Thursday, February 10, 2011

KLCI skids more than 2pct, wipes out gains for the year

KUALA LUMPUR: The FBM KLCI's year-to-date (YTD) gains were wiped out on Thursday, Feb 10 after it fell more than 2%, the biggest single day loss since November 2008, in tandem with most key regional markets.

European markets fell as disappointing corporate earnings weighed on global stock markets on Thursday, pushing major indexes lower, while shifting interest rate expectations lifted the dollar and put Britain's pound on edge, according to Reuters.

Investors were also cautious about a Bank of England meeting later in the day, wary in case it makes its first move to tighten policy since the start of the financial crisis, it said.

The FBM KLCI was the worst performer among the key regional markets as the YTD gains of the markets in Hong Kong, Taiwan, South Korea and Singapore were also erased in frenzy of selling, while the Shanghai Composite Index rebounded after having slipped on Wednesday following an interest rate hike in China.

The FBM KLCI fell 2.09% or 32.08 points to 1,503.99, the steepest fall since it lost 2.11% on Nov 6, 2008. YTD, the FBM KLCI lost 0.98%. Losers thumped gainers by 750 to 160, while 223 counters traded unchanged. Volume was 2.23 billion shares valued at RM3.13 billion.

Hong Kong's Hang Seng Index fell 1.97% to 22,708.62, Taiwan's Taiex lost 1.89% to 8,836.56, South Korea's Kospi fell 1.81% to 2,008.50 and Singapore's Straits Times Index lost 1.5% to 3,103.39.

However, the Shanghai Composite Index rose 1.59% to 2,818.16 and Australia's S&P/ASX 200 Index added 0.20% to 4,914.40

MIDF Research head Zulkifli Hamzah said the weakness in the market partly reflected apprehension over China's inflation data due out next week.

He said MIDF Research expects the number to be more than 5%, which was why the decision by the authority there to increase interest rate on Tuesday was a preemptive move with the possibility of more hikes to come.

'The local market was practically dragged by banking and PLANTATION [] sectors. Banking stocks suffered given heightened fears that Bank Negara may raise statutory reserve ratio instead of the OPR, although we believe the risk is overplayed.

'There was profit taking on plantation stocks as CPO price traded at a premium to soyoil lately, which is an unsustainable phenomenon. These concerns are transient in nature. We expect investment sentiment to rebound,' he said.'' Banking stocks weighed down on the 30-stock index, with profit taking also erasing gains at key blue chips.

On Bursa Malaysia, banking stocks were among the major losers with AMMB down 27 sen to RM6.18, Maybank 22 sen to RM8.56, CIMB 19 sen to RM8.18, RHB Capital 12 sen to RM8.27, Public Bank eight sen to RM13.06, Hong Leong Financial Group seven sen to RM8.83 and Hong Leong Bank down two sen to RM9.23.

Other blue chips that fell included IOI Corporation that fell 22 sen to RM5.56, Axiata 14 sen to RM4.99, Tenaga 20 sen to RM5.95, Petronas Chemicals 29 sen to RM5.96, Genting 18 sen to RM10.22 and Sime Darby eight sen to RM9.30.

Iris Corp was the most active with 75.96 million shares done. The stock was unchanged at 21.5 sen. Other actives included SAAG, Karambunai, Talam, Ho Wah Genting and KUB.

MTD Cap rose 42 sen to RM10.94 after the takeover offer was raised from RM9.50 to RM11. Nestle added 52 sen to RM45.90 and F&N rose 20 sen to RM15.70.

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