Asian markets slump on gloomy outlook

KUALA LUMPUR: Asian markets slumped on Tuesday, July 12, with South Korea’s Kospi falling more than 2% as a gloomy global economic outlook took its toll on investor sentiment.

US stocks suffered their worst day in nearly a month on Monday on fears the euro zone debt crisis could spread to Italy and also concerns about the stalemate in US budget talks.

The euro fell to a four-month low after new IMF Managing Director Christine Lagarde said the fund was not yet ready to discuss terms of a second Greek bailout, while stock markets tumbled on fears that more countries will be engulfed by the euro zone's debt crisis, according to Reuters.

Growing worries about Europe continued to stoke investors' flight from riskier assets into bonds, extending a rally in US Treasuries and sending Japanese government bond prices to a two-week high, it said.

On Bursa Malaysia, the FBM KLCI fell 0.45% or 7.17 points to 1,581.41 at the mid-day break, weighed by losses at key blue chips. Losers led gainers by 436 to 138, while 286 counters traded unchanged. Volume was 322.38 million shares valued at RM545.23 million.

The ringgit weakened 0.60% to 3.0280 versus the US dollar; crude palm oil futures for the third month delivery fell RM32 per tonne to RM3,038, crude oil shed 70 cents per barrel to US$94.95 while gold fell US$4.42 to US$1,549.05.

At the regional markets, South Korea’s Kopsi fell 2.11% to 2,111.64, Hong Kong’s Hang Seng Index lost 1.99% to 21,903.18, Taiwan’s Taiex declined 1.90% to 8,501.47, Japan’s Nikkei 225 down 1.35% to 9,933.33, the Shanghai Composite Index fell 1.26% to 2,767.32 and Singapore’s Straits Times Index fell 0.92% to 3,088.81.

BIMB Securities Research said Wall Street saw a massive selldown overnight down by 152 points as investors were spooked by the contagion effect from Greece financial crisis now feared cascading to Italy.

The situation in the US was worsened by the stalemate over the country’s debt ceiling with many now expecting spending cuts amid recent hike in unemployment rate, it said.

“Back home, we expect trading to remain subdued with immediate support at 1,580 in line with regional bourses. Nonetheless, news of Kencana and Sapura Crest merger should be positive to the O&G industry and may prompt others to follow suit,” it said.

Among the losers this morning, DiGi fell 32 sen to RM29.56, PPB 24 sen to RM17.44, MMHE and MISC 18 sen to RM8.27 and RM7.61, HLFG 16 sen to RM13.34, Lysaght 15 sen to RM1.51, Panasonic and Sunway City 14 sen each to RM24.18 and RM5.13, while MSC and Petronas Gas fell 12 sen each to RM4.52 and RM13.68.

Gainers were led by CI Holdings that added 18 sen to RM3.69; Toyo Ink 10 sen to RM1.59, Press Metal eight sen to RM2.41, EPIC seven sen to RM2.74, while Shangri-La, Mida and Petronas Dagangan rose six sen each to RM2.70, RM1.15 and RM17.48 respectively.

Kencana rose 14 sen to RM2.94 and SapuraCrest added five sen to RM4.54 after a proposed merger of the two oil and gas companies.

The actives included Kencana, XDL, Malton warrants, Time, Petronas Chemicals, Muda and Timecom.