M'sian market lower on election talk, global outlook

PETALING JAYA: The local bourse closed lower as continued
speculation over the date of the general election and concerns on the
global economic outlook cast a shadow on investor sentiment.
The
FBM KLCI fell in tandem with markets in the region, with plantation and
banking stocks among the top losers. The index shed 1.10% to 1,601.31
at the midday break before regaining some ground in the second session
of trade.
European markets opened lower as investors remained
cautious ahead of a ruling today by the German federal constitutional
court on the proposed European Stability Mechanism, a bailout fund.
JF Apex Securities Bhd deputy managing director Lim Teck Seng told StarBiz
that investors were now using any excuse to sell and take profit. “The
date of the elections and what may come after is what is driving the
performance of the local bourse in recent weeks,” he said.
Lim
said besides the election issue, funds were also selling due to worries
over the global economic outlook. The country's latest trade and
factory output data shows external demand remains tepid amid recession
in the eurozone and slower growth in the United States and China.
OSK
Research technical analyst Mohammad Ashraf Abu Bakar does not see the
FBM KLCI's uptrend being threatened as long as the index does not fall
below the 1,600 level.
He said it was still too early to see a
downward trend, even if the index did fall below the 1,600 level.
“It'll still need a lot of market movement before we see a trend and
there may be another decline before the market moves up again,”
Mohammad Ashraf pointed out.
However, he said there was a
correlation between the market movement now and the market movement two
months prior to the last general election held in March 2008.
“What
is different this time around is that consumer stocks are driving the
market instead of the government-linked ones. It does look like
investors are moving towards stocks with fundamentals or defensive
stocks,” Mohammad Ashraf said, adding that these stocks would be the
ones to support market performance going forward.
Meanwhile, analysts at Alliance Investment Bank Bhd
said in a research note that the rebound from the midday low was due to
supportive buying when traders realised that they needed to do
something to keep the index above the 1,600 psychological level
followed by a close above 1,611 support level “in order to avoid panic
selling.”
They said haggling in the area of the 1,611 support
level could be seen in the next few days while a downside violation of
the 1,600 level should see the market moving downward with an eye to
test the next downside target at 1,570.