KUALA LUMPUR (Nov 9): The bellwether FBM KLCI mirrored losses suffered by most of the region's major indices today (Friday), dropping as much as 8.71 points or 0.53% after stocks on Wall Street fell overnight for the second day in the row.
After opening cautiously higher at 1,641.98 this morning, the index fell 8.71 points to 1,632.36 in just thirty minutes of trading, before resting 3.54 points (0.22%) lower at 1,637.53 points at midday break.
A total of 318 losers outweighed 201 gainers, with 306 stocks unchanged. Turnover was 339.37 million valued at RM454.62 million.
"With the Dow's plunge, expect a volatile day to the downside locally," said Maybank KimEng in a note this morning.
The research house said Its resistance level of 1,645 and 1,669 will cap market gains, whilst weaker support areas are located at 1,621 and 1,638.
In a report yesterday, MIDF Research head Zulkifli Hamzah said the recent re-election of President Obama has both short and long term repercussions on the Malaysian equity market.
"Immediately, there should be concerns whether or not last night's selloff on Wall Street will have a knock-on effect on Bursa. We believe it will because risk aversion towards equity is currently globewide," he said.
"However, any retracement in the KLCI would present a good opportunity for funds to accumulate as we expect the sell off on Wall Street to be transient. The market would realize that Obama's reelection means continuity which is important for the long-term prospect of the economy," he added.
"Most investors will remain sidelines amid the on-going 3Q reporting season and ahead of the long holidays next week (Deepavali on Nov 13, and Awal Muharram on Nov 15)," said Hong Leong Investment Bank (HLIB) said in an early note.
Blue chip counters like British American Tobacco Malaysia (BAT), Petronas Dagangan (PetDag), Kuala Lumpur Kepong (KLK) and Petronas Gas (PetGas) were among the top losers today.
At midday break, BAT declined 84 sen to RM58.26 with 32,400 shares traded, while PetDag fell 24 sen to RM21.58 with 16,900 shares done.
Top gainers were led by Dutch Lady, Top Glove, Shell, Pharmaniaga and Prolexus.
Active trades included Saag, Pasukhas Group, Karambunai, Takaso and Redtone International shares and warrants.
Asian shares fell further on Friday, weighed down by worries over the risk of a recession in the world's largest economy as the United States faces a looming fiscal crisis, while Europe still awaits a bailout for Greece, keeping investor risk appetite subdued.
Global stocks fell overnight on worries about Washington's ability to resolve the "fiscal cliff" in a timely manner before nearly US$600 billion worth of spending cuts and tax increases kicks in early 2013 unless a compromise is reached to cut the deficit. There is also the issue of a debt ceiling, which needs to be raised to avoid a government shutdown.
A recession in the United States, which had recently defied a general trend in other parts of the world by showing signs of a modest recovery, could drag the global economy down further.
The Standard & Poor's 500 index SPX dropped for a second day and closed below its 200-day moving average for the first time in five months yesterday, signaling a weaker trend. It closed down more than 1% at its lowest since Aug 2.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5%, after sliding 1.3% yesterday for its biggest one-day percentage drop in two months.
Australian shares slipped 0.8%, with big banks and miners dropping after losses on Wall Street. South Korean shares opened down 1.1% and Japan's Nikkei average also opened down 1.1%.