Malaysian market wrap: Shares, ringgit fall to one-week lows as risk appetite remains low

Malaysian market wrap: Shares, ringgit fall to one-week lows as risk appetite remains low

KUALA LUMPUR (NewsRise) — Malaysian shares fell for a third day Tuesday, tracking losses in most other Southeast Asian indexes, as persistent global growth concerns and local political turmoil hit investor sentiment.

     The ringgit fell 0.68% to a one-week low. The currency, Asia’s worst-performing this year, has fallen by more than 2% in September, extending last month’s 10% decline.

     The nation’s benchmark FTSE Bursa Malaysia KLCI fell 0.25% to 1,635.37 points, its lowest level since Sep. 14. Eighteen of 30 constituents in the index ended lower, while overall advancing issues outnumbered declining ones 424 to 322, and 1,097 closed unchanged. The index had fallen by 2.5% in the previous two sessions.

     “Sentiment is low right now, suffice to say that foreigners are almost out of the market,” said Andrew Wong, AmFunds Management’s chief investment officer, equities. “There’s a lot of uncertainty… and obvious concern is about the political noises.”

     Foreign investors sold 333.9 million ringgit in Malaysian shares Monday, booking profits after last week’s 4% rally in the index, according to a note by BIMB research.

     Other Southeast Asian stock markets ended lower, with Indonesia’s benchmark index falling 0.73% to 4,334.04 points, the Thai SET Index declining 0.96% and Philippines’ shares ending lower by 0.58% at 7,051.23 points. Singapore’s key index fell 0.48%.

     Most other Asian markets rose, tracking Wall Street’s gains Monday, as several Federal Reserve officials indicated the authority may still raise interest rates this year.  South Korea’s Kospi rose 0.83%, while Hong Kong’s Hang Seng gained 0.18%. China’s the Shanghai Composite Index rose 0.94%.

     Mounting chances of a China-led global growth slowdown prompted the U.S. central bank to leave its rates near zero last week. However, expectations revived after at least three Fed officials hinted at the possibility of a rate increase sometime this year.

     Global markets now await China’s preliminary manufacturing data due Wednesday for further cues on the health of Asia’s largest economy.

     “We think last week’s intervention in the equity markets by the government is not likely to be very effective and we expect markets to head lower in the short run. However, we do think that markets have now corrected to a level that valuations now look attractive from the medium term perspective,” Krystal Tan, Senior Asia Economist at Capital Economics said.

     The KLCI chalked its biggest weekly gain since 2013 last week after the government announced a plan to support equities by reviving a fund with a 20 billion-ringgit cash infusion.

     Mobile phone operators Axiata Group and Maxis fell 1.3% to 6.06 ringgit and 2.24% to 6.56 ringgit, while television services provider Astro Malaysia fell 0.68% to 2.92 ringgit.

     Latex product manufacturers Hartalega Holdings and Top Glove Corp. were among the few gainers, rising 2.59% to 4.35 ringgit and 3.22% to 7.69 ringgit, respectively. Sime Darby, with business from plantations to motoring, rose 2.31% to 7.53 ringgit.

     Gaming conglomerate Genting, recovered slightly from yesterday’s 4% slide, to close higher by 1.08% to 7.51 ringgit.

     “We expect economic data out of US to improve in the coming months and do not see further downgrades to our global growth estimates,” Tan said.

     Global growth concerns, local political unrest and slumping crude oil prices have driven a 7% decline in Malaysia’s shares this year and pushed the ringgit to 17-year lows.

     Over the last two months a political tumult over graft allegations against Prime Minister Najib Razak has sapped investors’ demand for Malaysian assets.

     A U.S. federal grand jury is examining corruption charges against Najib, the New York Times reported Monday, citing sources.

     The U.S. FBI opened an investigation into money-laundering allegations related to Malaysia’s state investment fund, the Wall Street Journal reported on Saturday, citing a person familiar with the matter.

Malaysian market wrap: Shares, ringgit fall to one-week lows as risk appetite remains low