KLCI down 0.36% as Brexit batter world markets

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KUALA LUMPUR (June 24): The FBM KLCI dipped as much as 28.1 points following volatile trading today as global markets were hammered after Britain voted to exit the European Union (EU), a move that has compelled UK Prime Minister David Cameron to call it quits.

However, just before the end of trading hours, the benchmark index rallied and pared down the bulk of the losses and closed at 1,634.05 points, though it is still down 5.93 points or 0.36%.

Etiqa Insurance & Takaful head of research Chris Eng said the KLCI is much more resilient compared to other regional peers as the selldown was much more severe in markets in northeast Asia.

"It is still too early to say where the market will end up. We still need to see the reaction of Asian markets on Monday when they will react to how the US markets will react to Brexit," he said when contacted.

He said early indication shows that the KLCI's performance is positive, as it has not hit the 1,600-point level.

"By Monday, if we can hold above the 1,600 level on Monday, then that is positive because it shows that probably a lot of foreigners have already exited (the KLCI), which we do already know as year-to-date net buy is more or less zero and there is not a lot of selling pressure left in the KLCI so it can withstand some shocks," he added.

Meanwhile, the local bourse saw 2.23 billion shares, valued at RM2.36 billion, traded today. Decliners led gainers by 760 counters to 179 counters, while 277 counters remained unchanged.

The decliners included Nestle (Malaysia) Bhd, Carlsberg Brewery Malaysia Bhd, Fraser & Neave Holdings Bhd and Genting Bhd.

Top gainers included British American Tobacco (Malaysia) Bhd and IHH Healthcare Bhd, as well as a host of Hang Seng put warrants. AirAsia Bhd was the most actively traded counter with 63 million shares done.

The ringgit, which weakened to as low as 4.1365 against the US dollar earlier in the day, strengthened to 4.0860 at the time of writing.

In a statement, CIMB group chief executive Tengku Datuk Sri Zafrul Aziz said Britain's exit from the EU will take some time to complete and that there will be volatility and a devaluation of the pound and asset values in the immediate term, which could result in investors fleeing towards gold or the US dollar.

"The higher potential risk is in the contagion effect of Brexit, e.g. other European countries seriously considering exiting the EU, plus the impact to other major markets caused by immediate financial product pricing, such as foreign exchange rate, equity, bonds etc," he said.

"Significant changes to the regulatory framework, tax regimes, immigration, customs etc will hamper the UK's economic outlook as these changes are made and instituted," he added.

However, he said the overall Brexit impact on Asean will likely be contained as countries like Indonesia, Vietnam and Thailand do not have significant exposure to the UK economy.

UK's FTSE 100 was reportedly battered after the Brexit vote, with over £100 billion (about RM570 billion) wiped off the market, while the pound plunged to 1.3331 against the greenback.

Meanwhile, Reuters reported the 'Leave' vote has roiled markets across Asia, with the Japan's Nikkei 225, Hong Kong's Hang Seng Index and Chinese markets tumbling.

The Nikkei 225 ended 7.9% lower at 14,952.02 points; Hang Seng Index fell 4.7% to 19,894.12 points, while South Korea's Kospi was down 3.09% to 1,925.24 points.

Both China's blue chip CSI300 Index and the Shanghai Composite Index lost 1.3% to 3,077.16 and 2,854.29 points, respectively.