FBM KLCI declines with China shares; Bursa construction index down 10%

FBM KLCI declines with China shares; Bursa construction index down 10%
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KUALA LUMPUR (Oct 8): The FBM KLCI declined 1.4 points or 0.08% after China's share drop hit world markets. Bursa Malaysia's construction index fell 19.53 points or 10.06%.

At 5pm, the KLCI settled at 1,775.75 points after falling to its intraday low at 1,769.72 points. In China, the Shanghai Stock Exchange Composite closed 3.72% lower while Hong Kong's Hang Seng was down 1.39%.

Elsewhere across Asia, South Korea's Kospi declined 0.6% while Japan markets were closed today for the Health-Sports Day holiday.

Reuters reported that shares in Asia slumped Monday as China's markets stumbled in their first trading day after a one-week holiday even though Beijing's central bank increased liquidity to offset the impact of an escalating trade dispute with the United States. It was reported that The People's Bank of China (PBOC) on Sunday cut the level of cash that banks must hold as reserves, aimed at lowering financing costs as policymakers worry about fallout from the tariff row with the United States.

It was reported that reserve requirement ratios (RRRs) — currently 15.5 percent for large commercial lenders and 13.5 percent for smaller banks — will be cut by 100 basis points effective Oct 15, the PBOC said, matching a similar-sized move in April. Asian shares were also hit on Monday as investors in Chinese stocks reacted for the first time to new pressure from Washington and a report that Chinese spies had compromised US hardware, according to Reuters' report.

In Malaysia, CIMB Research analyst Nick Foo Mun Pang told theedgemarkets.com : “While it may be positive news that the PBOC cut the level of cash that banks must hold as reserves, but being the fourth time this year, investors may think that China is foreseeing a very negative outlook and hence the need for the central bank to cut rate and spur growth.”

“(On the KLCI) From a technical point of view, the KLCI has broken out of a head-and-shoulders pattern last Friday, which is very negative, hence we have a downside target of 1,730 points. The index is expected to stage a technical rebound, but the rebound is going to be short lived," Foo said.

Today, Bursa Malaysia's construction index was the largest decliner, in percentage terms, among the bourse's indices. At 5pm, the construction index closed at 174.59 points, weighed down by news reports the Federal government will retender all the unfinished underground work of the Mass Rapid Transit Line 2 (MRT2) project.

It was reported that this follows the Cabinet's decision to terminate the underground work contract of the MRT2 with MMC Gamuda KVMRT Sdn Bhd, a joint venture between Gamuda Bhd and MMC Corp Bhd.

Across Bursa Malaysia, Gamuda Bhd lost 78 sen to settle at RM2.43 to become the exchange's largest decliner. Gamuda was also the most-actively traded stock with some 93 million shares changing hands.