KLCI rebounds as Federal Reserve indicates no rate hike for now

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KUALA LUMPUR (Oct 9): The FBM KLCI rebounded today after two consecutive days of losses, as the minutes from the September meeting of Federal Reserve indicated US central bankers were wary of raising rates too soon.

The benchmark index gained 5.41 points or 0.3% to end at 1,829.73, as stocks such as British American Tobacco (M) Bhd and Kuala Lumpur Kepong Bhd rose.

RHB Research Head of Research Lim Chee Sing said the interest rate in the US would remain low, for a considerable period of time.

“The first interest rate hike will [negatively] influence the emerging market," he said.

On the losses seen from the oil and gas counters for the past two days, Lim acknowledged the oil price was the trigger to the sell down: “The valuation of the oil and gas counters are at premium, compared with regional players and global players.”

Brent crude was as high as at US$115.77 per barrel in June 2014 and has since declined to US$90.11 yesterday — a decrease of 22.2% decline over the last three months.

"The execution of contracts are becoming a key risk, and since any O&G outfits are expanding to the region and their valuation will be pegged against their regional peers."  

However, O&G counters such as Uzma Bhd, SapuraKencana Petroleum Bhd, Coastal Contracts Bhd and Icon Offshore Bhd have picked up gains today, reversing the declining trend of the past few days.

Nevertheless, Lim pointed out that the volatility in the global market remains, as the valuation is high and there is no fresh catalysts.

“The two risks in the global market are the weaker-than-expected global growth and a dampening effect from a stronger dollar,” he added.

Bursa Malaysia saw 1.81 billion shares, worth some RM1.852 billion traded today. Gainers topped losers at 609 over 229, with 266 counters remaining unchanged.

Top gainers include BAT and KLK, while top losers were Malaysia Airports Holdings Bhd and Hong Leong Industries Bhd.

Meanwhile, the most active counters include the likes of software solutions providers Censof Holdings Bhd (up 11.76%), Efficient E-Solutions Bhd (9.84%), IFCA MSC Bhd (up 11.4%), and so on.

In the region, the Singapore’s Straits Times Index climbed 1.08%, while the Hang Seng Index climbed 1.17%.

According to Reuters, Asian shares surged and the dollar skidded today, after minutes of the US Federal Reserve’s latest policy meeting showed concerns about downside risks of a stronger dollar and the global economy.