KUALA LUMPUR (May 3): The FBM KLCI declined 1.27% in line with weakened investor sentiment, as the deadline for troubled strategic investment fund 1Malaysia Development Bhd (1MDB)’s semi-annual interest payment approaches.

At 5pm, the market fell 21.28 points or 1.27% to close at 1,651.44.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said the decline in the benchmark index could be due to the upcoming May 11 deadline for 1MDB’s semi-annual interest payment, due to its US$1.75 billion bond issued by 1MDB Energy Ltd.

“Investors are worried about 1MDB’s upcoming interest payment due May 11, worried on whether there will be another default. This could be the drag factor on the local market, as regional markets are mostly mixed.

“It’s uncharacteristic for Malaysia to register the biggest drop among Asian markets, as we tend to be more defensive compared to other markets,” said Pong.

Overall, the bourse saw a total of 1.69 billion shares traded, worth RM1.73 billion. Decliners outnumbered gainers at 624 versus 221, while 324 counters remain unchanged.

Leading decliners were blue chip counters such as British American Tobacco (Malaysia) Bhd and Kuala Lumpur Kepong Bhd, while Lay Hong Bhd headed gainers. The most actively-traded stock was Sona Petroleum Bhd’s warrant stock, SONA-WA.

Markets in the region were mixed, as Hong Kong’s Hang Seng fell 1.85%, while South Korea’s Kospi rose 0.42%. Japan markets are closed today, tomorrow (May 4) and Thursday (May 5) for the Golden Week holidays.

According to Reuters, Asian stocks erased earlier gains and the Japanese yen rallied to a fresh eighteen-month high on Tuesday, as investors grew doubtful about global central banks' ability to boost growth through aggressive policy easing.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat after being up as much as 0.4% on the day, and is now trading at a three-week low.