KUALA LUMPUR (Sept 18): The FBM KLCI fell 12.09 points or 0.7% as investors sold plantation shares amid a stronger ringgit and after major commodities importer India upped import taxes on crude and refined edible oil by 5%.
The KLCI closed at 1,669.45 points on losses in oil palm plantation stocks like Sime Darby Bhd and Kuala Lumpur Kepong Bhd. Both stocks ended among Bursa Malaysia's top decliners.
Analysts said the KLCI had also fallen as investors locked in gains, following yesterday's 34.39 point or 2% gain amid an uncertain economic outlook.
“Given the uncertainty surrounding the global economy currently, investors are capitalising on the recent rebound in the market, locking in their profits,” Public Investment Bank Bhd head of research Ching Weng Jin told the theedgemarkets.com today.
The ringgit was closely watched, after US Federal Reserve's anticipated interest rate hike did not materialise, following a two-day meeting which ended yesterday.
Today, the ringgit strengthened 1.34% to 4.1965 as US' policy makers' decision to postpone interest rate hikes, supported emerging Asian markets.
“We could potentially see foreign interest trickling back into the local market, as the ringgit approaches the 4.0000 levels against the US dollar,” Ching said.
A stronger ringgit does not bode well for Malaysian palm oil exports, as it makes the commodity costlier for global buyers. India's higher import taxes will also result in more expensive Malaysian palm oil purchases by the major economy.
In Malaysia, Bursa Malaysia saw 2.03 billion shares, valued at RM2.63 billion, traded. Gainers edged decliners at 482 against 384, while 275 shares were unchanged.
Sarawak Oil Palms Bhd led gainers, while newly-listed Aemulus Holdings Bhd was the most actively-traded stock.
Across Asian share markets, Hong Kong’s Hang Seng and South Korea’s Kospi registered gains of 0.3% and 0.98% respectively. Japan’s Nikkei 225, however, fell 1.96%.
According to Reuters, traders in Tokyo said the Fed's decision left investors with two conflicting interpretations: investors are concerned that the U.S. economy is not growing strongly enough to withstand rate increases, but at the same time, easy monetary conditions in the U.S. may now continue for a longer period of time, which should support global equity markets.
(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.)