KLCI inches 0.23% higher, with stocks linked to AirAsia under pressure

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KUALA LUMPUR (Dec 29): The FBM KLCI inched 3.97 points or 0.23% higher today as oil prices remain sluggish and the ringgit remains at weak levels. Stocks linked to low cost carrier AirAsia Bhd however, came under pressure after an aircraft operated by its affiliate went missing early Sunday morning.

The benchmark index settled at 1768.41 points at 5pm today, with 1.25 billion shares valued at RM1.33 billion traded.

There were 343 gainers against 376 decliners, while 286 counters remained unchanged.

Today's top gainers included Asia File Corporation Bhd, Ibraco Bhd and Kuala Lumpur Kepong Bhd.

The decliners were led by Dutch Lady Milk Industries Bhd, Syarikat Takaful Malaysia Bhd, and AirAsia.

The most actively traded stock today was AirAsia, with about 103.03 million shares changing hands.

In a note today, Maybank Investment Bank Bhd's aviation analyst Mohshin Aziz said he expects weakness in the group's share price in the near term. The research house is also reviewing its call on AirAsia.

"Expect share price weakness in the near term. Our FY15-16 earnings forecasts have [a] downside bias and our 'buy' call and target price, pegged to 11 times FY15 price-to-earnings ratio, are under review," he said.

Mohshin said there would be some financial impact from the incident, but noted that it should be contained due to the group's 49% holding in AirAsia Indonesia.

A dealer with a local bank told theedgemarkets.com that the market is seen as trading sideways, neither experiencing a significant uptrend or downtrend as oil prices remain sluggish and the ringgit remains at weak levels.

"Brent crude oil prices have remained sluggish at US$59 to US$60 per barrel and the ringgit has remained weak at 3.49 to 3.50 against the US dollar, but it [the ringgit] has not weakened further, which explains the sideways performance of the market," said the dealer.

He added that the holiday period is also another factor as to why there was no leading indicator to move the market.

TA Securities technical analyst Steven Soo said the stockbroking firm is maintaining its year-end target for the KLCI at 1810 points, but added that they believe the market may face resistance at 1,778 points or 1,806 points.

"Though it is the holiday season, we still expect to see some year-end window dressing in the coming last 3 days of the year," he told theedgemarkets.com.

Regionally, Hong Kong's Hang Seng was up 1.82%,whilst Japan's Nikkei was down 0.5%, while South Korea's Kospi was down 1.04%.

According to Reuters, Asian stocks rose today following fresh gains on Wall Street, whereas Tokyo's Nikkei slid amid reports of a suspected Ebola case in Japan that spooked the market, which saw thin tradings before the year-end holidays.

Bloomberg, meanwhile, attributed the rise in Asian stocks to a surge in Chinese shares amid optimism that the Chinese government will step in to spur lending and bolster growth.