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Broad sell-off on Bursa Malaysia
KUALA LUMPUR: Fund selling of index-linked stocks on Bursa Malaysia saw nearly 20 points erased from the FBM KLCI while the broader market came under pressure with 1,001 counters in the red.
The selling pressure saw the KLCI closing down 19.07 points or 1.07% to 1,767.77 yesterday – the lowest since Sept 19 and it is down 5.31% year-to-date.
Declining counters beat advancers 15 to one or 1,001 to 64, reflecting the cautious market sentiment.
At press time, key European markets were in the red while regional markets posted losses of between 0.25% and 2.22% with Japan’s Nikkei 225 the worst performer.
Reuters reported the Euro STOXX 50 Volatility Index surged to 35.5 yesterday, its highest level since mid-2012, signalling a sharp rise in risk aversion on the back of worries over the strength of the global economy.
Malaysia’s stock market, which had been underpinned by oil and gas stocks, came under pressure also as weaker global growth saw oil prices sliding. At 5pm, US light crude oil fell US$1.28 to US$80.50 and Brent lost 62 cents to US$83.16.
Oil and gas heavyweight SapuraKencana Petroleum Bhd fell 25 sen to RM3.16 in active trade.
The double whammy was also from the weaker ringgit, which was trading at 3.2835, the lowest since April 2014.
Insurers and banks were among the major losers. Allianz Malaysia Bhd fell 46 sen to RM10.84 and Syarikat Takaful Malaysia Bhd was down 42 sen to RM11.38. CIMB Group Bhd fell 29 sen to RM6.19, RHB Capital Bhd 15 sen lower at RM8.36 and Malayan Banking Bhd lost 13 sen to RM9.45.
BIMB Securities Research, had in its strategy report, said foreign fund flows had been quite erratic this year purely dictated by the expectations in the United States.
“After some nominal movements during the June/August period, foreign outflow gathered in September when a whopping RM1.5bil exited the local bourse.
“At time of writing, foreign outflow remains evident of around RM300mil thus ramping up total net outflows to RM3.5bil year-to-date. Looking ahead, we reckon foreign fund outflows to persist as there is still an ample amount of short term ones in the local bourse estimated to a tune of RM16bil,” it said.
BIMB Research said the recent market selldown did not bode well for the local market as most investors preferred to wait and see.
“Meanwhile, we believe any absence of window dressing activity during the quarter may see the KLCI ending 2014 on a flat note,” it said, adding its fair valuation for the KLCI was 1,830.
The research house believed there could be some year-end buying hence its liquidity induced target for 2014 at 1,900.
“As for 2015, we have a preliminary target of 1,960 premised on 16.5 times price-to-earnings and a 10% earnings growth,” it said.
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