KLCI declines, ringgit weakens ahead of Fed minutes

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KUALA LUMPUR (Nov 18): The FBM KLCI declined 0.3%, tracking Asian share markets, as investors anticipated the US Federal Reserve's meeting minutes.

The Federal Reserve will announce its Oct 27 and Oct 28 meeting minutes today. The minutes are closely watched, as they offer clues on the timing of US interest rate hikes.

US rate hikes do not bode well for Asian markets, as investors turn their attention to US dollar-denominated assets.

In Malaysia, the KLCI declined 5.03 points to closed 1,656.50 at 5pm, while the ringgit weakened to 4.3890 versus the US dollar. Analysts sensed a lack of direction in the local share market.

“It seems like the KLCI was hesitating today, not sure of its direction, amid mixed signals from global markets. For example, the Dow Jones saw a slightly higher close overnight, while the S&P 500 was down. This gives some mixed signals to the KLCI,” Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told the theedgemarkets.com.

ValueCap Sdn Bhd's planned investment in Malaysian shares was also closely anticipated. The government earmarked RM20 billion for state-owned fund manager Valuecap to invest in the local share market.

Valuecap is equally-owned by Khazanah Nasional Bhd, Kumpulan Wang Persaraan (Diperbadankan) and Permodalan Nasional Bhd.

Pong said it remained to be seen whether the government would actually go on with its liquidity-injection plan.

“It’s past the middle of November already and there has been no updates on the proposed exercise. They indicated that they will invest in undervalued stocks, but now valuations are not as cheap,” he said.

Across Bursa Malaysia, 2.42 billion shares, worth RM2.03 billion, were traded. There were 516 decliners and 400 gainers.

Leading decliners included Top Glove Corp Bhd and PPB Group Bhd, while top gainer was Dutch Lady Milk Industries Bhd. The top-active stock was Instacom Group Bhd.

Across the region, Hong Kong’s Hang Seng and South Korea’s Kospi fell 0.34% and 0.04% respectively. Japan’s Nikkei, however rose 0.09%.

Reuters reported that an index of Asian shares fell on Wednesday, as copper prices tumbled and another bomb scare in Europe and gunfire in the French capital hurt risk appetite, while bets that the Federal Reserve remains on track for a rate hike, underpinned the dollar.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)