KUALA LUMPUR (Dec 21): Malaysian stocks fell 14.81 points or 0.9% for the second straight session today, after Brent crude, which is used to price international oils, slumped to its lowest level since 2004 and led foreign funds to sell on Bursa Malaysia.
Despite most Asian markets closing up today, the benchmark FBM KLCI continued its downward trend to end the day at 1,629.09 points.
Under the low oil price scenario, a fund manager told theedgemarkets.com that it could drive the KLCI to close the year below 1,600 points in the absence of window-dressing activities.
According to Reuters, Brent futures fell almost 2% to as low as US$36.17 per barrel today, the level last seen in 2004, dropping below the lows during the 2008 financial crisis on renewed worries over an oil glut.
The ringgit also lost 0.21% against the US dollar to reach 4.2945 at press time.
Losers led gainers by 521 to 352, with 313 counters trading unchanged on Bursa. The index was dragged down by British American Tobacco (Malaysia) Bhd, Kuala Lumpur Kepong Bhd, Hong Leong Bank Bhd and Petronas Gas Bhd.
The top 10 gainers included Top Glove Corp Bhd, Kossan Rubber Industries Bhd, Supermax Corp Bhd and PIE Industrial Bhd.
At 5pm today, the KLCI saw 1.83 billion shares traded, at a total value of RM1.57 billion.
"If you look at the Asian markets today, they were not that bad. Thus, KLCI seems to be impacted by oil prices and foreign fund (selling), not the US market," a fund manager who only wants to be known as Teoh told theedgemarkets.com.
Last Friday, KLCI fell 12.62 points or 0.76% to 1,643.9 points. According to BIMB Securities Research, trading participation saw net selling by foreign institutions while local institutions and retail were net buyers.
Teoh said the window-dressing activities towards the end of the month in this weak market remains uncertain as external factors, such as crude oil prices, will continue to affect KLCI performance in the near future.
"With oil price (Brent) falling below US$40 per barrel, the ringgit will again be under pressure as the government may miss its 2015 fiscal deficit target again. It's very likely for the index performance to be in red this year should window-dressing activities not happen," he added.
Year to date, the KLCI has fallen lost 7.5%.
Regionally, key Asian markets traded mixed, with Japan's Nikkei 225 closing down 0.37%, while South Korea's Kospi, China's Shanghai Composite and Hong Kong's Hang Seng reported marginal gains between 0.17% and 1.78%.
Impacted by fears over a rout in commodity prices, the Dow Jones Industrial Average and the S&P 500 index closed down 2.1% and 1.78% to end at 17,128.45 and 2,005.52 points respectively last Friday.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)