KLCI falls 20.69pts weighed by Tenaga

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KUALA LUMPUR (May 25): The FBM KLCI slid 20.69 points or 1.2% in afternoon trades, weighed by selling pressure on Bursa Malaysia's top decliner Tenaga Nasional Bhd

At 3.28pm, the KLCI slumped to 1,766.81 points. At 3.44pm, the index fell 21.58 points to 1,765.92.

Other stocks such as Petronas Dagangan Bhd and Sime Darby Bhd also contributed to losses in the index.

At 3.45pm, Tenaga (fundamental: 1.3; valuation: 1.8) dropped 60 sen or 4% to RM13.10 with some 15 million shares done on continuing selling pressure since last Friday.

Shares of state-controlled utility Tenaga had fallen amid concerns the company may take over 1Malaysia Development Bhd's power-generation assets, according to remisiers.

They also said Tenaga had fallen in tandem with the KLCI after hedge funds bought more index-linked put warrants.

A remisier told theedgemarket.com that the drop in Tenaga shares could be due to hedge funds trading KLCI-linked put warrants heavily. The put warrant prices have an inverse correlation with the underlying index, hence, allowing investors to hedge against losses in the broader market today.

According to the remisier, Tenaga, being a KLCI component stock, was affected by the hedge funds' trading strategy.

(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.)