Forex Marketz Daily Forex News – Fully Markets Update
Malaysian market wrap: Shares slip to three-week lows, ringgit hits another new 17-year low on China woes
KUALA LUMPUR (NewsRise) — Malaysian shares slid to a near three-week trough and ringgit fell for the sixth straight session Tuesday, as fears of a global growth slowdown resurfaced after China reported a decline in industrial companies’ profits, hurting sentiment for risk assets.
The ringgit, Asia’s worst performing currency so far this year, fell to its lowest levels since January 1998. The currency has fallen by almost 6% in the last six sessions. The currency is now 20 sen away from its all-time closing low of 4.68 to a dollar, touched January 8, 1998.
Foreign funds remained net sellers, offloading 171.2 million ringgit ($38.4) in stocks yesterday, according to BIMB research. Overseas investors sold net 1.27 billion ringgit in Malaysian shares last week and have withdrawn 17.7 billion ringgit from equities in 2015.
The nation’s benchmark FTSE Bursa Malaysia KLCI fell 0.32% to 1,603.32 points, its lowest since September 10. Sixteen of the 30 constituents in the index ended lower, while overall declining issues outnumbered advancing ones 597 to 227, and 1,020 closed unchanged.
Southeast Asian stock markets closed mixed. Singapore’s Strait Times and Thai SET Index fell by 0.14% and 0.24%, respectively. Philippine’s PSE Composite Index rose 0.64%.
Indonesia’s Jakarta Stock Exchange Composite Index rose 1.41%. The nation’s Chief Economics Minister Darmin Nasution said that the government will announce a second installment of fiscal stimulus on Tuesday, as authorities seek to support the rupiah and revive growth.
Broader regional markets closed lower. Hong Kong’s Hang Seng and China’s Shanghai Composite Index fell 2.97% and 2.06%, respectively. Japan’s Nikkei 225 fell 4.05%. Markets in South Korea and Taiwan were shut today.
European shares were down half a percent, while U.S. stocks, which fell 2% overnight, were poised to open higher.
“We remain positive on Malaysian equities in the medium term and are of the opinion that the effects of lower oil prices on the economy, while definitely negative, are overblown,” said Pong Teng Siew, head of research at InterPacific Research. “We reckon government infrastructure spending and support for public infrastructure projects will prevent a precipitous fall in the country’s growth rate.”
Oil services provider Sapurakencana Petroleum was the biggest loser on the KLCI, declining 3.14% to 1.85 ringgit, tracking a near 3% overnight slump in global crude oil prices.
Still, AllianceDBS Research maintained its “buy” call for SapuraKencana Petroleum with a 12-month target price of 2.15 ringgit, citing near-term revenue visibility and stability in the company’s offshore service businesses.
The ongoing slump in crude oil prices, local political turmoil and concerns of a China-led global economic downturn have weighed on the oil-exporting nation’s shares this year. The KLCI shed about 9% of its value in 2015 so far.
On September 14, the Malaysian government announced its plans to infused 20 billion ringgit into a state investment firm to shore up the stock market.
“We think that the 20 billion ringgit injection into ValueCap would have a limited impact on the real economy,” Pong said.
Financial stocks CIMB Group Holdings and Hong Leong Financial Group fell by 2.16% to 4.53 ringgit and 1.01% to 13.76 ringgit, respectively.
Manufacturer and seller of latex gloves Hartalega Holdings fell 1.81% to 4.89 ringgit.
Port owner and construction firm MMC Corp., which rose 1.4% Monday, declined 1.83% to 2.14 ringgit.
Malaysia’s biggest mobile operator by market value Axiata Group extended Monday’s near-two-percent decline, falling 1.38% to 5.71 ringgit.
Increasing possibility of a China-led global slowdown has sparked a selloff in global markets over the last two months, prompting the U.S. Federal Reserve to stand pat on interest rates earlier this month. The Fed is due to review monetary policy on October 27 and October 28. This week, markets await factory activity data for September from China and the U.S.
“We think the Federal Reserve may be too late in raising rates as U.S. economic data points are weakening and we expect the world’s largest economy to possibly be in recession before they seriously consider raising rates,” Pong said.
