Midday Market KLCI edges lower, but sell off to be minimal

Midday Market KLCI edges lower, but sell off to be minimal
Business & Markets 2013
Written by Surin Murugiah of theedgemalaysia.com
Wednesday, 21 August 2013 12:42

KUALA LUMPUR (Aug 21): The FBM KLCI edged lower at the midday break in line with the renewed pressure at most regional markets, but the sell off on Bursa Malaysia is expected to be minimal.

At 12.30pm, the FBM KLCI shed 0.74 points to 1,744.68.

Losers beat gainers by 353 to 271, while 311 counters traded unchanged. Volume was 844.46 million shares valued at RM999.81 million.

The top losers included BAT, Petronas Dagangan, Tasek, Aeon, Oriental, Genting PLANTATION []s, Tan Chong, Shangri-La, Lafarge Malaysia and Favelle Favco.

MAS was the most actively traded counter with 72.83 million shares done. The stock added half a sen to 34.5 sen.

The other actives included TMS, Sona Petroleum, Compugates, Instaco, Insbio, Flonic, Daya Materials, Maybank and Sumatec.

The gainers included Nestle, Bumi Armada, Kein Hin, BIMB, Maxis, PCCS, Coastal Contracts, GCE and Yinson.

Affin IB vice president Dr Nazri Khan said that going forward he expects the FBM KLCI to build the second upleg (decline and test again 1765 support level) before trending higher towards 1800 level.

“In the near term, we expect the FBM KLCI selloff to be minimal riding on three factors (1) Bursa resilience and defensive appeal (as it did during the past global uncertainties with 20 IPOs in the pipeline) (2) More rotation play towards small cap stocks as can be seen by the outperformance of FBMSmallCap and FBMFledgling Indices (which already hit all time high level driven by among others Hohup, Brahim, ECM, LBS, Gtronic, MNRB) (3) Portfolio rebalancing with institutional funds positioning ahead of the Budget 2014 to be tabled in Parliament on October 25.

“Further, the fact that Moody's Investors Service recently maintains a stable outlook on Malaysia sovereign rating should also lend support on ringgit after being battered following Fitch downgrades,” said Nazri.

Nazri added that a catalyst for the local market would be a strengthening ringgit, adding that if the ringgit consolidated at below RM3.3 to the US dollar, it would augur well for the local market.

Another factor that could boost local sentiment is positive economic performance data, he said.

“There is also some local institutional buying support for the local bourse,” he said.

Meanwhile, Asian share markets came under renewed pressure on Wednesday as investors worried that minutes of the Federal Reserve's July policy meeting would only add to suspicions it will start scaling back stimulus from September, according to Reuters.

Reports that Japan's government would raise the severity of the latest leak at Fukushima to a level 3 event, or a serious radiation incident, sent shivers through stocks and knocked the Nikkei down 0.8 percent, it said.