KLCI in the red, dragged by Tenaga, TM and possible Fitch downgrade

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KUALA LUMPUR (June 25): The benchmark FBM KLCI closed 0.86% or 14.87 points lower at 1,716.81 points at 5pm today, after a trading day that saw government-linked companies Telekom Malaysia Bhd (TM) and Tenaga Nasional Bhd fall as much as 4.35% and 1.72% respectively.

TM closed down 30 sen at RM6.60 today after 13.11 million shares changed hands, making it the second top loser across the bourse today, while Tenaga closed at RM12.56 after 13.38 million shares were done — and was the fourth top loser.

In a note today, Affin Hwang Capital said it maintains a hold call on TM, pending news on the group’s wireless expansion plans, post its investment into wireless provider Packet One Networks (Malaysia) Sdn Bhd (P1).

“While TM should see strong revenue growth momentum, we view P1 as a potential wildcard that could drag down earnings in the short term,” said Affin Hwang.

TNB continued trending downward for the fourth consecutive day, closing down 22 sen or 1.72% at market close today, on news of its RM10 billion sukuk plan to partly finance its purchase of a 70% stake in Project 3B from 1Malaysia Development Bhd (1MDB).

Meanwhile, according to Jupiter Securities Sdn Bhd's chief market strategist Benny Lee, the drop in the KLCI index today was also brought about by anticipation that Fitch ratings may downgrade Malaysia from its current A- rating.

“The ringgit has also weakened against the greenback in the past week, this coupled with a potential downgrade from Fitch may have eroded investors confidence,” he told theedgemarkets.com.

At press time, the ringgit was trading 3.7513 against the US dollar, and at 2.7949 against the Singapore dollar.

According to Bloomberg, the ringgit dropped the most in Asia, on speculation Fitch will downgrade the country as the US moves towards raising interest rates.

According to Reuters, the Malaysian currency has been under persistent pressure from weak prices of commodities — the country's key export — and concerns for state-fund 1MDB's debt problems.

“By contrast, Singapore's central bank maintains its policy of a "modest and gradual" appreciation of the Singapore dollar,” said Reuters.

Overall, the KLCI saw a total of 1.65 billion shares, valued at RM2.08 billion, traded during the day.

Losers outweighed gainers, with 552 losers against 292 gainers, while 254 counters remained unchanged.

Among today’s gainers were Westports Holdings Bhd and Malayan Banking Bhd.

Besides TM and Tenaga, the other decliners for the day included Astro Malaysia Holdings Bhd, IHH Healthcare Bhd and Genting Malaysia Bhd.

The most actively-traded stock today was KNM Group Bhd, with about 89.96 million shares changing hands.

Regionally, markets were down, with Japan’s Nikkei closing down 0.46%, South Korea’s KOSPI closing down 0.02% and Hong Kong’s Hang Seng index closing down 0.95%.