KUALA LUMPUR (Feb 2): Malaysian stocks broke the upward momentum in the last one week today, with the FBM KLCI falling by 14.62 points or 0.88% to close at 1,653.18.
Plantation stocks were the worst hit as investors contemplated the likely impact of the sudden announcement of the hike in foreign worker levy ranging from 100% to 367% on plantation firms' earnings, said analysts.
Weak cues across the region also dampened sentiment as crude oil prices slipped and the realisation that Bank of Japan's latest stimulus measures were not enough to spur liquidity into markets.
As at writing, Brent crude fell 49 US cents to US$33.75 per barrel. The ringgit, which had gained handsomely relative to its Asian peers since the budget revision, also fell 1.13% to 4.2085 per US dollar.
Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew attributed the benchmark KLCI's fall today mainly to the announcement of the new foreign worker levy rate, which is effectively more than double the current rate.
On Sunday, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi was reported as saying that the restructured levy rate system for foreign workers is expected to bring in an extra income of RM2.5 billion to the government.
With the new streamlined system, foreign worker levy in the manufacturing, construction, and services sectors comes in at RM2,500 per worker. Those in the plantation and agriculture sectors have to pay RM1,500 per head.
"That (the new foreign worker levy system) brought some effect to the KLCI's fall today as it impacted plantation and manufacturing sectors, and to some extent, services," Pong told theedgemarkets.com.
This was evidenced by Sime Darby Bhd's 6.57% drop today, while Felda Global Ventures Holdings Bhd lost 3.49%, and Kuala Lumpur Kepong Bhd (KLK) was down 1.34%.
Nonetheless, Pong said he was "mildly positive" about Malaysian equities' outlook, mainly because of Bank Negara Malaysia's (BNM) statutory reserve requirement (SRR) cut by 50 basis points to 3.5%.
He said this development had brought foreign investors back to Bursa Malaysia.
"To the foreigners, credit is important. The SRR cut will lower banks' costs of fund," he said.
Pong expects BNM to do further cuts to the SRR, or the fraction of interest-free money that banks need to keep, given that the central bank tends to do so in a series, rather than a one-off.
"I think BNM will do another three to five more cuts (of 50 basis points) to 2% or 1%. If my estimates are correct, this should free up about RM60 billion in liquidity," he added.
Today, Bursa Malaysia saw 1.61 billion shares collectively valued at RM2.54 billion traded. A total of 463 counters fell, while 382 were gainers.
APFT Bhd was today's most actively traded counter, followed by Tiger Synergy Bhd and XOX Bhd.
The biggest gainers for the day included DanaInfra Nasional Bhd's retail Islamic bond 0400GC and Petronas Dagangan Bhd. Lay Hong Bhd also made it to the list as it spiked 84 sen or 10.13% to close at RM9.13 today, which prompted Bursa Securities to issue a cautionary note to investors when trading the counter.
Today's top decliners were plantation giants Sime Darby, Genting Plantations Bhd and KLK.
Regionally, with the exception of China's Shanghai Composite Index, which gained 2.26%, Japan's Nikkei 225 index dropped 0.64%, Hong Kong's Hang Seng Index lost 0.76%, Australia's S&P/ASX fell 1%, and South Korea's Kospi Index dipped 0.95%.
Neighbouring Singapore's Straits Times Index also fell by 0.87%.
Reuters reported Asian shares fell on Tuesday as crude oil prices slid on oversupply fears and after downbeat manufacturing data raised concerns about sluggish global economic growth.