Market Close KLCI falls to lowest point since February on MSCI rebalancing, softer 1Q GDP

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KLCI falls to lowest point since February on MSCI rebalancing, softer 1Q GDP

By Kamarul Anwar / theedgemarkets.com   | May 13, 2016 : 5:50 PM MYT

KUALA LUMPUR (May 13): MSCI’s decision to reduce its weightage on Malaysian blue chips, coupled with the country’s softer economic growth in the first quarter, sent the FBM KLCI tumbling by 20.72 points or 1.26% to 1,628.26, the lowest closing since early February.
Malaysia’s benchmark index was one of today’s worst performers in the region, relative-wise. Nearly four-fifths of the constituents fell, with the worst hit being CIMB Group Holdings Bhd, Malayan Banking Bhd, Sime Darby Bhd, Petronas Chemicals Group Bhd and UMW Holdings Bhd.
The KLCI was traded in a wide range, between 1,618.93 and 1,645.14. Over the past week, it lost 1.28%.
The only blue chips that managed to eke gains today were Astro Malaysia Holdings Bhd, Telekom Malaysia Bhd, Hong Leong Bank Bhd, Tenaga Nasional Bhd, Public Bank Bhd, British American Tobacco (Malaysia) Bhd (BAT), and IHH Healthcare Bhd. The latter three stocks had their weightages increased in MSCI’s portfolio, according to dealers.
MSCI’s website said yesterday that as part of its May 2016 semi-annual index review, the changes in its equity indices will take effect from the close of trading on May 31.
Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng told theedgemarkets.com that MSCI’s weightage rebalancing was the main factor in KLCI seeing red.
“But there are other factors, too, being the unresolved issues with 1MDB (1Malaysia Development Bhd) and the weaker first quarter GDP (gross domestic product) growth.
“It (GDP growth) was mostly within expectations, but it was still weaker than the previous year,” he said.
Malaysia’s economy grew at a slower pace of 4.2% in its first quarter of 2016 (1QFY16), compared with 5.7% a year ago, with a value of RM291 billion.
According to the Department of Statistics Malaysia, all sectors in production posted a positive growth except for agriculture, while the continuous expansion in the services, manufacturing and construction led growth, remaining its main catalyst.
On a quarter-on-quarter seasonally-adjusted basis, the GDP grew 1% compared with 1.2% growth in 4QFY15.
The ringgit also ceded some of yesterday’s gains, as it fell 0.15% to close at RM4.031 against the US dollar. Spot Brent crude, whose price movement tends to move in sync with the local currency because of investors’ perception that Malaysia is dependent on oil revenue, fell 0.62% to US$47.78 a barrel as at time of writing.
Bursa Malaysia saw 1.83 billion shares traded today, at a collective value of RM2.81 billion. Decliners, at 607, more than doubled the 272 gainers.
Vivocom Intl Holdings Bhd and its warrant VIVOCOM-WB led the local bourse’s most active counters today, with CIMB trailing.
Dutch Lady Milk Industries Bhd was the day’s biggest gainer, followed by BAT and Hong Leong Industries Bhd.
The biggest decliners today included Maybank, Macquarie Capital Securities (M) Sdn Bhd’s European-style call warrants for the Hang Seng Index, and CIMB.
Regional markets fell too. Japan’s Nikkei 225 lost 1.41%, Hong Kong’s Hang Seng dropped by 0.99%, China’s Shanghai Stock Exchange Composite Index fell by 0.31%, while Shenzhen Composite Index lost 0.38%, South Korea’s Kospi Index ceded 0.53%, and Australia’s S&P/ASX200 fell by 0.57%.
Neighbouring Singapore’s Straits Times Index meanwhile, fell by 0.38%.