PETALING JAYA: The FBM KLCI pared some of its losses to close at 1,672.60 points today after a dampened early trading session due to developments in the US which included a partial government shutdown and the S&P 500 Index’s close brush with bear market status.
Coming out of Christmas break, the local bourse’s benchmark index opened 15.13 points lower at 1,668.69 points against Monday’s close of 1,683.82 points. It tumbled as much as 23.02 points or 1.37% to 1,660.80 before closing at 1,672.60, down 11.22 points or 0.67%, with a total of RM10.68 billion in market capitalisation being wiped off.
Market breadth was negative with 567 losers against 208 gainers. Total trading volume stood at 1.41 billion shares valued at RM966.8 million.
The FBM KLCI was bogged down by a sell-off in counters such as Tenaga Nasional Bhd and Genting Bhd, which skidded 3.3% and 3.4% to RM13.54 and RM6.02, respectively.
All indices on Bursa Malaysia save for financial services and real estate investment funds ended in the red.
MIDF Research head of strategy & quantitative analytics Syed Muhammed Kifni Syed Kamaruddin told SunBiz that the local market was depressed in the morning in a knee-jerk reaction to the developments in the US such as the pre-Christmas sell-off on Wall Street and President Donald Trump’s criticism of the Federal Reserve’s (Fed) decision to raise interest rates.
“However, the KLCI regained the bulk of the lost points during the afternoon session as buying interest re-emerged. On this score, it is notable that while the Dow Jones tumbled about 1,800 points in the past five trading days, the local market has quietly staged a year-end rebound as it gained nearly 40 points,” he added.
The partial US government shutdown and statement made by Trump sparked a selling frenzy on the stock market. Earlier this week, media reports noted that Trump had discussed the possibility of firing Fed chairman Jerome Powell after the recent interest rate hike. Trump, however, later denied this, adding that he has no right to do so.
Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said except for the Dow Jones Industrial Average, other US indices have fallen into the bear market territory. The S&P 500 Index has fallen 19.8% in three months. A decline of more than 20% is the common definition of a bear market.
The bearish stock market conditions have been exacerbated by tumbling crude oil prices, sending out ominous signals of the possibility of a global economic recession. Brent crude, the global benchmark, was up 43 cents at US$50.90 at 5.49pm Malaysian time.
“The kind of drop (in oil prices) we are seeing would be especially reflective of economic weakness in China with that country being the largest market and the largest importer and user of oil.
“Markets believe that China is headed for a serious pullback in economic activities, (which is) sufficient to cause demand for oil to fall plus statements from President Trump are not encouraging for the market,” Pong said.
According to him, there are chances of Bursa Malaysia sliding further until the year concludes in line with these global developments. He noted that market will be up for a downward trend if corporate earnings continue with their disappointing run next year.