The weak sentiment in the commodity markets spilled over to the equity markets in the region, sparking concern that share prices have gone ahead of fundamentals and that the prospects of the economic recovery might have been overvalued.
In Asia, Japan’s Nikkei 225 plunged 2.32% to 10,202.06 points, Hong Kong’s Hang Seng Index closed 1.08% lower to 20,932.20 and Singapore’s Straits Times Index lost 1.54% to 2,639.74.
The Tokyo market fell for a different reason: investors fear the stronger Japanese yen would affect exports.
At home, the FBM KL Composite Index fell 0.41% to 1,203.36 points, an easing compared to the plunge in regional bourses. Dealers attribute the lesser fall in the KLCI to the minimal foreign participation.
“Foreign shareholdings in Malaysia equities are still low relative to history and other regional markets. In case of a sudden turn in sentiment globally, any selldown would be less severe, given the improving economic outlook, in our opinion,” Nomura said in its strategy report.
On Sept 14, three-month CPO futures fell 3.2%, its biggest drop in two months, to RM2,064 per tonne.
CPO exports fell 17% to 332,392 tonnes in the first 10 days of the month compared with August, Societe Generale de Surveillance, an independent surveyor, said last week. The fall was 14% to 313,282 tonnes, Intertek said the same day.
“Exports for Sept 1-10 were looking shaky,” ECM Libra Investment Research said in a report yesterday. “September and October statistics are crucial, given that it’s peak production cycle time.”
The global benchmark Nymex crude oil for one-month delivery fell 1.2% to US$68.45 (RM239.58) per barrel at 5.40pm in Malaysia, while spot gold traded in New York dropped below US$1,000 per ounce, falling 1.1% to US$994.17 at 5.40pm Malaysian time.
A rebound in the US dollar yesterday of about 0.5% during Asian trading hours after last week’s fall to a 12-month low is largely seen as the catalyst for the commodity selldown.
The Dollar Index that tracks the greenback against a basket of six major currencies gained 0.57% to 77.042 points at 5.40pm in Malaysia, versus Friday’s close at a year’s low of 76.608 points.
Despite the big fall in CPO prices, plantation stocks were holding up well on Bursa. IOI Corp Bhd lost four sen to RM5.28, Sime Darby Bhd remained at RM8.50 while Kuala Lumpur Kepong Bhd was up two sen to RM13.68.
Syarikat Prasarana Negara Bhd’s announcement on the kickstart of the RM7 billion extension of the existing light rail transit line in Kuala Lumpur did not lift construction stocks.
Gamuda dropped three sen to RM3.20, Scomi Group lost two sen to 59.5 sen, IJM Corp added one sen to RM6.25 and WCT fell six sen to RM2.77.
Genting Bhd, which hogged the limelight following its unit Genting Singapore’s cash call announcement last week, closed nine sen lower to RM6.73 on Sept 14.
Analysts said Genting’s selldown would dent local sentiment considering it is a key component of the KLCI.
TA Securities chartist Stephen Soo, who said he was not surprised at the selldown, saw it as normal profit taking following the sharp gains on news of the early opening of Genting’s casino resort in Singapore.
He set a level of RM6.50 per share for buying interest to return to Genting.
Soo expects the FBM KLCI to be range-bound this week with a downside level or 1,190 points and an upside of 1,220 points. He sees a possibility of selective buying opportunities this week.