Market Close KLCI falls 0.58%, outlook remains volatile

Market Close KLCI falls 0.58%, outlook remains volatile
Business & Markets 2013
Written by Surin Murugiah of theedgemalaysia.com
Monday, 02 September 2013 17:10

KUALA LUMPUR (Sept 2): The FBM KLCI fell 0.58% at the close on Monday as the local market remained volatile, despite the uptrend at most global markets as concerns of an air strike on Syria eased.

At 5pm, the FBM KLCI lost 10.02 points to 1,717.56, keeping in line with its September downtrend pattern over the past decade. The August to October period remains most challenging for the local stock market. Notably the FBM KLCI lost more than 67 points month-on-month last August.

Losers beat gainers by523 to 231, while 242 counters traded unchanged. Volume was 1.08 billion shares valued at RM1.99 billion.

The top losers included Tan Chong, Petronas Dagagan, Aeon Credit, Takaful, Hartalega, Lafarge Malaysia, Batu Kawan, GAB and Favelle Favco.

TMS was the most actively traded counter with 56.81 million shares done. The stock was unchanged at 9.5 sen.

The other actives included Pesona, Compugates, Sona Petroleum, Asia Media, MQ Tech, CIMB, MAS and Sersol.

The gainers included United PLANTATION []s, Far East, Dana Infra, Knusford, Fima Corp, Hong Leong Capital, Mercury, TH Plantations and Dutch Lady.

Affin IB vice president and head of retail research Dr Nazri Khan said overall, he expects continuous currencies relief, pullback in geopolitical concerns and oversold technical condition will lead to more short term bounce in emerging markets with FBM KLCI doing a corrective rebound back toward 1,730 resistance level.

Nazri said both MSCI All-World and FTSE All-World also showed signs of a deeper rebound after sitting near its lowest in six weeks while the USA 10-year bond yields retreated after sitting at their highest levels in more than two years.

He said various momentum studies (MACD, RSI and Stochastics) have been trending up from oversold territories which support a higher technical rebound near major support levels.

“Despite the mild recovery, we still believe three global risks loom ahead which includes the Federal Reserve stimulus tapering on September 16th, the alarming fiscal cliff debate in the USA and the upcoming Germany General Election which may set to reintroduce volatility again to the global market,” he said.

Meanwhile, the FBM KLCI may be volatile for some weeks to come as it may take quite a while for the ‘hot money’ investors to unwind their positions, according to MIDF Research.

Nonetheless, while the QE3 taper may be a drag to risk assets valuation, it also signals better economic outlook particularly in the United States, it said.

“Thus we reckon that as the world’s largest economy is beginning to show signs of a more sustained recovery, it would also provide a fillip to the rest of the world moving forward.

“Hence expect positive secular trend in the equity market to remain intact as the market is “climbing the wall of worry”,” it said.

In a quarterly earnings wrap strategy note Monday, the research house said that the aggregate earnings as reported of the 30 FBM KLCI companies came in at RM15.74 billion in 2QCY13, a jump of 14.1% year-on-year (y-o-y), according to MIDF Research.

Elsewhere, a delay in potential U.S. military action in Syria and improving economic data from China and Europe boosted appetite for riskier assets on Monday, lifting world shares and sending the yen lower, according to Reuters.

Oil prices also fell after U.S. President Barack Obama announced at the weekend that any military action against Syria in response to last month's chemical weapons attack would wait until lawmakers had had a chance to vote on the plan, it said.