China data drags KLCI into the red; ringgit weakens

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KUALA LUMPUR (Sept 23): The FBM KLCI fell 22.2 points or 1.4% as the ringgit depreciated on weaker-than-expected China factory data.

Reuters reported the preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) fell to 47.0 in September, the worst since March 2009, missing market expectations for 47.5 and slipping from August's final 47.3. Levels below 50 signify a contraction.

At 5pm, the KLCI settled at 1,613.17, after touching its intraday low at 1,609.83. RHB's group chief economist Lim Chee Seng said the KLCI fell mainly on global factors, such as the Chinese Caixin data and US shares' overnight losses.

"The two major negative factors continue to reinforce each other and weighed down the regional market," Lim said.

In China, the Shanghai Composite declined 2.2%, while Hong Kong's Hang Seng fell 2.26%. South Korea's Kospi dropped 1.89%.

Japan markets, which were closed since Monday, resumes trading tomorrow (Sept 24). Malaysian markets will be closed tomorrow for the Hari Raya Haji holiday.

Today, Bursa Malaysia saw 483 decliners, versus 315 advancers. A total of 1.78 billion shares, worth RM2.12 billion, exchanged hands.

Top gainer was Nestle (M) Bhd, while Public Bank Bhd led decliners. The most actively-traded stock was UEM Sunrise Bhd.

In currency markets, the ringgit was traded at 4.3435 against the US dollar at 5pm. The ringgit had pared losses from its weakest point today at 4.3608.

Economists foresee more risk for the ringgit, due to the high foreign ownership in Malaysian government bonds.

"More risks lie ahead. The Fed’s tightening cycle, which our US team believe will start in December this year, will likely lead to further unwinding of the high foreign ownership holdings (of about 47%) of Malaysian government bonds," BofA Merrill Lynch Global Research economist Chua Hak Bin wrote in a note today.

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