Thursday, September 22, 2011

KLCI down 1% at mid-morning

KUALA LUMPUR: A confluence of bad news drove the FBM KLCI back into negative territory on Thursday, Sept 22, in line with the slump at regional markets following the steep overnight fall at Wall Street.

Asian stocks fell as investors took fright at a warning from the Federal Reserve that the United States faced a grim economic outlook with "significant downside risks", according to Reuters.

Investors were further spooked after the International Monetary Fund lowered the 2011 and 2012 global real GDP growth forecasts to 4% from the previous forecasts of 4.3% and 4.5% made in July 2011.

With no real domestic catalyst in sight, the FBM KLCI fell 14.12 points to 1,404.92 at mid-morning, weighed by losses at key blue chips.

Losers thumped gainers by 330 to 52, while 133 counters traded unchanged. Volume was 111.35 million shares valued at RM185.88 million.

At the regional markets, Japan's Nikkei 225 fell 1.63% to 8,598.32, Hong Kong's Hang Seng Index lost 2.99% to 18,262.01, the Shanghai Composite Index shed 0.65% to 2,496.52, Taiwan's Taiex fell 2.39% to 7,355.67, South Korea's Kospi lost 2.36% to 1,810.53 and Singapore's Straits Times Index was down 1.30% to 2,755.40.

BIMB Securities Research in a note Sept 22 said it was another classic case of investors expecting too much too soon.

Though the Feds announcements of Operation Twist was just what investors had expected, most were disappointed with the absence of 'extra' pleasant surprises, it said.

'In addition, investors mood were made even more moody when Moody's downgraded Citigroup, Wells Fargo and Bank of America,' it said.

As such, the Dow Jones Industrial Average was dumped by 284 points, it said.

'Today, we anticipate performance of the regional markets to be affected by the decline in the US and we expect the same for local bourse as well.

'Though we saw some buying support at the 1,400 level, we remain sceptical that this could hold for any longer. Once the 1,400 is broken, the next support level is seen at 1,380,' it said.

Meanwhile, Affin Investment Bank Bhd in a strategy note Sept 22 said that with the rise in risk aversion, a defensive investment strategy is only prudent.

The research house it favoured value stocks with good balance sheets, strong cash flows and high dividend yields.

'Our preferred sectors (those with better earnings visibility and less vulnerable to pricing pressure) are consumer staple, gaming, rubber gloves and domestic demand driven companies like CONSTRUCTION [] and oil and gas.

'We are negative on highly cyclical sectors such as full service airlines, shipping and export-oriented manufacturers (namely TECHNOLOGY [] companies),' it said.

Among the losers, the Hong Leong Bank rights entitlement issue that started trading today fell 41 sen to RM1.54 while Hong Leong Bank shares fell 30 sen to RM10.30.

Petronas Dagangan lost 38 sen to RM16.54, Nestle 30 sen to RM49.20, Genting 28 sen to RM9.02, Boustead and Petronas Chemicals 15 sen each to RM4.94 and RM5.66, while IJM Corp fell 14 sen to RM5.05.

Petronas Chemicals was also the most actively traded counter with 5.37 million shares done.

Other actives included Dutaland, Kurnia Asia, AirAsia, MRCB, UEM Land, Jotech and Timecom.

Meanwhile, gainers included Aeon Credit, Kretam, Samudra, Can-One, Yee Lee, and Luxchem.

No comments:

Post a Comment