KUALA LUMPUR (Mar 20): The FBM KLCI retreated as investors took profit following substantial gains on news of the US monetary stance.

At 5pm, the KLCI fell 5.48 points or 0.3%  to settle at 1,803.65 points.

Yesterday, the KLCI rose 11.56 points to close at 1,809.13 after US policymakers indicated that rate hikes would be gradual. Such sentiment had resulted in global fund flows into emerging Asian markets like Malaysia, where interest rates are higher.
 
Today, an analyst told theedgemarkets.com that apart from the US factor, investors were also mindful of Malaysian economic dynamics.

These include concerns on 1Malaysia Development Bhd’s (1MDB) debts as well as as the country's possible credit rating downgrade by Fitch.

“The decline in the KLCI shows that the market is cautious of the inherent issues in Malaysia, particularly concerns over the 1MDB's debts as well as the possible downgrade by Fitch.

"That is why you will see that many investors have chosen to stay on the sidelines and trading on Bursa Malaysia move sideways,” he said.

Overall, Bursa Malaysia saw 325 gainers and 471 decliners while 314 unchanged counters.

A total of 2.12 billion shares valued at RM3.14 billion changed hands.

Top gainers included British American Tobacco (M) Bhd and Allianz Malaysia Bhd. Meanwhile, top decliners included Lafarge Malaysia Bhd and Batu Kawan Bhd

MQ Technology Bhd was the most actively traded stock.

The weakening ringgit was also closely watched as low inflation raises the likelihood of an interest rate cut by Bank Negara Malaysia.

The ringgit weakened to 3.7333 against the US dollar, and  depreciated to 2.6884 against the Singapore dollar

BofA Merrill Lynch Global Research said in a report today Malaysia's February inflation at 0.1% year-on-year, may prompt Bank Negara to cut interest rates.

"The sharp fall in inflation has raised the likelihood of policy easing, in our view," BofA Merrill Lynch said.

Across regional share markets, Japan’s Nikkei was up 0.43%, Hong Kong’s Hang Seng fell 0.38% while South Korea’s Kospi was lower by 0.03%.

Reuters reported that Asian stocks stalled on Friday as Federal Reserve-inspired gains petered out, while the dollar steadied after rebounding from the shock of a surprisingly dovish U.S. central bank.