KLCI up 9.59pts as South Korea rate cut spurs Asian shares

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KUALA LUMPUR (Mar 12): The FBM KLCI gained 9.59 points or 0.54% as Asian markets rose on South Korea's interest rate cut.

At 12.30pm, the KLCI settled at 1,787.75 on gains in PPB Group Bhd and Public Bank Bhd, among others.

Reuters reported that a surprise interest rate cut by South Korea's central bank on Thursday helped lift an index of Asian stocks away from the previous session's seven-week lows, while the prospect of higher US interest rates buoyed the dollar.

The Bank of Korea's monetary policy committee cut its base rate by 25 basis points to a record low of 1.75 percent, its first cut in five months. It joined its counterparts in other countries which have recently taken advantage of lower inflation to ease monetary policy to spur sluggish growth.

The rate cut catalyst drove Asian stock markets higher with Japan's Nikkei 225 rising 1.39%, South Korea's Kospi adding 0.36% and Hong Kong's Hang Seng 0.43% higher.

In Malaysia, Bursa Malaysia gainers outpaced decliners 441 to 263 while 301 counters traded unchanged. Volume was 1.73 billion shares valued at RM1.01 billion.

The top gainers included Panasonic Manufacturing Malaysia Bhd, Allianz Malaysia Bhd and Public Bank.

Top decliners included Daibochi Plastic and Packaging Industry Bhd, MSM Malaysia Holdings Bhd and Shell Refining Company (Federation of Malaya) Bhd.

Actively traded counters included Eti Tech Corp Bhd, Xinghe Holdings Bhd and Ingenuity Consolidated Bhd.

Despite local equity gains, analysts warned that the overbought market might see profit-taking.
 
In a note on Thursday, Affin Hwang Investment Bank Bhd said it anticipated the local market to release its short-term overbought pressure with pullbacks bound to happen.
 
"Volatility is expected to increase," Affin said.

Sino Hua-An International was among decliners at Bursa Malaysia's afternoon break after the coke producer said its China operations had been temporarily halted. This is pending completion of an environmental-compliance inspection.

Coke, which is derived from coal, is used in iron and steel production.

Earlier, Sino Hua-An fell as much one sen or 9% to 10 sen before paring losses. At 12:30pm, Sino Hua-An settled at 10.5 sen with 304,800 shares changing hands.

Yesterday, Sino Hua-An (fundamental:1.85; valuation: 1.2) said its China-based subsidiary Linyi Yehua Coking Co Ltd, had stopped production temporarily to comply with the notification from local authorities, pending completion of a compliance inspection.

Sino Hua-An said the Environmental Protection Ministry had recently initiated a more stringent scrutiny on heavy industries.

Sino Hua-An said steel mills and coke producers had been instructed to stop production temporarily, until such time when the assessments had been concluded and appropriate clearance given by the authorities.