KUALA LUMPUR (May 3): The FBM KLCI dropped 21.58 points or 1.3% while the ringgit weakened as investors evaluated the impact of a stronger yen and 1Malaysia Development Bhd (1MDB) debt on the stock market.

At 12:30pm, the KLCI settled at 1,651.14, while the ringgit depreciated against the US dollar at 3.9292 at 1:04pm. Against the yen, the ringgit exchanged hands weaker at 3.7094.

Malaysian shares might have taken the cue from substantial losses in Japan equities yesterday (May 2).

Malaysian markets were closed for the Labour Day holiday yesterday, while Japan's Nikkei 225 fell 3.11%. Japan markets are closed today, tomorrow (May 4) and Thursday (May 5) for the Golden Week holidays.

Reuters reported Nikkei 225 tumbled to near 3-week low on Monday, after the yen hit a fresh 18-month high against the dollar, hurting profit outlook for exporters and other shares benefitting from a weaker yen.

In Malaysia today, TA Securities Holdings Bhd said concerns on 1MDB's debt could lead to market volatility.

TA said "concerns over further cross default on 1MDB's next interest payment due May 11 on another bond issue, could see market volatility remaining high."

"Nonetheless, the implied government guarantees backing the bond payments and absence of any downgrade by the major rating agencies on the country, should cushion downside risk," TA said.

Across Bursa Malaysia today, there were 542 decliners against 186 gainers. A total of 895.73 million shares, valued at RM723.15 million, were traded.

Inter-Pacific Securities Sdn Bhd remisier Sam Ng told theedgemarkets.com that he noted certain investors were taking short positions in the share market.
 
“But the trading volume of the KLCI component stocks are thin,” Ng added.