KUALA LUMPUR (Dec 14): The FBM KLCI fell 10.18 points or 0.6% as the double whammy of low crude oil prices and anticipation of the US interest rate decision hit Asian share markets.
At 5pm, the KLCI settled at 1,629.96. Across Asia, Japan's Nikkei 225 was down 1.8%, South Korea's Kospi fell 1.07%, while Hong Kong's Hang Seng index dropped 0.72%.
US policy makers will meet tomorrow (Dec 15) and on Wednesday (Dec 16) to decide on the country's monetary policy. A US rate hike does not bode well for emerging Asian markets like Malaysia as investors turn their attention to US dollar-denominated assets.
A US rate hike will be the country's first increase in about seven years from near-zero levels.
In Malaysia today, JF Apex senior analyst Lee Cherng Wee said the market was still pricing in negative sentiment from low oil prices and the US Federal Reserve (Fed)'s expected decision.
"The possible rate hike by the Fed coupled with the fresh lows in oil prices are the two factors bringing down the market today," Lee told theedgemarkets.com.
Crude oil prices have fallen below US$40 a barrel on oversupply concerns. At the time of writing, Brent oil was trading at US$37.74 a barrel.
Sentiment on crude oil also hit the ringgit as the commodity forms a major component of the Malaysian economy and government revenue.
The ringgit weakened to 4.3267 against the US dollar at 5pm. An economist with MIDF Amanah Investment Bank Bhd said the ringgit possessed a higher correlation with the commodity's price.
"In the short term, we may be seeing further downward pressure on the commodity index, particularly as it is expected that the current winter is likely to become a warm winter, due to the El Nino this year," he said via email.
The spotlight was also on the yuan. Bloomberg reported that the ringgit declined to a three-week low, following China's introduction of an index tracking the yuan against a basket of currencies.
It was reported that the move might put pressure on Asian currencies to depreciate as policy makers bid to keep exports competitive with the world's second-biggest economy, by allowing their exchange rates to weaken and as a looming US interest-rate increase strengthens the greenback.
In Malaysia, Bursa Malaysia saw 1.58 billion shares valued at RM1.59 billion traded.
Decliners outweighed gainers at 782 against 177 gainers.
Top decliners included Petronas Gas Bhd and Petronas Dagangan Bhd. Leading gainers included Ajinomoto (M) Bhd and Kluang Rubber Co (M) Bhd.
Newly-listed Red Sena Bhd's shares and warrants were the most-actively traded counters on Bursa Malaysia today.
(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)