KUALA LUMPUR (May 21): The FBM KLCI fell 0.8% on as heavy selling in the afternoon pulled the Malaysia's stock benchmark below the critical 1,800-point level. The KLCI fell amid domestic political concerns surrounding 1Malaysia Development Bhd (1MDB).
At 5pm, the KLCI closed at 1,795.04. Announcement of the 11th Malaysia Plan (11MP) by Prime Minister Datuk Seri Najib Tun Razak earlier today failed to spark buying interest in the local bourse.
The KLCI had earlier dipped to an intra-day low of 1,793.34 points. For comparison, the FTSE Bursa Malaysia Small Cap Index was also down 124.96 points, or 0.75% to close at 16,507.85.
An analyst with a local investment bank told theedgemarkets.com that voices in the domestic political backdrop were getting louder, and the market’s reaction today indicated that investors had started to listen.
“The market’s reaction today cannot be due to the 11MP, as there were no surprises and the government had previously hinted on the 11MP’s proposed plans.
"The fall in the KLCI today is most likely related to the uncertainties involving the political situation in the country,” said the analyst.
Bursa Malaysia saw 2.45 billion shares valued at RM2.29 billion traded. There were 259 gainers against 628 decliners while 284 counters remained unchanged.
Top gainers included British American Tobacco (M) Bhd and Microlink Solutions Bhd.
Major decliners included Nestle (M) Bhd and Axiata Group Bhd. The most actively-traded stock was Frontken Corp Bhd
Despite the KLCI's losses, it is interesting to note that the ringgit strengthened against major currencies. The ringgit changed hands at 3.6018 versus the US dollar and compared to the Singapore dollar, the ringgit was traded at 2.6982.
Reuters reported that ringgit was up as the government said it expects dependence on oil-related revenue to decline. Malaysia is a net oil exporter and recent slides in crude have hurt the currency.
Across Asian share markets, Japan's Nikkei 225 rose 0.03% while Hong Kong’s Hang Seng fell 0.22%. South Korea’s Kospi was down 0.78%.
According to Reuters, stock market gains were capped on Thursday in much of Asia in the wake of China's downbeat factory activity data, but shares in Shanghai focused on the potential positives from the weak reading and rallied.