FBM KLCI down 0.6% as China-US trade war escalates

FBM KLCI down 0.6% as China-US trade war escalates
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KUALA LUMPUR (Aug 26): The FBM KLCI settled 8.8 points or 0.55% lower at 1,600.53 today, after broad-based selling across Bursa Malaysia, following the US and China's planned additional tariffs on each other's goods in tit-for-tat responses, which led to escalating US-China trade war concerns.

At 5pm, all Bursa indices finished in negative territory except for the real estate investment trust (REIT) gauge. The index for small market capitalisation stocks closed down 124.84 points or 0.95% at 13,017.80. 

The KLCI cut losses after falling to its intraday low at 1,590.51. At 5pm, the top percentage decliner among the 30 KLCI-linked stocks was Petronas Chemicals Group Bhd, after the counter closed down 31 sen or 4.29% at RM6.91.

Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com that the market seems to be taken aback, after the sudden outburst that appears to be an emotive response to tariffs announced by the US.

“This looks like a tit-for-tat [response] and I don’t see an easy resolution to it (the trade war), as there seems to be no middle ground between US and China. It is very unsettling for the market, because there is no direction from day to day," Pong said.

Reuters reported that the US President Donald Trump announced on Friday that Washington will impose an additional 5% duty on US$550 billion worth of Chinese goods, hours after Beijing announced its latest retaliatory tariffs on about US$75 billion worth of US goods in the latest tit-for-tat moves in their bilateral trade dispute.

It was reported that China's commerce ministry said late last week that it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the US, including crude oil, agricultural products such as soybeans, and small aircraft.

Today, Asian stock markets fell substantially, amid escalating US-China trade war concerns. In China, the Shanghai Stock Exchange Composite and Hong Kong’s Hang Seng ended down 1.17% and 1.91% respectively. 

Elsewhere, Japan's Nikkei 225 fell 2.17%, while South Korea’s Kospi dropped 1.64%.