FBM KLCI down on profit taking, joins other indices in the red on weak sentiment

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KUALA LUMPUR (June 12): Mirroring the overnight performance of Wall Street, equities around the globe — including the FBM KLCI — slumped into a sea of red as the negative sentiment in the US spilt over into the rest of the markets.

At 5pm, the FBM KLCI closed 11.23 points or 0.72% lower to settle at 1,546.02 points. Throughout the day, the benchmark index was only trading in negative territory.

However, despite opening more than 40 points lower from yesterday’s close, the FBM KLCI managed to pare some of its losses.

Inter-Pacific Securities Sdn Bhd head of research Victor Wan said the FBM KLCI was down on profit-taking activities as the market has been “overbought”.

From the recent low of 1,219.72 on March 19, the FBM KLCI has risen some 27% to today’s closing.

“The market needs to take a breather [from the rally] that was driven by liquidity and not so much of fundamentals,” Wan told theedgemarkets.com, adding that fundamentals are not looking good for the KLCI as he anticipates “very weak results” coming up in the second quarter of this year.

Thus, he opined that investors need a “reality check”, as currently, the high retail participants are helping to provide support to the market.

Additionally, Wan noted that the downtrend in the KLCI today also coincides with the negative sentiment from the US as fears of Covid-19 infections resurface, coupled with the dovish outlook from the US Federal Reserve.

Confirmed cases of Covid-19 in the US have exceeded 2 million, which has fuelled concerns on the spread of this outbreak.

Still, KLCI appears to be faring better than other markets. Across Asia, the biggest laggard is South Korea's Kospi, which fell 2.04%, followed by the Laos Composite Index, which was down 1.85%, and Thailand’s SET Index, which slipped 1.21%.

Japan's Nikkei 225 slid 0.75%, Hong Kong’s Hang Seng was down 0.73%, and China’s Shanghai Composite Index dipped 0.04%.

Among the 30 constituents of KLCI, banks pushed down the benchmark index, led by CIMB Group Holdings Bhd, which was down 14 sen or 3.54% to close at RM3.81 today, followed by Public Bank Bhd, which slid 44 sen or 2.55% to close at RM16.80, and AMMB Holdings Bhd, which was down seven sen or 2.12% to settle at RM3.23.

Malayan Banking Bhd was also down 17 sen or 2.1% at RM7.91, while RHB Bank Bhd declined 10 sen or 1.96% to RM5 today.

Today, Bursa Malaysia saw 8.03 billion shares worth RM4.77 billion traded. Losers led gainers by 803 to 283, while 343 counters remained unchanged.

All indices on Bursa Malaysia, apart from the Bursa Malaysia Real Estate Investment Trust (REIT) Index, were down. The worst hit was Bursa Malaysia Energy index, which slipped 23.01 points or 2.81% to 797.09 points today.

At the time of writing, Brent crude oil prices slipped to US$38 per barrel, down 10.17% from the recent peak of US$42.30 per barrel last Friday (June 5).

Reuters reported that Asian shares fell sharply on Friday and oil prices extended losses on growing concerns that a resurgence of Covid-19 infections could stunt the pace of recovery in economies reopening from lockdowns, or even lead to fresh restrictions.

Oil futures slumped for a second consecutive trading session on fears of weak global energy demand, which boosted the safe-haven US dollar, the newswire added.