KUALA LUMPUR (June 17): The FBM KLCI closed 0.23 point or 0.01% lower today while Bursa Malaysia's small market capitalisation (small cap) and technology stocks fell by a larger quantum as US-China trade war concerns sidelined investors further in Malaysia's already thinly-traded equities market.
Investors are also closely anticipating the US Federal Reserve's interest rate decision following the conclusion of its Federal Open Market Committee's two-day meeting on Wednesday (June 19).
At 5pm today, the KLCI closed at 1,638.40 following an 11th-hour plunge on profit taking after rising to its intraday high at 1,644.04. "Now that the KLCI comes below the level of 1,650 points, we foresee further downside selling pressure to around 1,630 points, as there are no other catalyst," Malacca Securities Sdn Bhd senior analyst Kenneth Leong told theedgemarkets.com.
Bursa's small cap index ended down 104.87 points or 0.82% at 12,741.18 while the technology gauge fell 0.42 point or 1.35% to 30.78.
Bursa technology stocks' decline today could have taken cue from news on Friday that a warning from Broadcom Inc of a broad weakening in global demand weighed on US chipmakers.
On Friday, Reuters reported that US stocks ended lower as investors were cautious going into this week's Federal Reserve meeting, while a warning from Broadcom of a broad weakening in global demand weighed on chipmakers and added to US-China trade worries.
It was reported that shares of Broadcom fell 5.6% after it cut its full-year revenue forecast by US$2 billion, blaming the US-China trade conflict and export curbs on Huawei Technologies Co Ltd. According to the newswire, other chip companies, which both source product and sell heavily in China, dropped sharply while the Philadelphia Semiconductor index tumbled 2.6%.
"Investors are bracing for next week's (this week's) Fed meeting in light of recent market expectations that the US central bank could cut interest rates as much as three times this year. Some strategists say stocks are primed for a selloff should the Fed fail to take an even more dovish tilt," Reuters reported.
At Bursa today, trade war concerns and expectation of the US interest rate decision could have led to thinner trade volume at 1.62 billion shares worth RM1.43 billion.
On Friday, trade volume stood at 1.75 billion shares worth RM1.67 billion.