FBM KLCI closes in the red but stays above 1,560-level

KUALA LUMPUR: The FBM KLCI closed in the red on Monday, June 27 but managed to stay above the 1,560-point level in line with analysts’ expectation of some window dressing activities that would help prop the index up in the final trading week of the month.

Regional markets mostly closed lower ahead of a Greek vote on unpopular fiscal austerity measures this week that may see doubts re-emerging about financial stability in Europe.

The FBM KLCI closed 0.14% or 2.14 points lower at 1,562.52, weighed by losses including at Genting, Tenaga, DiGi and IOI Corp.

Losers beat gainers by 433 to 263, while 313 counters traded unchanged. Volume was 288.37 million shares valued at RM1.34 billion.

Regional and European markets remained tepid, ahead of the Greek parliament’s debate of a 28 billion euro package of measures to increase taxes and cut fiscal spending that is critical to winning a new round of international funding to keep it afloat.

A rejection of the austerity plan could greatly worsen pressures already reflected by rising Portuguese and Spanish government bond yields, possibly bringing high-risk Europe closer to a chain of sovereign defaults that would blow out interbank funding costs and place heavy stress on the region's banking system, according to Reuters.

The risk of a credit event of this magnitude is keeping two-year US interest rate swap spreads near the widest in a year and helping to lift the US dollar out of a downtrend that has lasted a year, it said.

At the regional markets, Japan’s Nikkei 225 fell 1.04% to 9,578.31, Hong Kong’s Hang Seng Index lost 0.59% to 22,041.77, South Korea’s Kospi was down 0.98% to 2,070.29, Singapore’s Straits Times Index fell 0.6% to 3,048.28 and Taiwan’s Taiex shed 0.38% to 8,500.16.

Meanwhile, the Shanghai Composite Index added 0.44% to 2,758.23.

MIDF Research head Zulkifli Hamzah in a note June 27 said that while there could be window dressing in the final trading week of June, the FBM KLCI index was to remain sideways at best.

He said while regional markets had indeed rebounded last week, it had not been accompanied by a surge in the flow of foreign funds.

That means that the markets had been propped up by local money, he said.

Zulkifli said the FBM KLCI was losing its short-term catalysts, adding that banking stocks lost their lustre a little after Maybank and CIMB ended their talks on merger with RHB.

Meanwhile, PLANTATION [] stocks could be under pressure as CPO pice is falling in tandem with the price of crude oil, he said.

“We expect the market to be unexciting ahead of the MSM Malaysia Holdings Berhad on 28 June (Tuesday).

“MIDF Research has a post-listing target price of RM4.15, based on 10x EPS12. As MSM is not exciting from the earnings perspective, it is likely to attract more attention for its dividend payout. MSM has a dividend policy of paying out 50% of its net profit. At RM3.38 (retail IPO price), its FY10 gross dividend yield is 4.9%,” he said.

On Bursa Malaysia, Genting was the top loser today and fell 26 sen to RM10.98; Shell was down 24 sen to RM10.36, Warisan and Lafarge Malayan Cement lost 21 sen each to RM2.39 and RM7.37, Esso down 12 sen to RM4.95, Kenmark and Subur Tiasa 11 sen each to RM1.09 and RM2.68, while Aeon, Far East and Batu Kawan fell 10 sen each to RM7.02, RM7.35 and RM17.08 respectively.

Other decliners included Tenaga that fell nine sen to RM6.66, DiGi and MISC eight sen each to RM28.82 and RM7.50, Petronas Chemicals three sen to RM7.04 and IOI Corp two sen to RM5.30.

Gainers included Hong Leong Bank, Maybank, RHB Capital, CIMB, AirAsia, Malayan Flour Mills and Panasonic.

Actives included HWGB, Focus, MAA, Karambunai, CIMB and Maybank.