Malaysian market wrap: Shares, ringgit slump continue on China woes

Malaysian market wrap: Shares, ringgit slump continue on China woes

KUALA LUMPUR (NewsRise) — Malaysian shares slid Wednesday for the fourth consecutive session, as weak manufacturing data out of China reinforced worries about the health of Asia’s largest economy and spurred a selloff across regional assets.

   The ringgit fell 1.19% to its lowest level in two weeks, even as foreign exchange reserves improved. Wednesday’s fall marks the currency’s third consecutive session of losses and its second worst three-day decline in at least 15 years. The currency has fallen by 3.3% in the last three sessions.

   Data released earlier today showed August retail inflation in Southeast Asia’s third-largest economy stood at 3.1%, slightly above market expectations of a 3% increase.  ANZ Research expects Bank Negara Malaysia to pause through 2015. BNM held interest rates steady at 3.25% at its meeting on September 11.

   The nation’s benchmark FTSE Bursa Malaysia KLCI fell 1.36% to 1,613.17 points. Twenty-six of the 30 constituents in the index ended lower, while laggards outnumbered gainers, and 1,053 closed unchanged.

   Disappointing manufacturing activity data from China hurt global risk appetite, driving declines in Asian assets. 

   China’s factory sector activity fell to six-and-a-half-year lows this month as local and export demand remained weak, according to a preliminary Caixin/Markit survey. 

   Other Southeast Asian stocks fell, led by a 2.29% drop in Indonesia’s Jakarta Stock Exchange Composite Index. The Thai SET Index and Philippine’s PSE Composite Index ended lower by 0.30% and 1.76%, respectively. Singapore’s Strait Times index closed lower by 0.79%.

   Broader regional markets also slipped, with Hong Kong’s Hang Seng and China’s Shanghai Composite Index falling 2.26% and 2.16%, respectively. South Korea’s Kospi closed lower by 1.85%. Taiwan’s TWSE declined 2.06%.

   “We think the local market will continue to be volatile, trading sideways with a negative bias for the fourth quarter,” said Lee Chung Cheng, Head Research at JF Apex Securities. “China is a key concern globally, as evidenced by the recent hold off on rate increases by the Fed.  We believe China will roll out more fiscal and monetary stimulus to prevent any hard landing with GDP growth slightly below 7% for this year.”

   Lee expects the KLCI to move in a range of 1,510-1,690 points till December.

   SapuraKencana Petroleum fell 3.52% to 1.92 ringgit, leading losses on the index, after an overnight slump in crude oil prices. The stock has lost more than half of its value in the last one year and is the worst performing stock in the KLCI. Global crude prices have fallen by more than 50% in this period.

   Malaysian gaming conglomerate Genting fell 3.33% to 7.26 ringgit.

   Banking stocks fell, led by a 2.43% decline in Malaysia’s third-largest lender Public Bank. Shares of the company closed at 17.68 ringgit. The nation’s biggest bank, ,Malayan Banking fell 1.29% to 8.41 ringgit.

   Malaysia’s biggest mobile operator by market value Axiata Group extended Tuesday’s over-one-percent decline, falling 2.64% to 5.9 ringgit.

   Latex product manufacturers Hartalega Holdings and Top Glove extended Tuesday’s advances and were among the rare gainers, rising 0.46% to 4.37 ringgit and 3.77% to 7.98 ringgit, respectively. The stocks of these bulk rubber glove exporters have gained about 10% each over the last six weeks, on hopes of better earnings prospects following a steady decline of the ringgit against the U.S. dollar.

   The ringgit has been Asia’s worst performing currency in 2015, hovering around 17-year lows. Foreign exchange reserves, which have been declining at a monthly average of $2.2 billion over the past few months, rose to $95.3 billion as on September 15, data from Bank Negara Malaysia showed Tuesday.

   “Crude oil prices, ringgit movement, uncertainty about U.S. rate increases, concerns about China’s growth and domestic political uncertainty in will continue to haunt the market,” Lee said.

Malaysian market wrap: Shares, ringgit slump continue on China woes