KUALA LUMPUR (April 24): Malaysian stocks ended lower today for the third consecutive day, with the benchmark FBM KLCI down by 0.8% or 15.02 points as investors remained wary on how the rising US yields could affect the outflow from emerging markets.
The KLCI closed at 1,865.34 points, edging away from its record level of 1,895.18 last Thursday.
Across the region, Asian shares have mainly advanced higher with Japan's Nikkei 225 gaining 0.86% or 190.08 points to settle at 22,278.12 points, while Hong Kong's Hang Seng Index was up by 1.26% or 381.84 points to close at 30,636.24 points.
Reuters reported that the Japanese shares hit a two-month closing high with financials leading gains after US bond yields spiked to four-year highs and as investors remained optimistic about upcoming earnings.
The yield on the benchmark 10-year Treasury note climbed towards 3%, reaching a new 2018 peak of 2.99%, the highest level since the beginning of 2014. This was at the back of expectations of higher inflation and longer-term bond yields amid a spike seen in the oil price. As of writing, the Brent crude oil is at US$74.90 per barrel after it breached US$75 per barrel shortly, the first time since the end of 2014.
Back home, there were 574 decliners against 291 gainers while 386 counters closed unchanged on Bursa Malaysia, with about 1.93 billion shares worth RM2.3 billion traded.
Areca Capital Sdn Bhd chief executive officer Danny Wong shared that the domestic market remains fragile about the current situation where the US 10-year Treasury note is nudging towards 3%.
"With the US Treasury yields at this level, the market is afraid of a higher inflation which could lead to a faster-than-anticipated rate hike, and that could trigger an outflow of foreign funds from the country. It has affected us, similar to what we see back in February when the yields spiked at that time," Wong told theedgemarkets.com.
He noted that Malaysia has been one of the main beneficiaries from foreign fund flows this year, and could be affected if that happens.
Wong also said the domestic sentiment ahead of the 14th General Election is also creating some form of uncertainties, which has affected the performance of small- and mid-cap players.
"Most of the institutions will reposition their portfolio to have more of the big-caps compared with the small- and mid-cap stocks prior to the elections. This would explained the strong rally seen in the KLCI [as compared to] the poor performance for the second and third liners so far this year," he added.
As of closing, the FBM Small Cap Index was down by 0.5% or 69.7 points to 14,568.55 points.
The top active counters on Bursa were dominated by some of the oil and gas counters such as Sapura Energy Bhd and Hibiscus Petroleum Bhd. Allianz Malaysia Bhd and United Plantations Bhd were among the top gainers, while British American Tobacco (M) Bhd and Top Glove Corp Bhd led the decliners.