Friday, August 26, 2011

KLCI falls 1.24% at mid-day, OSK Research hints earnings growth cut

KUALA LUMPUR: ''The FBN KLCI fell 1.24% at the mid-day break on Friday, Aug 26, in line with the tepid sentiment at most regional markets as OSK Research cautioned that its 2012 KLCI earnings growth forecast could be cut.

The FBM KLCI fell 18.20 points to 1,446.54 at 12.30pm, weighed by losses at banking and key blue chip stocks.

Losers thumped gainers by 586 to 89 while 205 counters traded unchanged. Volume was 444.42 million share valued at RM995.30 million.

The ringgit weakened 0.13% to 2.9905 versus the US dollar; crude palm oil futures for the third month delivery fell RM29 to RM2,965, crude oil slipped 15 cents per barrel to US$85.15 while gold gained US$4.10 an ounce to US$1,778.25.

OSK Research director Chris Eng in his preliminary second quarter 2011 roundup strategy report said he expects his 2012 KLCI earnings growth forecast of 12.8% to be cut in the coming days and maintain OSK Research's Neutral call on the Malaysian market.

He said with investors' attention fixed over the past 3 weeks on the volatile movements in global equity markets, the research house was swinging its focus back onto fundamentals by having an early review of Malaysian corporate results announced thus far.

'What we discover is not pretty with earnings continuing to slide and the Big Caps joining the Small Caps in both disappointments and downgrades.

'The Upgrade to Downgrade ratio has fallen further to 0.45 times with previous stalwarts in the Banking sector also experiencing earnings downgrades. As such, the fall in the KLCI that was earlier attributed purely to sentiment now appears to be gaining a fundamental basis,' he said.

Eng said investors were advised to continue focusing on defensive stocks.

On Bursa Malaysia, CIMB and RHB Capital fell 21 sen each to RM7.04 and RM8.11, Hong Leong Bank 32 sen to RM12.46, HLFG 26 sen to RM11.88, BAT 42 sen to RM44.06, KLK36 sen to RM21.12, Nestle and Bumi Armada 24 sen each to RM47.90 and RM3.56, while Batu Kawan lost 22 sen to RM15.48.

CIMB was the most actively traded counter with 35.1 million shares done. Other actives included Axiata, MUI, Bumi Armada, MRCB, AirAsia and Petronas Chemicals.

Gainers included Panasonic, Nilai, Kamdar, Sungei Bagan, MISC and CBIP.

At the regional markets, Japan's Nikkei 225 was flat at 8,772.28, Hong Kong's Hang Seng Index fell 0.21% to 19,710.07, the Shanghai Composite Index lost 0.79% to 2,594.72 and Singapore's Straits Times Index fell 0.79% to 2,743.95.

Meanwhile, Taiwan's Taiex added 0.46% to 7,445.05 and South Korea's Kospi gained 0.12% to 1,766.72.

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