses at key blue chips including banking stocks. '' Losers edged gainers by 205 to 119, while 195 counters traded unchanged. Volume was 133.57 million shares valued at RM153.77 million.

RHB Research Institute Sdn Bhd said yesterday's selldown confirmed that the immediate resistance near the 10-day and 40-day Simple Moving Averages (SMA) will likely continue to cap the index's near-term upside potential.

In fact, the chart shows a marginal cut of the 10-day SMA to below the 40-day SMA yesterday, it said, adding that this spelt a medium-term bearish sign on the FBM KLCI's outlook going forward.

The research house said to avoid a further correction, the index needs an immediate technical rebound, even more urgently now, to above the SMAs.

'Given constant selling activities from institutional investors, we reckon the weakness on the core heavyweights will likely persist in the near term.

'A critical support now is at 1,450. Losing this level will confirm a major correction mode on the 20-month uptrend of the FBM KLCI,' it said in a note Dec 1.

Among the major losers, Maybank fell nine sen to RM8.42, CIMB, Public Bank and Gamuda lost six sen each to RM8.38, RM12.74 and RM3.63 respectively, YTL down seven sen to RM8.17, DiGi down four sen to RM24.42 and KL Kepong fell eight sen to RM20.14.

Other decliners included Goodway, Sunway City, Tasek, BAT, QSR and JCY.

The top gainer was Keck Seng that rose 33 sen to RM6.33 after its proposed corporate exercise for a one for two bonus issue that could involve the issuance of up to 119.709 million new shares.

Other gainers included Tradewinds, Hap Seng PLANTATION []s, BLD Plantations, Parkson and Supermax.

Harvest was the most actively traded counter with 13.84 million shares done. The stock added half a sen to 14.5 sen. Other actives included Mithril, JCY, Karambunai, KNM and Petronas Chemicals.

At the regional markets, the Shanghai Composite Index slipped 0.12% to 2,816.66, Singapore's Straits Times Index shed 0.07% to 3,142.35, Japan's Nikkei 225 fell 0.05% to 9,931.80 and Hong Kong's Hang Seng Index opened 0.2% lower at 22.952.81.

Meanwhile, Taiwan's Taiex jumped 1.15% to 8,469.11 and South Korea's Kospi added 0.10% to 1,906.53.

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