KLCI down 22.01pts, ringgit weakens after 1MDB defaults

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KUALA LUMPUR (April 26): The FBM KLCI dropped 22.01 points or 1.3% to its intraday low while the ringgit weakened after 1Malaysia Development Bhd (1MDB) said it defaulted on interest payment for its bonds.

The KLCI had also fallen with certain Asian markets ahead of the US Federal Reserve and Bank of Japan (BOJ) meetings this week. The outcome of these meetings will offer clues on the US and Japan's monetary policies, which could have a major impact on global markets.

At 5pm, the KLCI closed at 1,692.50 points while the ringgit depreciated to 3.9290 against the US dollar. Across Asian share markets, Japan's Nikkei 225 fell 0.49% although Hong Kong's Hang Seng increased 0.48%.

Reuters reported that Asian stocks retreated on Tuesday as investors braced for central bank policy meetings in the US and Japan this week.

According to Reuters' report, BOJ policymakers were likely to meet on Wednesday and Thursday to discuss further easing, while the US Federal Reserve, which lifted its benchmark overnight interest rate in December for the first time in nearly a decade, is scheduled to meet on Wednesday.

In Malaysia, Areca Capital Sdn Bhd chief executive officer Danny Wong told theedgemarkets.com that investors were closely watching the 1MDB issue.

1MDB said today it had defaulted on the US$50.3 million (about RM198 million) interest payment for the US$1.75 billion bonds issued by its unit 1MDB Energy (Langat) Ltd.

1MDB, however, insisted that the risk of cross default on other bonds issued by the company was limited. The Malaysian Government via Minister of Finance Inc owns 100% of 1MDB.

Wong said: "The market is on a temporary pause now as there is no strong catalyst in the market to buy up in one to two months."

According to him, not helping the share market is the slowdown in foreign fund inflow this month as investors eye corporate earnings during the current financial reporting season.

Across Bursa Malaysia today, decliners outpaced gainers by 779 to 164. Trading volume was 2.91 billion worth RM2.33 billion.

Top gainer was Guinness Anchor Bhd while top decliner was Globetronics Technology Bhd. Most active was Sona Petroleum Bhd's warrants.