KLCI extends losses on China market fall

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KUALA LUMPUR (April 20): The FBM KLCI shed 2.24 points or 0.1% on China's share market fall and lower crude oil prices.

At 5pm, the KLCI closed at 1,708.91 points. In China, the Shanghai Composite Index dropped 2.31% while Hong Kong's Hang Seng fell 0.93%.

Yesterday, the KLCI fell 6.53 points to 1,711.15.

In Malaysia today, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com that the KLCI's decline was in line with China's share fall.

"It (China) has become a potential spoiler for any positive momentum building in this region. It can be anything (bad news from China): from its currency's drop to its markets," Pong said.

The overarching story of a slowdown in the world's second largest economy was extended to its corporate sector, as Pong said investors were concerned of the earnings prospects going forward.

Reuters reported that Shanghai stocks had their worst performance in eight weeks on Wednesday, tumbling more than 2% and breaching a key technical support level as investors who are increasingly worried about the economy took profits from a long rally.

Although no specific event appeared to trigger the abrupt sell-off, traders and analysts listed several contributing factors, including reduced stimulus hopes, disappointment over economic restructuring, rising credit risks and lofty valuations of small-caps.

In Malaysia, Pong said the conundrum of crude oil prices' fall also cast a dark cloud over Bursa Malaysia. But with the ringgit continuing to strengthen today, he said such sentiment caused many export-oriented stocks to lose more flavour.

Brent crude oil futures fell 94 cents to US$43.09 a barrel at 0830 GMT after Kuwaiti workers ended a three-day strike. The ringgit strengthened 0.5% against the US dollar to close at 3.8667.

"Some of the small caps with biggest earnings growth last year happened because of the weaker ringgit. The enthusiasm might have ebbed," Pong said.

Bursa Malaysia saw 413 stocks gained while 385 declined. A total of 1.75 billion shares valued at RM2.06 billion were traded.

AirAsia X Bhd warrants AAX-WA were the most-actively traded. Top gainer was Dutch Lady Milk Industries Bhd while the biggest decliner was British American Tobacco (M) Bhd.