KUALA LUMPUR: The benchmark FBM KLCI closed 16.15 points or 0.92% lower at 1736.62 points, as oil prices hit fresh 5-1/2-year lows and the ringgit slumped to a five-year low.
A total of 1.47 billion shares were traded over the course of the day, for a total of RM1.41 billion.
Market breadth was mixed, with 271 gainers against 502 decliners, while 257 counters remained unchanged.
Today's top gainers included Panasonic Manufacturing Malaysia Bhd, Hong Leong Bank Bhd, Fraser & Neave Holdings Bhd, Carlsberg Brewery Malaysia Bhd and Latitude Tree Holdings Bhd.
The decliners were led by British American Tobacco (M) Bhd, Public Bank Bhd, PIE Industrial Bhd, Tasek Corp Bhd and Riverview Rubber Estates Bhd.
The most actively traded stock was Minetec Resources Bhd, which saw some 109.6 million shares changed hands.
A remisier told theedgemarkets.com that the slump in oil prices had set the momentum for the market downturn.
"The ringgit has also devalued further, causing the market to drop more after the lunch break. Usually, when the ringgit takes a hit, investors get jittery about the possibility of another crisis happening, similar to 1998," he said.
At the time of writing, the ringgit was trading at 3.5340 a dollar. According to Reuters, Indonesian rupiah and Malaysian ringgit lost the most against the US dollar on Monday as Asian markets reacted afresh to falling oil prices, a weakening euro and a broad aversion to risky trades.
In its market commentary today, TA Securities Research said following last week's profit-taking correction, the KLCI should extend post window-dressing profit-taking as blue chips correct further amid slowing institutional participation.
"However, the advent of the new year could see trading momentum in the small caps sector stage a robust comeback as retail participation return after the long year-end holidays," it said.
The research house said blue chip stocks like Axiata Group Bhd, Gamuda Bhd, Genting Bhd and Telekom Malaysia Bhd were attractive to accumulate on post window-dressing profit-taking dips, while oil and gas related stocks such as Bumi Armada Bhd, Muhibbah Engineering (M) Bhd, Perdana Petroleum Bhd and SapuraKencana Petroleum Bhd were also attractive recovery candidates going forward.
Meanwhile, the MSCI Asia Pacific Index fell 0.7% to 136.99 as of 4:09 pm in Hong Kong, heading for its lowest close since Dec 23, according to Bloomberg.
The regional gauge slipped 2.5% in 2014, its first annual decline since 2011, as commodity companies tumbled amid signs of slowing expansion in China.
Hong Kong's Hang Seng closed the day after shedding 0.57%. South Korea's Kospi ended 0.55% lower, while Japan's Nikkei 225 was down 0.24%.